Facebook’s impending IPO has led to the Palo Alto company to seek a huge increase in their credit line.
And not the higher credit you get when you call your credit card company to ask for more juice for that fancy big screen TV. More like the kind you get when you are worth many billions of dollars.
This week, Facebook doubled their credit line to a whopping $5 billion, and borrowed $3 billion to help pay for the vesting of employee stock for its impending public offering.
The NYT reported that Facebook has been steadily borrowing more money over the last year. Last February, Facebook said they had secured a $1.5 billion line of credit, followed by an increase to $2.5 billion by September 2011.
Facebook should be scraping up all the money and loans they can get right now. Banks are practically throwing the green bills at them to curry favor with the social behemoth, said the NYT.
One wonders what you could possibly do with all these billions of dollars?
Facebook’s answer is actually kind of boring: pay taxes and settle lawsuits. What a snooze.
And while $8 billion sounds like a lot of money, Facebook is only worth a measly $28.7 billion according to Forbes estimates this week. Meanwhile, their Silicon Valley neighbor, Apple, is rolling in the dough and worth $500 billion.
If they want to compete with the local tech giants, they are going to have to raise the stakes.
If Facebook is having money thrown at them, maybe we should all go to Harvard or Yale and then churn out a multi-billion dollar company. Considering the ivy league is cheaper than Cal State right now, maybe that isn’t such a bad idea.