Peter Thiel’s hedge fund just went from +50% on the year to -5%.  And, by the time the year is up, I suspect it will be far lower.  Hedge funds are going to undergo a bloodbath.

But, while that is all nice and dandy (or, like, not at all…) I think the next jolt will come when Facebook will have to raise more money in a down round.

Make no mistake about it:

- Facebook will have to raise more money to sustain its massive growth,
- No one will attribute it a value remotely near $15B, let alone over it.
- Since that deal was struck, the Nasdaq, DJIA etc., are all down; Google - the bellwether in consumer web media - is down 50%.

However, it is very possible that Facebook’s valuation will have to sustain an even greater haircut… to how low?  I don’t know, but it will be less than $10B, maybe as low as $5B, even.  Of course, Facebook CFO Gideon Yu is in Dubai trying to raise a boatload of money from the country’s Sovereign Funds, who care less about returns and more about influence and prestige… but prestige can only go so far.  This will be a down round, for sure.

The alternative?

Sell to MSFT for $10B or so… but I doubt MSFT would ever offer this to Facebook now, because while the excited fanboys all said that Mark Z. took Stevie B. to the cleaners, the truth is Stevie B. took advantage of Mark Z.’s inexperience and his Board’s greed; much like he and MSFT will eventually take advantage of Yahoo! CEO Jerry Yang’s hubris and arrogance.

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