Facebook, Now Worth $50 Billion

Goldman Sachs Gives Facebook Mega-Funds

Posted by Michael Learmonth on 01.03.11 @ 12:09 PM

Goldman Sachs thinks Facebook is more than an Internet phenomenon — it’s a real business worth more today than Internet stalwarts like Ebay and Yahoo, as well as Time Warner and Boeing.

The New York Times reported the company is raising another $500 million, $450 million from Goldman Sachs and another $50 million from Russian investor Digital Sky Technologies in a deal that values the company at $50 billion. Goldman will also allow its clients to invest another $1.5 billion through a private investment vehicle.

AP Mark Zuckerberg’s social network is now
valued at $50 billion.

The new cash will be used to buy out employee shareholders, who are now very rich on paper and have been trying to make that wealth real by selling off some of their holdings in the secondary market. Facebook isn’t public but it will have to start disclosing financials to the SEC once it has more than 500 individual shareholders. The Goldman deal gives Facebook a way around this rule with an investment vehicle for Goldman clients, who will count as one shareholder.

“First, it gives them cash to continue to grow the business rapidly,” said Mike Lazerow, CEO of Buddy Media, a brand management platform for Facebook. “Second, it provides a commitment to buy additional shares from current shareholders of the business. This is important to provide liquidity to existing shareholders, including employees, without adding additional names to the capitalization table.”

As Henry Blodget noted, it’s sort of like a private IPO, in which Goldman Sachs gets to offer its clients a chance to invest in Facebook in a way that individual investors can’t, unless of course they can strike a deal to buy Facebook shares on the secondary market.

Aside from estimated revenues as high as $2 billion, AllThingsD’s Peter Kafka summarizes some of the metrics that have would-be investors so excited, from JP Morgan’s Imran Khan, who assembled them as part of his new 2011 forecast. Facebook now accounts for 10% of all time spent on the web in the US, for example, more than Yahoo (9%) and Google (4%), Mr. Khan said in his report.

Aside from buying up employee shares, Time reported CEO Mark Zuckerberg is looking for a campus-style new headquarters and Mashable reported that he’s checking out Sun Microsystem’s campus in Menlo Park.