Facebook raising $150 million to buy back stock shares
When you can’t take your stock public, what are your employees supposed to do with all those shares you gave them? Apparently you sell them back to the company.
According to VentureBeat, Facebook is in the process of raising $150 million dollars so that they can buy back shares of its stocks that it gave to employees over the past few years as bonuses and incentives. While some employees have been given thousands of shares, since the stock is not publicly listed, it has been worth around a $1 USD a share. Facebook will apparently be offering them $10 a share to purchase them back from the employees.
There have been rumors for some time now that Facebook was attempting to raise a new round of funding, but many had believed that it was in an effort to purchase more servers and hardware as the social network’s membership swelled past the 200 million user mark. While Facebook has no comment on this time in regards to this latest round of rumors, the stock buy back is appearing to be the plan.
The interesting twist is that Facebook has to go back to the well so many times for money that the usual investors of Accel, Greylock, Founders Fund and others couldn’t help them this time. They are instead having to look at some Asian investment firms to reach their goal of $150 million.
This once again brings up the question of when companies such as Facebook and Twitter will be anything more than companies that just live off of constant streams of investment dollars. Facebook is at least running advertisements, which obviously isn’t enough, but you can’t even say that about Twitter at this point. At some point the well is going to dry up, and these darlings of the social media scene are going to find themselves without any money, and maybe then they will finally realize they should have had solid monetization plans from day one.
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May 18th, 2009
It will be interesting to see how a company without a business plan is going to make it through the recession. I suspect Zuckerberg will one regret he didn’t take the money when he had a chance.