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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. ]
What could POSSIBLY go wrong ...
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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?
Only the American tax-payer is the fool, here. This is a can't-lose wager, for everyone else. You invest and get rich or you invest and get re-imbursed by the American tax-payer next time the government decides to save the speculators by handing them a few trillion.
Remember, the current president and last president decided that speculation should no longer have any risk and backed that up with seven or eight trillion dollars in handouts. Hurrah!
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.
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
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.
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?!?
Take all your physical paper junk mail and toss it into MULTIPLE trash bags for about a year. Make an intelligent estimate on paper, printing, and postage costs and multiply by the number of envelopes / catalogs / postcards / phone books. I was easily exceeding $1000/yr a couple years ago.
Realize that my yearly junk mail is a yearly cost for an entire industry, that shows up on the P+L and cash flow statements not the balance sheet. On the other hand you're talking about ownership of a future advertising industry merely being $100 per victim. Frankly, $100 ownership cost per victim is cheap.
Compare to the cost of buying the SuperBowel in order to sell millions per minute TV commercials.
Another fun cost comparison is a realistic estimate of the sum of all local TV stations, at least a hundred million industry wide total to reach a million or so viewers, not so far out of line.
Advertising is big business.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
It's a good thing tax payers have made all that money back with interest then, isn't it?
I think you forgot to mention that part.
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
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.