January 3, 2011

Investment Values Facebook At $50 Billion

Social networking giant Facebook has received a $500 million investment from American bank Goldman Sachs and Russian firm Digital Sky Technologies as part of a deal that places a $50 billion value on the Mark Zuckerberg-owned website, the New York Times reported Sunday.

The agreement could double Zuckerberg's value and makes Facebook worth more in the eyes of investors than eBay, Yahoo, and Time Warner, Times reporters Andrew Ross Sorkin and Evelyn M. Rusli said in their story, citing unnamed sources "involved in the transaction."

"The stake by Goldman Sachs, considered one of Wall Street's savviest investors, signals the increasing might of Facebook, which has already been bearing down on giants like Google," Sorkin and Rusli said in their report.

The Times article also claims that the additional funding "will give Facebook more firepower to steal away valuable employees, develop new products and possibly pursue acquisitions--all without being a publicly traded company" and could allow some shareholders, "including Facebook employees, to cash out at least some of their stakes."

Zuckerberg and other Facebook execs have been hesitant to take the company public, but according to Sorkin and Rusli, the deal "could add pressure" on the company to offer an IPO.

Furthermore, according to various reports, the Securities and Exchange Commission (SEC) is currently investigating whether companies like Facebook and Twitter are "improperly using the private market to get around public disclosure requirements," the New York Times reported Sunday.

Representatives from all three firms involved in the transaction refused the Times request for comment, Sorkin and Rusli said, but according to Reuters, "Goldman is planning to create a special purpose vehicle to allow its high-net worth clients to invest in Facebook."


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