Facebook is Now Valued $50 Billion
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Even before Facebook reportedly sets its initial public offering in April 2010, it has already received a $500 million investment from Goldman Sachs Group Inc. and Russia’s Digital Sky Technologies thus making the social-networking company’s theoretical value at $50 billion. The investment bank also made an arrangement that lets its clients buy Facebook equity worth as much as $1.5 billion.
Goldman Sachs Investment Invites SEC Scrutiny
The hefty investment has caught the attention of Securities Exchange Commission. The Securities and Exchange Commission, whose rules require any company with more than 499 investors to disclose financial information to the public, is already scrutinizing the market for trading shares of closely held companies including Facebook and other private technology companies such as Zynga, Twitter and LinkedIn.
Would the Goldman Sachs Investment to Facebook Cause New Bubble?
The deal now makes Facebook worth more than companies like eBay, Yahoo and Time Warner. It is clear that Facebook seems to be taking the lead in the next wave of tech-stock enthusiasm. The number of Goldman Sachs investors that becoming interested in the unnamed “private company that is considering a transaction to raise additional capital” are increasing and might cause Facebook’s inevitable public offering.
Would these investors enthusiasm cause a new bubble just like what happened in the late 1990’s? Will Facebook be the new star of the technology sector or will it become a symbol of how overinflated expectations and over subscription social networking sites have? While the company might have an annual revenue of estimated $2 billion range, its new hefty valuation gained from the investment of Goldman Sachs and Russia’s Digital Sky Technologies of $50 billion might be difficult to live up to.
Though the social networking site may now have over 600 million users, the question as to how could they convert these numbers into successful advertising campaigns still has vague answers.
Facebook Still Banned at Goldman Sachs
While Goldman Sachs has been enthusiastically encouraging its wealthy investors to put their money to Facebook, it is interesting to note that the investment bank has prohibited its employees to use the said social networking site. While the issue may be regarding productivity, with the heightened interest over its investment on the social networking site, could this setup soon change?
Would the Goldman Sachs investment create a win-win situation to its investors and Facebook users? Or would it only create pressure to Facebook to live up to its current hefty valuation?