said on Tuesday it had accepted a $200m investment from Digital Sky Technologies, a private Russian internet investment group, valuing the fast growing social network’s preferred stock at $10bn.

The investment, which represents a 1.96 per cent equity stake, gives Facebook an additional cash cushion but the $10bn valuation is a come-down.

A year and a half ago, Microsoft invested $240m on similar terms but valued Facebook’s preferred stock at $15bn

“The fundamental challenge for all of these social network companies is: How do they convert traffic and consumer interest into revenue and earnings? The jury is still out.” said Bob Akerman.

Facebook and MySpace may have $820 million in combined sales this year, a fraction of the $45.7 billion online advertising market, according to New York-based research firm EMarketer Inc.

About 70 percent of marketers surveyed by Forrester Research Inc. plan to increase spending on social-networking sites. Still, 75 percent of those surveyed will spend only about $100,000 a year or less.