The ever increasing value of Facebook

The company’s notional value is now not $10 billion but $15 billion. As Deal Journal points out, this values the company at 500 times earnings—a staggering multiple even by the standards of the dot com boom.

But Microsoft’s reasoning for the $240m investment might actually have little to do with Facebook’s future prospects. The social-networking site’s continuing use of Microsoft’s ad software helps keep the Redmond behemoth competitive with Google in this market and so the investment can be viewed as a price worth paying on those grounds alone. If Facebook lives up to its valuation so much the better.