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Goldman Invests $450m In Facebook 228

Posted by CmdrTaco
from the super-poke-me dept.
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."
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Goldman Invests $450m In Facebook

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  • Can't resist ... (Score:5, Insightful)

    by johnhennessy (94737) on Monday January 03, 2011 @01:33PM (#34745112)

    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 ?

  • 12 billion bailout (Score:4, Insightful)

    by fermion (181285) on Monday January 03, 2011 @01:35PM (#34745144) Homepage Journal
    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?
  • by Seumas (6865) on Monday January 03, 2011 @01:36PM (#34745158)

    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!

  • by durrr (1316311) on Monday January 03, 2011 @01:39PM (#34745184)
    Some very sucessful people crashed the worlds economy, while getting filthy filthy rich at the same time.
    One mans poison is another mans profit.
  • by MoonBuggy (611105) on Monday January 03, 2011 @01:55PM (#34745360) Journal

    That still hinges on the assumption that targeted marketing is so beneficial that it's worth all these billions of dollars. Maybe it is, maybe I'm wrong - I'm just some guy and I'm arguing with billionaires here, after all - but it looks to me like they're building something of a house of cards that'll come tumbling down if the companies purchasing the ads ever manage to quantitatively assess their impact.

  • by blind biker (1066130) on Monday January 03, 2011 @02:00PM (#34745410) Journal

    Now that Goldman Sachs has invested all this taxpayers' money into Facebook, is Facebook suddenly too big to fail? *shudders*

  • by vlm (69642) on Monday January 03, 2011 @02:14PM (#34745586)

    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.

  • by Viewsonic (584922) on Monday January 03, 2011 @02:17PM (#34745614)

    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.

  • by Viewsonic (584922) on Monday January 03, 2011 @02:20PM (#34745642)

    People seem to leave this part out. They keep screaming about the 'bailouts' and tax payer money being 'wasted'. That money has been, for the most part, repaid, with interest. The 'taxpayers' have been making out like bandits with these 'bailouts' because they've decided they don't want the regulation that comes along with it. You take taxpayers money, you play by their rules. It's like people can't beyond the fact that these loans had some pretty heavy strings attached to them for the benefit of the taxpayers.

  • by dachshund (300733) on Monday January 03, 2011 @03:31PM (#34746398)

    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 ?

    Two words: regulatory arbitrage [thinkprogress.org].

    US law currently prevents Facebook from taking on more than 499 investors unless it discloses its financial results to the public. Facebook does not want to do this, but it certainly wants investment money. Plus there's a lot of dumb money out there that would love to invest in Facebook. How to get around this?

    The answer is, apparently, to take on a single investor --- Goldman Sachs. G-S will then sell "shares" of their stake to their own investors, collecting a handsome commission along the way. Most likely the investment house won't even wind up with too much exposure of its own, so when Facebook inevitably dot-bombs they'll just be sitting on a pile of cash. Plus there are opportunities here to make and return profits to their preferred clients (as the stock goes up), making sure that only the fools get stuck when it plummets.

    Normally it wouldn't bother me too much to see rich people getting fleeced, but how much do you want to bet that somehow your money will wind up in that pool, even if it's indirectly through mutual funds and third-party companies?

  • by David Jao (2759) <djao@dominia.org> on Monday January 03, 2011 @04:56PM (#34747366) Homepage

    People seem to leave this part out. They keep screaming about the 'bailouts' and tax payer money being 'wasted'. That money has been, for the most part, repaid, with interest. The 'taxpayers' have been making out like bandits with these 'bailouts' because they've decided they don't want the regulation that comes along with it. You take taxpayers money, you play by their rules. It's like people can't beyond the fact that these loans had some pretty heavy strings attached to them for the benefit of the taxpayers.

    If you count Goldman's AIG exposure, which any honest accountant must count, Goldman has not even come close to repaying the bailout money they received.

    Goldman would absolutely be bankrupt today ten times over had the government not bailed out AIG. The government's bailout of AIG was in effect a proxy bailout of Goldman. Until AIG repays every cent they received with interest, Goldman is not off the hook.

    It is, however, more than a little upsetting that cheerleaders like you so blindly accept Goldman's offloading of their liabilities onto AIG and then try to say with a straight face that Goldman has repaid their debt to the taxpayer.

  • by witherstaff (713820) on Monday January 03, 2011 @05:06PM (#34747470) Homepage

    They were able to use further loans from the gov to pay back the TARP funds. I know GM did this [reason.com], 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%. [seekingalpha.com]. 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.

Numeric stability is probably not all that important when you're guessing.

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