Wednesday 30 May 2012

Facebook's sliding stock takes Instagram below $1B price tag



Instagram founder and CEO Kevin Systrom might be wishing he'd taken more cash and less stock when he struck that $1 billion deal with Facebook CEO Mark Zuckerberg.
No one is going to shed a tear for Systrom, who's going to make a fortune off his popular, money-losing app no matter how this plays out. But as investors again drove down Facebook's stock again today, the much talked about acquisition is suddenly worth a decidedly less cool $963 million.
When Systrom and Zuckerberg were working out terms for the deal, Systrom reportedly asked for $2 billion. But Zuckerberg got him to accept $300 million in cash and just under 23 million shares, telling his 20-something counterpart to look at the deal as a percentage of Facebook's total value. That way, according to a Wall Street Journal report, Systrom would eventually get his number -- assuming Facebook would someday be worth $2 billion.
He still might, of course, but it's increasingly looking like it might take a long time. Remember, too, that FTC investigation into the deal has slowed it down, so there's no telling what it will be worth once it wins approval. And if it doesn't, Systrom still walks away with a $200 million breakup fee.






(courtesy:cnet.com)

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