ITV has finally bitten the bullet and sold ‘Friends Reunited’ for £25 Million. In total they paid £175 Million for the social network, so in little under four years the value of this online property has dropped by £150 Million. Ouch. That’s got to burn a hole in anyone’s wallet.
Despite this sale, Friends Reunited does still get three million people per month actively using the site. So it could be argued that the site itself is not a failure, more the valuation that was put upon this by those at ITV back in 2005. ITV are not alone in their over valuation of web properties though.
Microsoft valued Facebook at £7.3 Billion when they invested £117 Million for a 1.6% stake two years ago. Since then the value has been falling fast. Share prices indicate that Facebook could now be worth less than 10% of the initial £7.3 Billion valuation. That would be over £100 Million loss for Microsoft on a 1.6% stake! That money could have been put towards buying Yahoo, but then that’s another company that you could argue is over valued, despite their strength within the emerging markets.
Of course Facebook is a hugely successful social network, if not the most successful with growing user numbers but the point here is, as with Friend Reunited, companies are still getting carried away with over valuing online assets just like back in the dot com boom.
So before the investment by DC Thomson to buy Friends Reunited is dismissed as a company buying a sinking ship, it is worth recognising that in reality this is quite a good deal and isn’t an over inflated / panic buy as could have been said with the initial ITV purchase back in 2005 and with the Facebook investment of Microsoft.
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