The day Goldman Sachs invested about 1.5 billion dollars in Facebook, we concluded that Facebook has reached its peak. In Further mathematics, that was their maximum point. To have any change in momentum, they have to lose value. Do not be deceived, Myspace lost not because of Facebook but because they destroyed themselves.
Late last year, a single share of Facebook was at $28.26 in Second Market, valuing it at more than $70 billion. By January, it lost about $2 to become $26.25 per share and then recovered to $27. From Tekedia Intelligence data, the $28.26 was the highest it has attained in its auction.
SecondMarket is the marketplace for alternative investments, not traded in the stock market. Through SecondMarket, buyers and sellers of alternative investments can access robust market data, create an online investment identity, build a comprehensive investor network and transact across a broad array of alternative assets.
By last two weeks, including more than 2 billion outstanding shares, Facebook is worth about $66 billion. Since the 10th auction in Second Market, it has lost about a billion dollars.
Tekedia thinks that one of the major reasons while Facebook has this astronomical value is Zynga, the social gaming company. One percent of its players contribute about 25- 50% of its revenue (about $592 million in 2010), according to Businessweek. So Zynga has a huge opportunity if the other 99% could start paying. If Zynga moves out of Facebook to Google Plus through a partnership agreement, Facebook value will drop below $50b. But right now, Zynga builds the farms in the land owned by Facebook.
Also, Tekedia thinks that Facebook ad is primitive and that is where Google Plus could strike. The static images by the right hand side of user’s profiles do not add any major value. Few people care to see those images. If Google plus offers a more dynamic and less instructive ad network, advertisers will follow. It is about value and right now, Facebook ads do not add any value.
So, in the next Facebook Second Market, we will see what the impact of Google Plus has been on the minds of investors. That Google plus is coming does not mean that Facebook is gone. What it means is that advertisers have a choice. Most times, that could be hugely important.
NB: The photo is from our Second Market trading account. We are investing in Zynga, not Facebook.