Goldman Sachs "friends" Facebook
TEXT OF STORY
JEREMY HOBSON: Goldman Sachs is pouring a half a billion dollars into Facebook. The New York Times today reports that the granddaddy of investment banks is going young adult. In a move that boosts Facebook’s value to about $50 billion.
Our friend Marketplace’s Scott Tong is following this story for us this morning and he joins us now live. Good morning Scott.
SCOTT TONG: Good morning.
HOBSON: So Facebook getting some street cred, as in Wall Street. Does that make Facebook establishment now?
TONG: Well — Facebook has long been an established web destination. and now its business model may have graduated to grown up status. Facebook makes money by selling ads, and what are called virtual goods — say you play a game on the website, you want to faster car, you have to pay real money. I mean we’re talking half-a-billion users who now use the word “friend” as a verb.
I spoke just now to Justin Urquhart Stewart at firm Seven Investment Management in London. He calls the Facebook evolution “fascinating.”
Justin Urquhart Stewart: The very fact you then get someone like Goldman Sachs taking interest in it, now you realized this has just moved from something that’s interesting entertainment for the younger generation, into something that is a very serious business opportunity.
HOBSON: And Scott, we’ve heard a lot about whether Facebook is going to go public. Is it more likely now that it will go public soon?
TONG: Well here’s how the Securities and Exchange Commission rules work: as a company like Facebook gets more investors, and Facebook is getting it from banks like Goldman Sachs and people who buy shares from early venture capital firms, the SEC says you have to disclose your financial results when you have more than 500 shareholders. So the thinking is, once that information gets public, you may as well go public. So the CEO Mark Zuckerberg has said lately, don’t hold your breath.
HOBSON: Marketplace’s Scott Tong in Washington, thanks.
TONG: You’re welcome.
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