Today Facebook announced that Digital Sky Technologies (DST) made a $200 million investment in exchange for preferred stock. The Russian company’s stake in Facebook is reportedly about 2%.
This begs the question: why on earth would a legitimate tech company invest so much money in a company that hasn’t – and won’t until at least 2010 or 2011 – made any money? Wouldn’t DST be better off investing the cash in emerging technologies – even flying cars would be a better investment than social networking.
I’m not convinced there’s a value to Facebook just yet other than targeted ads, and even then, with 307 million visitors last month, one would think that the ad-generated income would be quite large. However, according to the Facebook people, the site still has yet to turn a profit.