Goldman Flooded With Facebook Orders

[Newsjock]

Source: Wall Street Journal

Inundated with demand, Goldman Sachs Group Inc. plans to stop taking orders for shares of Facebook Inc. on Thursday, and has told some would-be investors to expect just a small fraction of the shares they requested, according to people familiar with the situation.

... In some ways, the Facebook deal represents all sides of the classic Goldman business model: Take a stake in a fast-expanding company, advise it on capital raising, help the company rake in cash from investors, and eventually sell a stake to outside investors through an initial public offering.

Goldman will collect from new Facebook investors upfront fees of 4%, plus 5% of any gains, according to people familiar with the matter. Analysts said the securities firm also is likely to get a private-placement fee for arranging the deal. Such fees typically range from roughly 2% to more than 4%.

Goldman would get another windfall if Facebook eventually goes public and Goldman manages the IPO.

Read more: http://online.wsj.com/article/SB10001424052748703675904576064210094944044.html

[Mimosa]

1. Recced x 1,000: the U.S. investment model is a joke for which millions fall

The true value of this business is all based on perception. It's a darn joke.

[phasma ex machina]

2. The classic vampire squid bankster model typically bets against its own "investment" advice.

Those with either the guts or the foolishness to enter the shark tank that passes for equity markets can get ahead by doing the opposite of whatever the vampire squid publicly pitches. The squid says one thing then actually does the exact opposite.

[MichaelHarris]

3. So I was shopping on Facebook the other day

wait...what am I saying, Facebook sells the consumer nothing and actually offers very little service. They actually do nothing but advertise. Didn't one of these bubbles bust a while back?

[uncle ray]

5. we are not the customers.

we are the commodity.

[girl gone mad]

17. A couple of interesting notes on that point.

1. It's very easy to data mine from Facebook so there can't be much of a premium on personal information.

2. The users who spend the most amount of time on Facebook are primarily using third party apps, like the Zynga games, which means Zynga should have the upper hand here.

(Not addressed to you specifically) Also, come on, this is precisely what critics of the Wall Street bailouts said was going to happen - more stupid bubbles and speculation while the productive economy stays trashed. We are headed for another meltdown, imo.

[Kolesar]

7. Facebook will sell for $50 billion

It would be bigger than Time Warner, GM and Ford.

[cbdo2007]

21. Facebook will get up to $100 Billion.

Google is at almost $200 Billion so even if Facebook opens at $50B it will quickly rise up to $100B+

There definitely is another bubble building up here but the country seems obsessed so it should go on quite a ride for the next 5 years or so.

[Javaman]

10. Facebook sells one thing, and probably the most profitable thing...

ego.

[Broderick]

13. ego

and more importantly narcissism.

[Javaman]

15. yup.

both are never in short supply.

They only way facebook will fail is when zuckerberg sells it.

The content is always morphing to take complete advantage of people ego and narcissism. Once that model is broken, facebook, no matter how hard it will try will never ever be the same. It will then soon be replace by the next self indulging narcissistic ego driven internet gewgaw rage.

Frankly, I believe Facebook, right now, is only successful via momentum. I honestly believe it's "hayday" was 3 years ago. Now, it's just a reiteration of itself. Those who use it haven't yet caught up with that yet.

I give it another 5 years. By then it will have morphed into something very weird. Because, those who started using it in college will now be using it in their regular post college life and that is a much larger audience for facebook. And as such, will evolve to suit those needs.

Facebook works/worked as well as it does because it's still attracting a younger market, but at some point their business model will have to evolve to also include an older demographic.

Or maybe not. We, as a nation, act like children anyway.

[sarcasmo]

19. Data mining is the only thing facebook is good for.

[watajob]

4. Does no one remember...

... the "tech" bubble?

[Javaman]

11. As long as there are self inflated egos, facebook will be around for a very long time. nt

[SpiralHawk]

6. "Get your facial, right here now. Smirk." - Goldman Huckster, Inc. (R)

[dipsydoodle]

8. Goldman Sachs May Sell Facebook Stake Without Warning

Goldman Sachs Group Inc. clients considering whether to buy shares in closely held Facebook Inc. should take heed: Wall Street’s most profitable securities firm could unload its own holdings without letting them know.

In the last sentence of a one-page investment profile sent to private wealth clients, the firm explains: “GS Group may at any time further reduce its exposure to its investment in Facebook (through hedging arrangements, sales or otherwise), without notice to the fund or investors in the fund.”

The offering document, obtained by Bloomberg News, shows that $75 million of the $450 million investment in Facebook by Goldman Sachs is coming from Goldman Sachs Investment Partners, a hedge fund that handles client money. The firm’s own $375 million investment will probably be cut to $300 million because Goldman Sachs expects to sell $75 million to third parties or to the fund it created so clients could buy a stake in Facebook.

“There may be conflicts of interest relating to the underlying investments of the fund and Goldman Sachs,” according to the Facebook offering document’s disclosures section. Material in the documents “is not guaranteed as to accuracy or completeness.”

http://www.bloomberg.com/news/2011-01-06/goldman-sachs-discloses-it-can-sell-hedge-facebook-stake-without-warning.html

[dixiegrrrrl]

9. Gee..an offer we CAN refuse.

Selling nothing, with no promises, the new American business model.

[Javaman]

12. facebook as has the cornered the market on the most valuable commodity...

America's sense of misplaced ego.

[dixiegrrrrl]

16. Pathetic, ain't it?

[DCKit]

14. If the WSJ had an ounce of journalistic integrity left (after Rupert's takeover)....

they'd be telling people the truth of this scam.

[sarcasmo]

18. The main head on the Greed monster is Goldman Sachs.

[bemildred]

20. Buy now!!! Don't wait!!!! This deal won't last!!!

:sarcasm:

[GeorgeGist]

22. Bubble, bubble ...

toil and trouble. Facebook my Ass.

[bullwinkle428]

23. Imagine if Goldman Sachs spent their entire wad on America Online 12 years ago.