Goldman Sachs’ $450M Facebook Investment: IPO soon?

Posted: January 6, 2011 in Uncategorized

The highly publicized Goldman Sachs investment in Facebook has triggered rumors of a pending IPO for the social networking giant, despite young billionaire and FB CEO Mark Zuckerberg’s denial of such happening in 2011. The investment has upped the valuation of FB to $50 billion.

In a report by Kerri Shannon (MoneyMorning),  Facebook has been under pressure to go public because of its private market popularity. “In November, $40 million worth of Facebook shares was involved in a private exchange called SecondMarket. Similar private market interest pushed Microsoft Corp. (MSFT) and Google into IPOs,” the report said.

The analysis of my good friend and top-notch Research Director of Mediablast Digital, Cesar Tolentino, said that “the actual decision of whether Facebook will have an IPO is driven by the personality of Zuckerberg, who I characterize to be an adolescent trying to behave like an adult. Thus, it is most likely that Zuckerberg will create an atmosphere of expectation that the IPO will push through (behaving like a brat) but then in the end not pushing it through with an explanation that the IPO booking offers from the market will ‘not meet his expectations.’ This will create a furor and chaos in the investment market where the investment buyers will end up buying the next big thing…”

In the MoneyMorning report, it said that “the private market has been booming lately as the tech world rebounds from the recession. Companies like Facebook, Twitter, online game site Zynga and business networker LinkedIn have piqued buyers’ interest, and the number of transactions on private exchange markets is growing each month.”
Second-guessing on Cesar’s insights and the possible reaction of investors on the FB investment of GS, any social media company can benefit from Zuckerberg’s denial of a pending IPO as investors go look for the second-best thing out there. Even the likes of social networking “oldies” Friendster and Multiply can arm themselves for their re-launches and get sizeable investments from turned-off FB buyers. The way to go is raise a flag for investors to look at Asia as the hottest tech region in town where both sites are still making good numbers.
In all, GS’s investment into FB is good for alternative investments, many of which are in tech stocks. That is why the likes of SecondMarket is thriiving. I hope this type of opportunity reaches the shores of Asia where some hot investments are worth picking.

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