Winklevoss Twins Want Zuckerberg’s Money, Not His Company’s Rapidly Devaluing Stock
Ssshhhh, the Winklevoss twins don't want you to know this: The uber-bros recently received $65 million from Facebook founder Mark Zuckerberg in a confidential settlement ending the lawsuit over who really, really started Facebook. But the Brothers Winklevoss aren't satisfied; they want the verdict overturned. Why, you ask? Probably because they were paid largely in Zuckerberg Bucks (a.k.a. Facebook stock). According to Valleywag:
ConnectU's settlement was issued in common shares. And an appraisal Facebook conducted to value the shares it issued to employees valued the company at $3.7 billion, or $8.88 a share — making the stock part of ConnectU's payment only worth $11 million, and the total $31 million.
Only $31 million? Oh, but it gets worse. From Valleywag:
An informal market for Facebook stock exists, though it's not publicly traded. Vulture investors are offering to buy shares for as little as $2.50 apiece. At that price, the company as a whole is worth $1.3 billion. That's less than Yahoo reportedly bid for the company in 2006.
With share price falling, what's a young Zuckerprince to do? After the jump, predictions for Facebook's grim future.
According to Valleywag, Zuckerberg has one option and its not pretty: sell off prime cuts of the company's stock.
So Facebook will probably need to raise money soon, and it will have to give up a far larger percentage of the company this time-a scenario its executives have dreaded, but which they have few ways to avoid. It will likely have to make whole Microsoft and other investors who bought in at a $15 billion valuation by issuing them new shares. That will further dilute the stake owned by employees, which will hurt morale and possibly lead to defections. If it loses key salespeople and engineers, Facebook will lose further momentum. The prospect of a death spiral is very real.
The twins better get Zuckerberg back in court before all that's left of the company is a poke and a dream.
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Read more: ConnectU, Facebook, Mark Zuckerberg, Winklevoss
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February 14th, 2009 at 6:30 pm
Even a poor, struggling Facebook (though it’s not) is still better than MySpace!
February 16th, 2009 at 8:26 pm
ivygate is slacking. you guys totally missed a meningitis outbreak at penn, that resulted in university wide cancellations of parties and other events this past weekend as well as about 3000 students getting prophylactic treatment…
February 16th, 2009 at 8:39 pm
An e-mail from Princeton Dean about meningitis at Penn.
I knew west Philly was rough, but man…
February 17th, 2009 at 11:19 am
You can’t proclaim a glorious comeback and then take four days off.