Ah, Goldman Sachs Continues to Deliver the Tragic Comedy of Modern Finance

“Goldman Sachs and an unnamed Russian investor have invested $500 million in Facebook…” CNN

Poor Facebook, it was doing well-ish. Haha, and how about this sales pitch:

On Sunday night, a number of Goldman clients received an email from their Goldman broker, offering them the opportunity to invest in an unnamed “private company that is considering a transaction to raise additional capital.” Another person briefed on the deal said that Goldman clients would have to pony up a minimum of $2 million to invest and would be prohibited from selling their shares until 2013. NYT

Goldman Sachs employee: Fellas, fellas. I got this great investment opportunity for you. How does this sound? It’s a huge social IT company. And it’s gonna get huger, but I can’t tell you what it is. It’s a private company that wants additional capital though, so eh, boddabing boddaboom, ya know what I’m saying?


What does Goldman Sachs know about Facebook that the casual user doesn’t? I mean don’t we just use it to stalk other people and scout for funny links? Besides selling this information to other companies and advertising the things I like on side columns, how is it worth $50 billion? A part of me still thinks Facebook has nothing more to offer outside of liking dancing panda videos and linking me to other dancing panda aficionados.  It’ll be really interesting to see if all this additional capital pushes Facebook into something that’s really profitable or pushes the whole project into promises it cannot deliver. With this influx of money, Facebook just can’t stay what it is now. On a related note: Tian Tian does the Dougie, so awesome.

Update: William D. Cohan at the NYT shows that if Facebook’s rise in value by Goldman Sachs was applied to GE it would now be worth $3.75 trillion rather than its $200 billion. Facebook is now worth more than Morgan Stanley, DuPont, and TimeWarner, despite Facebook’s annual revenue of $2 billion with negligible profit.

Welcome everybody, to a first-hand account of how Wall Street firms make financial bubbles for their profit while wrecking the companies/countries they leave behind. (Anyone remember how Goldman Sachs helped Greece cover its budget woes for years by inventing exchange rates? Don’t worry though it was legal. Yay?) It’s now a top-priority for Goldman Sachs to make sure that Facebook is valued higher than $50 billion when Facebook goes public. But, we’ll have to wait and see how Facebook is suddenly going to start being profitable and how Goldman Sachs will manipulate investors to make sure Facebook is valued impossibly high when Facebook goes public.

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