Goldman Sachs invests in Facebook at $50 Billion valuation • Hacker News Board

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#121

Post by jongraehl » Tue, Jan 04, 2011, 1:53 AM UTC

afterburner wrote: post #86

borism wrote: post #85

Earlier quoted context omitted.

Yup, let's judge people by their former employers, not by their actions. I mean, Hank Paulson's decision not to bail out Lehman would have been totally OK, have he not been former Goldman CEO...

Not sure how many (if any) layers of sarcasm to strip away, so I'll just say: Hank Paulson's decision not to bail out Lehman was not OK regardless. His former employer simply might have informed that incorrect (for the US/world in general) decision. Simple bias; had GS been on the chopping block, I can personally guarantee he would not have advised letting it tank.

How are you so certain (that he would have treated GS differently)? What evidence would make you change your mind?

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#122

Post by codelust » Tue, Jan 04, 2011, 5:23 AM UTC

anta wrote: post #19

Can someone explain how fb is worth 50B? I.e. how much revenue are they making/projected to make, and how was this number arrived at?

Valuation is always a dicey territory to be in, especially when done by an investment bank. Their interests are not exactly in line with putting the actual picture out there.

One of the companies I had worked for once had its valuation done by a pretty big i-bank at $1 billion. We were flabbergasted, but they were also going to be underwriters for the issue.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#123

Post by nitrogen » Tue, Jan 04, 2011, 5:24 AM UTC

scottmp10 wrote: post #58

nitrogen wrote: post #5

Are the extremely high Facebook valuations a result of the company's stock structure? I'll admit my only information on the subject comes from The Social Network, but it sounded like only ~35% of the stock was actually sold. So, since investors are fighting over 35% instead of 100% of the company, a more accurate valuation would be .35*50bil = $17.5 billion. Is this remotely reasonable, or am I way off?

I think Facebook will issue new shares to the new investors so who owns the existing shares doesn't matter. The new valuation is determined only by the total number of shares before the deal, the number of shares being issued, and the size of the investment. Valuation = new value per share * total shares = (amount invested / # new shares issued) * (# existing shares + # new shares issued) Although they probably agree…

Right, but if the movie is to be believed, then Zuckerberg and several others have non-diluting shares. I'm wondering how much that restriction on the circulating share pool affects the valuation.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#124

Post by nitrogen » Tue, Jan 04, 2011, 5:29 AM UTC

afterburner wrote: post #86

borism wrote: post #85

Earlier quoted context omitted.

Yup, let's judge people by their former employers, not by their actions. I mean, Hank Paulson's decision not to bail out Lehman would have been totally OK, have he not been former Goldman CEO...

Not sure how many (if any) layers of sarcasm to strip away, so I'll just say: Hank Paulson's decision not to bail out Lehman was not OK regardless. His former employer simply might have informed that incorrect (for the US/world in general) decision. Simple bias; had GS been on the chopping block, I can personally guarantee he would not have advised letting it tank.

One good thing came from letting Lehman die: the creators of Despicable Me were able to label their Bank of Evil as "formerly Lehman Brothers."

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#125

Post by iphoneedbot » Wed, Jan 05, 2011, 5:55 AM UTC

organicgrant wrote: post #108

iphoneedbot wrote: post #76

Apples to Oranges comparison: Porsche -> Mkt cap 11.72B Volkswagen-> Mkt cap 54.59B

Yet Porsche owned/owns 75% of VW. Do your research.

You've missed the point. btw, VW owns Porsche now- after Porsche's failed take-over attempt.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#126

Post by il » Wed, Jan 05, 2011, 6:16 PM UTC

2arrs2ells wrote: post #94

mynameishere wrote: post #55

Earlier quoted context omitted.

If each user just clicks on one Facebook ad each year, that's $2/user/year right there. CPCs are not 2 dollars on facebook.

$1.50/user/year? That's what CPC was for my most recent Facebook ad campaign.

That speaks more to the quality of your Facebook campaigns than Facebook's profitability.

The guys actually spending significant money on Facebook are not paying more than 30-40 cents CPC.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#127

Post by sedachv » Wed, Jan 05, 2011, 9:39 PM UTC

kragen wrote: post #92

2arrs2ells wrote: post #49

Earlier quoted context omitted.

Why in the world are you talking about Facebook blackmailing users to earn $2/$3 per user? Advertising (and maintaining what's left of their reputation) is clearly fall more lucrative. If each user just clicks on one Facebook ad each year, that's $2/user/year right there.

Two reasons. First, I continue to not trust advertising as a long-term stable business model. If some piece of information is valuable to somebody, they'll tend to want to pay to get it, and they certainly won't want to be denied it simply because its publisher didn't pay a middleman enough. By contrast, if an advertiser is paying a middleman money to shove their advertising in your face, it suggests that you seeing…

"If you earn US$100 000 per year, Facebook could very likely get US$20 000 per year out of you with blackmail."

How exactly would that work? People keep their skeletons in their closets, not on Facebook. No one (aside from journalists writing for old people) cares that you have college party photos of you and your favorite beer bong posted on FB.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#128

Post by sedachv » Wed, Jan 05, 2011, 10:41 PM UTC

kragen wrote: post #10

Is that reasonable? Suppose that Facebook eventually needs to settle at a P/E of 10:1. Then it needs $5B/year of profits. If Facebook is like Microsoft in that it can maintain a high profit margin due to continuing to successfully exclude any competitors from its market, just as it has so far (in Microsoft's case, through a combination of government-granted monopolies, criminality, and consistently not fucking up; in…

You're providing a hypothetical conspiracy theory business model, and assuming that FB has a high profit margin. FB's revenues seem to come primarily from ads. No one knows how much money they're actually making from virtual currency.

Take a look at what FB actually offers its users: core services: photo sharing, video sharing, blogging, micro-blogging, instant messaging, event/group management. non-core services (apps): quizzes, casual games, horoscopes.

Sounds like any other company everyone knows (Yahoo)? The difference is that FB offers all this with a single login, and the (perceived) greater privacy offered for things you post online. Yahoo never even managed to implement a single login across all of its sites and acquisitions.

The problem is that just like Yahoo and Myspace, there's nothing stopping Facebook from losing users to other sites. The business model is to have a lot of visits from a lot of users and serving them ads that don't bring in much profit. That's a lot of risk, and the upside isn't that great.

I don't see FB moving to a paid premium model. Even if it did that, it wouldn't be that different from what AOL had 10 years ago.

There's just not that much value in what FB does, and not much from preventing others from taking that value away from them.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#129

Post by afterburner » Thu, Jan 06, 2011, 3:59 PM UTC

jongraehl wrote: post #121

afterburner wrote: post #86

Earlier quoted context omitted.

Not sure how many (if any) layers of sarcasm to strip away, so I'll just say: Hank Paulson's decision not to bail out Lehman was not OK regardless. His former employer simply might have informed that incorrect (for the US/world in general) decision. Simple bias; had GS been on the chopping block, I can personally guarantee he would not have advised letting it tank.

How are you so certain (that he would have treated GS differently)? What evidence would make you change your mind?

Human nature; exceptional behaviour from Paulson, which seems unlikely given the kind of person he had to become and loyalty he had to exhibit to get to be at the head of both GS and the Treasury.

Re: Goldman Sachs invests in Facebook at $50 Billion valuation

#130

Post by kayoone » Thu, Jan 06, 2011, 5:37 PM UTC

tybris wrote: post #80

kayoone wrote: post #75

how much does Zuck still own of FB ? I read 25% percent somewhere, is that true ? Hes almost up with the google guys in terms of net worth then.

From the article: > For Mr. Zuckerberg, the deal may double his personal fortune, which Forbes estimated at $6.9 billion when Facebook was valued at $23 billion. That would put him in a league with the founders of Google, Larry Page and Sergey Brin, who are reportedly worth $15 billion apiece.

Thx, they even compare it with the googlers aswell :)