Slashdot Mirror
Goldman Invests $450m In Facebook
An anonymous reader writes "The news that Goldman has taken a stake in Facebook, the white-hot social networking giant, has tongues wagging from Wall Street to Silicon Valley. As first reported by DealBook, Goldman has invested $450 million in a deal that values Facebook at $50 billion. As part of the deal, Goldman is looking to raise as much as $1.5 billion from its wealthy clients to invest in Facebook alongside the firm."
Did evil just become even more evil while I was sleeping over New Years ?
Goldman Sachs aren't exactly known for their "good values".
Why the hell does an investment bank, who normally act as a "service provider" want to take a direct stake in a Social networking company ?
[ Monday is a terrible way to spend one seventh of your life. ]
Goes hand-in-hand with the modern-day Farcebook version:
Fools and their privacy..
-SS "Teach the ignorant, care for the dumb, and punish the stupid."
Aside from development I trade as a second-job.(I'd call it a hobby but hobbies cost money.) The net result of this valuation is marketing hype. Regardless who think what FB's eyeballs are worth, this is a point-in-time snapshot of FB's worth. Based on trading experience, if this was publicly traded right now I would be opening a vertical put spread.(i.e. be massively short) It feels and smells like an overrated athletic team.
Website Hosting
What could POSSIBLY go wrong ...
Read radical news here
So our 12 billion in bailout money goes to invest a company that maybe makes a few million dollars of profit on at a least half a billion dollars in revenue. Combined with Groupon, can we say bubble? Can we say it is easy to flush money down the toilet when it is the taxpayers? Can we remember how signed TARP and the bank bailout, thereby giving all the taxpayer money to the banks and investment firms and raising the deficit to astronomical percentages of GDP. And we want to continue to give these crooks a free hand at destroying the middle class?
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Why the hell does an investment bank, who normally act as a "service provider" want to take a direct stake in a Social networking company ?
Well theoretically Facebook's "product" is demographic data for marketing purposes - Goldman Sachs obviously think this is a profitable segment. What I've said before, and will say again, is that I'll never truly believe that marketing data can provide that much value. Obviously some very successful people think differently, so it may well be that I'm just outright wrong, but when I look at the value of Google and Facebook, who might provide slightly better ways to convince people to buy your product, and compare those valuations to those of the companies who actually make popular, profitable and tangible products, it just seems like there's something not quite right here. Bubble 2.0, perhaps?
..and I didn't RTFA, but doesn't it seem kind of messed up that mega-banks get to invest their profit (which comes from fractional reserve interest scheming) into a company, keeping the wealth amongst the uber-wealthy? I understand the they still have to pursue the private clients consent for the rest of the money, but have the days of traditional IPOs gone by the wayside in this age of predatory, high-frequency investing. If there is anything I have learned about Wall Street, its that it serves its own private interest, and not the commonwealths.
Whether or not this is ultimately beneficial to main-street is definitely debatable, but my money is on an exponentially larger gap between the distribution of wealth between the middle class and the upper elite.
I'm all for keeping the money you as an individual earn, but it seems that as corporations get more and more of the ups of personified status (defamation rights, etc.), without also incurring the negatives (murder, genocide), we all get screwed by the plutocracy ad infinitum. Or is my armchair punditry completely off-base?
'We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.' RPF
Regardless, it sounds like more of these privately traded shares in auctions from Sharespost will be conducted in the near future. Expect to see Facebook get a serious cash infusion if they all go as well as this one.
My work here is dung.
Tulip bulbs, I tried to tell them. Tulip bulbs! That's the future of finance, right there!
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
So we will have new sequel "The Social Network: Goldman Sachs years"?
Diaspora, where are you?
user@ubuntubox:~$ stfu This server is going down for shutdown NOW!
Can you really remain a white hat while involved in FaceBook's business practices? When you have the white hat, everything is above the table. FaceBook has many below the table items. You can't take off the hat either, as otherwise your hat gets stain marks, and your reputation is hurt.
This whole thing reminds of Bernie Madoff back in the day. Everybody was complaining about how the little guy couldn't get the huge hedge fund profits. People at high-end parties didn't feel like they were "somebody" unless they were in the fund.
How'd that work out for them?
I was so worried about facebook running out of money. Thank GOD that Goldman Sachs intervened and saved them from financial ruin.
He who knows best knows how little he knows. - Thomas Jefferson
Can I invest £50 and then get £1.50 from it? I think I have found a way to create infinite money!
Seriously though is there anything stopping me from doing this? Facebook doesn't look like it's going to fail anytime soon...
I care not for your karma and your mod points.
Somehow that does not seem right in any shape way or form. I know at least a handful users that have way more than a couple of accounts (pets, hiders and other stuff.)
Maybe 25 cents/user on a good day but $100?!? Completely incredulous. But then again maybe Goldman sees the US dollar tanking worse than Titanic in the near future.
Now that Goldman Sachs has invested all this taxpayers' money into Facebook, is Facebook suddenly too big to fail? *shudders*
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
http://en.wikipedia.org/wiki/Dot-com_bubble
Did I just get trolled?
Remember the good ol' days when "investing" actually meant "putting money in one basket to build a bigger company, to produce better products cheaper, to create more jobs"?
This is investment for the sake of investment. This neither generates jobs nor does it do anything else of value to ... well, anyone but the investors and the invested.
And when (not if, as soon as this bubble pops, too, we'll be bled dry for bailouts again.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Well, they control how we connect on the internet, our government's funds, the private sector's funds, the new media in general - I don't think anything can possibly go wrong, seeing how they define "wrong" as they see fit.
... Goldman's behavior during the recent mortgage-backed securities fiasco, I'd say its time to short Facebook. If that were possible with a pre-IPO company.
When someone advertises their purchase of a chunk of a companies equity and then goes looking for investors to "go in along side them", its too late. The news of their purchase has just driven the price up. If they were looking after their clients' interests, they'd have rounded up partners before going public. What they're probably looking for is suckers whose egos they can stroke by calling them "wealthy clients" who they can unload their holdings onto at the IPO.
This is why we need to reinstate something like Glass-Steagall. Or whatever it takes to separate brokerages, banks, investment banks, and private equity funds. Too many games are being played with publicity releases of investment schemes in pre-IPO companies.
Have gnu, will travel.
A 1% stake looks an awful lot like an attempt to manufacture a good old fashioned dotcom bubble - take a website, slap a price tag on it to create the illusion of value, sell it the masses in an IPO in a little while and get out before people actually analyze the balance sheet. Is there a legitimate business need for this investment money? If they are a profitable company, can't they just use the profits? (or if the IPO is the goal, just show the balance sheet and it should speak for itself). If they are not profitable by this point, then what value is there in the business?
On New Years, someone was taking pictures. The person is a big time Facebook person. Everyone except me was giving her crap about putting those photos on FB. She said "I keep my profile private!"
Long story short, everyone else (none are IT people) chastised her about FB's lack of consideration for privacy, how they ignore those settings and how they pimp the data they collected.
Facebook's name is mud - even among non-IT people.
Goldman is going to lose! They needn't worry! Their bitches in Congress will give them more money.
"Dogs of the AMS, this is GOLDMAN."
"And does the Goldman-Sachs give him a good price?"
"Of course not, they are the Goldman Sachs, they make their living ripping off the American people."
Taking guns away from the 99% gives the 1% 100% of the power.
Yet another bubble. That's going to do wonders for the economy.
Unlike companies that provide a service that requires skill and/or technology (eg. Google), Facebook does not provide anything that some college kid couldn't whip together over a couple of weeks. It's basically just a big web-forum.
MySpace is the same way and look how fast the tide turned on them. It's because they don't actually do anything and rely on people deciding to use them instead of some other site. A competitor could pop up and Facebook could disappear overnight and nobody would care.
Very poor investment.
Strange how few here seem to recognise this for what it is. But then Goldman have always been masters at obfuscating that modal switch.
http://www.youtube.com/watch?v=Akb5NyZaA9c
I woke up breathing today. Everything else is a plus.
The sequel will practically write itself.
I am becoming gerund, destroyer of verbs.
The $450 million number from Goldman is interesting because Facebook just announced plans to invest $450 million over the next 5 years in a huge new data center in North Carolina. Facebook's already spending about $50 million a year on leased data center space, and expects to spend about $200 million building its new Oregon server farm. It takes a lot of infrastructure and servers to support 500 million users.
RichM
Data Center Knowledge
What taxpayer money? They repaid their bailout (as have most financial institutions) a long time ago with interest.
I remember when the TARP was being discussed a lot of people would discuss what $700 billion could buy. Oh think about the number of schools, teachers, policemen firemen, or homeless people this money could go to. What those people failed to realize is that TARP was a loan, 90% of which has been repaid with interest.
...too big to fail.
Hey, if the Dollar crashes, we can buy lunch in Farmville Chickens. Maybe they'd be on a par with Italian Lira. $34,000 Chickens per former $.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
Do not like
They were not surprised by the meltdown. They didn't need TARP money. They should have gone bankrupt as people with good values at Bear Stearns, Lehman Brothers and countless others did!
If being smarter than your competition is evil, then I welcome evil.
If the other choice was to put the money into American Idol, without Paula, what would *you* do?
I don't believe that Facebook is worth the valuation financial media (and institutions) are touting today (>$50B). And I'm not sure Goldman intends to keep its investment in Facebook for a long time. I suppose they are trying to find as many suckers as they can, push Facebook through IPO with share price inflated several times, then sell their investment with profit to unsuspecting public, pension funds etc. (a.k.a. suckers), collect fees/profits on it and leave everyone with the bag. Watching banking sector overall and GS behavior in particular above scenario seems to be their standard business practice.
But...
They paid back the TARP with money they got from quietly selling illiquid MBSs to the Federal Reserve.
http://dailyreckoning.com/outing-ben-bernanke/
So, yes, the Treasury got paid back. But now there is a bunch more junk on the Fed's balance sheet that will eventually have to be written down.
But Goldman came out OK, so that's nice.
When GS can get the treasury to print it up for them. It's going to be interesting to see what happens when the creeping horror known as GS gets it hands on so much personal info. They could also take the LBO approach of "strip it and milk it" by forcing Facebook to ruthlessly cutting costs, which translates into worse service and security, and maximizing revenue which translates to opening the flood gates to greater sale of info and more ads.
putting the 'B' in LGBTQ+
Any political and/or economic ideology is perfect and will work as planned... until humans get involved.
Goldman is welcome to that data, and everything that comes with it.
Here's to hot beer, cold women, and Glaswegian kisses for all.
Facebook has 500 million viewers, but can only manage to get $1.2 billion a year from that.
Meanwhile, Conde Naste brings in $4 billion from just a few million viewers.
This is why internet advertising will never be able to compete with traditional advertising. They are chasing CPM in the pennies range, while something like Vogue has a CPM of $150.
Facebook and google have to dramatically improve signal-to-noise of their content before they can raise their CPM rates.
This is such a bad idea to throw more money towards an over inflated bubble. All I want to know is if I (as an average investor) can somehow bet against it? That way when the bubble bursts and goes down in flames, I can make some money.
Flexible bare-metal recovery for Linux/UNIX
They were able to use further loans from the gov to pay back the TARP funds. I know GM did this, not sure how widespread it is among TARP recipients. So they went around and got another loan, paid back the original loan, and everyone's happy.
As to G-S, give me access to 0% loans direct from the fed and I'm sure I can make money too. Like oh, use these no interest loans to buy government bonds that return 5%.. That's right, we give these bastards money at no charge so they can turn around, buy government debt, that we as taxpayers pay back at a 5% charge. Sweet! No wonder so many NY Stock exchange board members jumped onto G-S when they became a bank specifically to allow them to get bailout money.
Do this scam enough and the facebook money is nothing.
the whole TARP program is so complex that they have basicalyl hidden who got money.
the AIG thing David Jao points out, is just a tip of the iceberg.
The fed alone had several programs just by itself.
Considering a synthetic CDO cubed could have underlying swaps on hundreds of different securities, it would be almost impossible to untangle which were truly 'Goldmans'. but they damn sure benefitted from the money propping up the rotten system, AIG being a most blatant example, because it had to pay 100 cents on the dollar to Goldman for contracts where the market value was far, far, far, far less, more like 2 cents on the dollar.
I thought that's exactly how it did get created? And then some college *yid* stole it from him and now he's selling it to some other hooknosed kikes.
GS purchased an approximately 3% stake in Facebook because they have a plan. The most likely scenario is that they expect an IPO in the next year or two, and they want to be on good footing to be the investment bank for Facebook when that happens. The fees they'll make in that position will pay handsome returns over the $1.5B they just spent. As soon as this happens, they'll disinvest and move on.
Even if you're on the right track, you'll get run over if you just sit there. - Will Rogers
Good Afternoon Sheeple,
Facebook doesn't produce anything.
GS is a leech on the back of nothing to begin with.
I may be one of the stupidest sheeple on slashdot, but I know FB isn't worth $50 billion.
You chase that pipe dream and you can kiss your money goodbye.
Wake me up when I can remove facebook.com from my squidguard filter rules!
Has anyone calculated how much advertising is worth for Facebook?
In the current state I noticed they couldn't even geotarget outside of America properly - I requested geotargetting but I noticed in their logs they also advertised to people who didn't fill out a location -useless.
That's in the present state of course. If we imagine what the most is it could be worth, what then? Any additional value beyond this smacks of investment for ulterior motives.
A blog I run for the wealth
Didn't Goldman Sachs invest in Umbrella Corp?
"It is a mistake to think you can solve any major problems just with potatoes." Douglas Adams
So right after the money started to flow at them again, they went back to exactly the same behavior that gave us dotcom bubble.
I am expecting resurrection of flooz any minute.
Contrary to the popular belief, there indeed is no God.
If I pay $250,000 for 1% of an offshore well, that does not value the well at $25,000,000. In fact, my 1% is completely worthless if oil/gas is not struck. Same goes for Facebook, the userbase is the oil. Until they are traded on an OPEN market, the value is still anybody's guess, no matter what Goldman or Microsoft or whoever offers. What Facebook amounts to is a very large "pile of eyes", and as has already been proven on the internet, those piles can dissipate very quickly. The CEO is supposedly worth more than the companies all time cumulative revenue. As long as the #1 search term is "facebook" and the #2 is "facebook login", Google doesn't have to compete with Facebook as they are already the layer around it.