background preloader

Facebook financial

Facebook Twitter

$50 Billion? Hah! Insiders Say Facebook's Goal Is To Be The First TRILLION Dollar Company. Facebook Shares and Who Owns Them [Infographic] | WWWery. Why Goldman Sachs’s Facebook Deal Is Bad for Markets - Deal Journal. Goldman Sachs is, in substance, underwriting a stock offering of Facebook exclusively to its sophisticated and wealthy clients. Although there is not the typical IPO disclosure, it does not appear to violate any laws. Indeed the principles Goldman is relying on are not cutting edge—they are tried and true. (Counterpoint: Mean Street: Tough Noogies on Goldman’s Facebook Deal) Nevertheless, Goldman has taken concepts developed over the past 75 years to protect the integrity of the markets and turned them into a troubling model of how to orchestrate an initial public offering of a “hot issue”– and nothing is hotter right now than Facebook.

Goldman can do this because in some circumstances the SEC waives detailed disclosure and Sarbanes-Oxley obligations when the offerings are only to wealthy investors. The IPO to the unwashed masses will likely take place at a later date — after it has been nicely positioned in this Wild West environment. First, a quick summary of the law: Bloomberg News. Facebook’s Valuation: $224 Billion In 2013? That’s exactly what Albert Babayev over at Seeking Alpha has concluded, after developing a model based on the future projections of Facebook revenue, with him expecting Facebook Credits to eventually become an $8 billion a year business. Given that many are calling Goldman Sachs’ investment in Facebook bubble-like, a $224 billion valuation in 2013 should equally draw some criticism.

However, the model provided Babayev is somewhat reasonable as he expects the hype to die down to a level where stock price multiples are much closer to Google (currently a price-earnings ratio of 24), than an Open Table (currently a price-earnigs ratio of 159). If the projections are correct, the next few years will be explosive ones for Facebook, as revenues double year over year between now and into 2014. This sort of revenue model would definitely justify Facebook’s outrageous stock price, and it is most definitely a “best case scenario.” Why Facebook (and Others) Don't Want to Go Public - Justin Fox. By Justin Fox | 8:01 AM January 6, 2011 In case you hadn’t noticed, Facebook really doesn’t want to go public.

At least, not yet. The seven-year-old company is now valued at $50 billion, significantly more than one-time Internet behemoths Yahoo! Or eBay. (It’s also been said that the company’s value tops media giant Time Warner’s, but that’s only if you ignore the value of Time Warner’s long-term debt; throw that in and the companies’ enterprise values seem to be pretty much equivalent — which is still pretty amazing.) This arrangement is already attracting all sorts of scrutiny as a possibly out-of-bounds end run around the Securities and Exchange Commission’s rule that companies with more than 500 shareholders have to regularly disclose financial information. Larry Page and Sergey Brin eventually did take Google public, of course. Similar pressures will keep growing at Facebook. This argument that more efficient, more liquid stock markets aren’t an unmitigated good isn’t a new one.

Chief Of Goldman Sachs Asset Management Jim O'Neill Discusses Facebook Deal. It’s Not Just Facebook: IPO Market Gets Its Mojo Back - Deal Journal. Suddenly it feels like 1999. LinkedIn reportedly is planning to go public this year. It likely won’t be alone among the shiny, new social media start-ups. Twitter, Groupon and Zynga could well join LinkedIn in tapping the public markets this year. That list ignores Facebook, which won’t go public this year but likely will in 2012. Yet all the noise of social media IPOs, obscures the fact the market was already heading toward a much improve 2011. One week into the year, 110 companies have filed to go public. In all, 110 U.S. companies went public last year valued $35 billion, according to Dealogic. This year could mark a further recovery. Facebook Versus Google Circa 2004 - Venture Capital Dispatch. So, Now That We Know Facebook's Numbers, Is It WORTH $50 Billion?

Facebook Valued At $124 Billion In (Wacko) Private Market Transaction. Facebook documents reveal strong profits: source. Five (hundred) questions on the Facebook flogged horse. LinkedIn to Go Public, as a Long Economic Winter for IPOs Thaws | Epicenter  Analysis: Facebook ignites Bubble 2.0 chatter. Goldman customers get Facebook financials. Another Sign of a Tech Bubble? - Deal Journal. Associated Press Sure, Facebook — a company that didn’t exist six years ago — now is valued higher than real companies such as Morgan Stanley and Lockheed Martin.

But that isn’t the only sign the tech bubble may be re-inflating. SecondMarket, one of the private exchanges that have sprung up to facilitate trading in stock of closely held companies including Facebook and LinkedIn, is expanding its staff, according to its job postings. Naturally, SecondMarket took to Twitter and to its Facebook page to announce its intentions to expand: “2011 is upon us and we are expanding! Among the open positions, SecondMarket is looking for an associate to handle private placements, a “bankruptcy claims analyst” and a vice president to help with trades involving asset backed securities. Facebook's Stock Machinations Could Get It Into Trouble | Kara Swisher | BoomTown | AllThingsD. Many years ago, before Google went public, I had an unusual late-night conversation in the lobby of the TED conference with its co-founder Larry Page about the prospect, about which–despite its inevitability–he had more than a little nervousness.

That would be: Taking the search company public. After much ruminating, Page concluded that one of the more important reasons he felt compelled to have an IPO was to finally reward Google’s employees for all the work they had done to build the company. While I have never had a similar chat with Facebook CEO Mark Zuckerberg about the powerful social networking company and an initial public offering, I suspect that he would not express any such sentiment. And it’s not because Zuckerberg does not value his staffers any less than Page did–instead, it’s because he seems to value his privacy most of all. I know–ironic! Plus, a special purpose vehicle sounds like a car that bankers use to take people for a ride. Therefore, by all means, let’s do it!

Why Doesn’t Facebook Hit The Corporate Bond Market? The controversy is reaching a crescendo over Facebook’s effort to remain privately held while $1.5 billion or more of the company’s stock changes hands. Yet all the brouhaha could be avoided if the social network tapped the corporate bond market. It’s so much cheaper for issuers to sell debt than stock right now. Interest rates remain near record lows and even the higher yield that corporate bonds have to offer still would still add up to smaller fees going to the bankers.

The Goldman Sachs stock sale charges four percent up front plus another five percent of capital gains, the latter presumably due whenever the client sells. With a debt sale, the issuer doesn’t give up ownership of parts of the company (unless there’s a filing for bankruptcy, in which case bondholders get first dibs on assets in court, but that seems extremely unlikely compared to Facebook’s current finances). As long as Goldman Sachs is the shareholder of record, it has influence over Facebook’s decisions. Goldman’s Facebook Investment Document Leaked. A one-page investment profile appears to have gone out to investors who expressed interest in Goldman Sachs’ offering of Facebook shares. No one at the companies can officially confirm nor refute reports from sources that requested anonymity when leaking details to the media.

If this deal weren’t private, we’d have a lot more certainty about what’s going on. Without seeing the offering document ourselves, we can’t fact check any of the information that’s circulating. So we’re taking it all with a grain of salt, and highlighting for you here the most novel details being reported. For starters, the Goldman Sachs memoranda states that Facebook already has 600 million users, according to Business Insider.

That brings to mind a stock market equivalent of what happens when your mortgage lender your loan to another bank — only here the private investors would receive a letter saying that another institutional investor has become the custodian of the shares. Why Facebook’s investors want it privately-traded | Analysis & Opinion | John Abell asks a very good question about a privately-traded Facebook: Aren’t all the people investing at this moment assuming that a $50 billion valuation is a bargain? What will drive a higher valuation — let’s limit it to the Goldman Sachs Golddiggers — that makes the investment savvy? Can a relatively illiquid market (one open to only ultra-high net worth individuals) do that?

Or are these new investors buying at what they hope will be pre-IPO bargain prices? Would they otherwise, i.e., would they put up $2 million to get a upside potential based solely on privately-reported earnings? For the answer, it’s worth looking to Justin Fox. Generally speaking, economists and regulators have maintained that competition, and reduced transaction costs are of great benefit to consumers — but only to a point. Goldman’s clients are looking for uncorrelated investments, and Facebook will become much more correlated to other stocks the minute it becomes public. Facebook doesn’t care where Goldman gets its funds | Analysis & Opinion | The NYT is reporting that Goldman Sachs only made its $450 million investment in Facebook after its in-house private equity fund, Goldman Sachs Capital Partners, passed on the deal.

Many people — including the NYT — have been talking a lot in recent days about the “ancillary business” that Goldman is likely to get as a result of this investment, including fees from any future IPO and wealth-management fees for looking after Mark Zuckerberg’s fortune. There’s no formal agreement about any such things, I’m sure, but the general understanding seems to be that if Goldman scratches Facebook’s back by raising a couple of billion dollars for it now, then Facebook will scratch Goldman’s back in future with various lucrative bits of investment-banking business.

Goldman, it seems, would have loved to get all those fees without having to put its own money into the deal — and then when GSCP said no, it ponied up the requisite cash itself. Does Goldman’s Facebook investment violate the Volcker Rule? | Analysis & Opinion | FACEBOOK: Now It All Makes Sense. Why Facebook is Worth $50 billion - Financial Adviser. By James Altucher James Altucher There are two key questions, really. 1.

Is Facebook worth the value Goldman is pegging it at? And 2. Is there another Internet bubble brewing.? My answers: 1. Yes. Question #1: Is Facebook worth $50bb Two analyses: bottom up and top down Bottom up is difficult. . - Of the three biggest websites: Facebook, Google, Yahoo - Facebook is the fastest growing - People spend more time on Facebook than any other site. - Facebook probably did about $2 billion in revenue in 2010. The key stat: About a year before then went public, Google had $2 billion in trailing 12-month revenue. Top down: Facebook is a mini-Internet. Advertisers don’t want to advertise into a mess. Facebook has other sources of revenues that will continue to grow, such as transaction fees on Zynga’s games.

Also, Facebook can snap their fingers and create a duplicate of Groupon, OpenTable, etc. Question #2: Is another bubble brewing? Why say “another”? MySpace vs. Facebook: The Fight Isn?t Over | BNET. Last Updated Jan 4, 2011 12:49 PM EST If the turn of a new year is a time for resolutions, then MySpace, part of News Corp (NWS), may have chosen one of the most traditional: losing weight. According to a Wall Street Journal report, the once-leading social network will cut from a third to a half of its workforce of 1,100. Compare that to the news of Goldman Sachs (GS) investing $500 million in Facebook, giving the latter a $50 billion market value. Where did the one go right and the other go wrong? It wasn't technology so much as one smart move--focusing on students-- by Facebook. But that clever strategy could eventually backfire. And a different trend could favor MySpace and make it a natural acquisition for Google (GOOG). Just a few years ago, MySpace was the dominant name in social networking.

Facebook did something quite clever and almost inadvertent, given its genesis in a university setting. In addition, MySpace still has some interesting opportunities. Related: Why Are Taxpayers Subsidizing Facebook, and the Next Bubble? Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.” Goldman Sachs is investing $450 million of its own money in Facebook, at a valuation that implies the social-networking company is now worth $50 billion.

Goldman is also creating a fund that will offer its high-net-worth clients an opportunity to invest in Facebook. On the face of it, this might seem just like what the financial sector is supposed to be doing – channeling money into productive enterprise. The Securities and Exchange Commission is reportedly looking at the way private investors will be involved, but there are more deeply unsettling factors at work here. Remember that Goldman Sachs is now a bank-holding company – a status it received in September 2008, at the height of the financial crisis, in order to avoid collapse (see Andrew Ross Sorkin’s blow-by-blow account in “Too Big to Fail” for the details.)

Unfortunately, so far no one has taken up this approach. What Happened to Yahoo. August 2010 When I went to work for Yahoo after they bought our startup in 1998, it felt like the center of the world. It was supposed to be the next big thing. It was supposed to be what Google turned out to be. What went wrong? The problems that hosed Yahoo go back a long time, practically to the beginning of the company.

They were already very visible when I got there in 1998. Money The first time I met Jerry Yang, we thought we were meeting for different reasons. Revenue Loop was the optimal sort for shopping search, in the sense that it sorted in order of how much money Yahoo would make from each link. Jerry didn't seem to care. I didn't realize the answer till later, after I went to work at Yahoo. Hard as it is to believe now, the big money then was in banner ads. The prices seemed cheap compared to print, which was what advertisers, for lack of any other reference, compared them to.

By 1998, Yahoo was the beneficiary of a de facto Ponzi scheme. It wasn't just Yahoo. Hackers Notes. Hype will fade.