Wiki-Valuations: The Inside Skinny on $50 BN for Facebook

Leave it to the Internet.

Goldman Sachs just awarded a $50 billion valuation to Facebook. And in a shrewd branding maneuver, the storied financial behemoth is offering its high-net-worth clients the option to co-invest in the world’s leading social media site.

Is the investment opportunity exclusive? Absolutely. Will there be a fee? You bet.

Before investors jump in with their big boots, however, I encourage them to review the groundbreaking analysis—which I unearthed over at Herding Cats. This chart debunks the $50 billion valuation and even suggests some New Year’s resolutions if you’re late to the 2011 party.

4 Comments

  • Goldman Sachs are savvy investors but that does not mean there advise has always been satisfactory.

    I recall when Netscapes was going public and many of us purchased shares in the company.

    Are you commenting: “If it is too good to be true, people should be cautious with this investment?”

    • My best guess is that FB will flourish. But all companies stumble at one time or another, and I bet the $50 billion valuation will be tested for reasons nobody anticipates. (FB is private, so I’m going on instinct rather than any knowledge of the financials.)

      That said, the co-investment opportunity has the kind of baggage I hate when advising: a stiff front-end fee of 4 percent, no liquidity until 2013, and a 5 percent profit participation.

  • There is no sign of Facebook going out.

    • Agreed. FB is reinventing media.

      But look at the history. The Winklevosses are suing over private market valuations. They agreed to a $35.90 price per share based on Microsoft’s $15 billion valuation.

      A few days before the deal closed, FB’s board approved a valuation of $11 billion from a third-party expert. The WV twins contend that they were due more shares.

      Last I looked, MSFT is full of smart people. Did they pay too much? Same thing at Goldman. Private valuations are always tough.

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