Is Facebook worth $50bn?

According to recent investors who has provided an extra $500m in funding, the value of social networking phenomenon Facebook is now $50billion. For a business with annual revenues of just $2billion is this valuation massively over-hyped? What has happened is that Goldman Sachs and some Russian investors have paid $500m for a 1% stake in Facebook. To get to the business valuation, simply divide $500million by 0.01. BBC Technology correspondent Rory Cellan-Jones has provided this accessible analysis and evaluation of the $50billion valuation. It is an excellent example of analysis for students to take and apply to their exam case studies as well as providing the base for discussing Facebook. For more strategic analysis, this Guardian article is also worth a read.