Social networking sites overpriced: Buffett – SMH

Posted on March 30, 2011 by


Warren Buffett, the billionaire stock picker and takeover specialist, says investors should be wary of valuations for social networking websites as some of the industry’s biggest companies prepare to sell shares.

“Most of them will be overpriced,” Mr Buffett, chairman and chief executive officer of Berkshire Hathaway, said in New Delhi. “It’s extremely difficult to value social-networking-site companies,” he said, without specifying companies. “Some will be huge winners, which will make up for the rest.”

Facebook, owner of the most popular social-networking site, drew investors including Goldman Sachs Group in private stock sales that valued the company at $US50 billion as of January. Groupon, the Chicago-based daily deals site, has held talks about an initial public offering that would value it at as much as $US25 billion, two people familiar with the matter said earlier this month.

Buffett, 80, has shunned technology investments in favor of industrial, financial and consumer-goods holdings in his four decades at Omaha, Nebraska-based Berkshire.

Twitter, the microblogging site, said in December that it was valued at $US3.7 billion after receiving a $US200 million round of funding led by venture capital firm Kleiner Perkins Caufield & Byers. The company’s value may now be closer to $US5 billion, according to SharesPost Inc., a private-share exchange.