Bank deal puts $50bn price tag on Facebook
Social networking site Facebook has landed a cash injection from a major Wall Street bank which values the company at $50bn (£32bn), it was reported.
Goldman Sachs and Digital Sky Technologies (DST), a Russian investment firm and existing Facebook shareholder, have invested $500m (£320m) in the popular website, according to the New York Times.
The move places the company at twice the value of internet giant Yahoo - and roughly equal to well-established names such as aerospace firm Boeing and Kraft Foods. Google, by contrast, is valued at $190bn (£122bn).
Facebook, which has more than half a billion users worldwide, has resisted floating shares since it was founded nearly seven years ago, given the public scrutiny which comes with such a move.
The company, founded by chief executive Mark Zuckerberg, has out-muscled Google in the last two years, overtaking its rival to become the most-visited website last year, according to Experian Hitwise, a web traffic-tracker.
The deal with Goldman - the first Wall Street bank to invest in the website - and DST caps a strong 12 months for the company, which has added some 500m users and, according to analysts' estimates, generated about $2bn (£1.3bn) in revenues.
It also reflects the significant speed at which the company's valuation has soared. Venture capital firm Accel Partners paid less than $13m (£8m) for 10% of Facebook in 2005.
Goldman will raise up to $1.5bn (£970m) from investors for Facebook as part of the deal, according to the New York Times.
Analyst Lou Kerner of Wedbush Morgan said if Facebook were to go public, the California-based firm could trade at $100bn (£65bn).
But a stock market flotation does not look likely for the time being as Mr Zuckerberg (26) recently told flagship American news show 60 Minutes he did not see selling the company or going public as an end goal.
Mr Kerner said: "Companies go public to get access to capital, and Facebook clearly has access to capital."
Facebook is free to use and makes money from selling highly-targeted ads. Research firm eMarketer estimates that Facebook generated $1.29 bn (£833m) in online ad revenue in 2010 and will rake in $1.76bn (£1.1bn) in 2011.
Digital Sky Technologies - together with sister company Mail.ru, which had its flotation in London in November - already owned about 10% of Facebook.