Facebook has reportedly landed a $500 million investment from Goldman Sachs (NYSE:GS) and a Russian investor that places a $50 billion implied price tag on the social-networking giant.
According to The New York Times, Wall Street titan Goldman and Russian investment firm Digital Sky Technologies invested $450 million and $50 million, respectively. Digital Sky previously invested half a billion dollars in Facebook in a deal that gave the company a valuation of just $10 billion.
The latest investments highlight the growing demand for shares of Facebook ahead of the company‚Äôs expected initial public offering. Citing ‚Äúpeople involved in the fund-raising effort,‚ÄĚ the Times reported that Facebook‚Äôs board has indicated an intention to consider an IPO in 2012.
The $50 billion price tag on Facebook implied by the Goldman investment means the Palo Alto, Calif.-based company has a higher valuation than big-name companies like auction site eBay (NASDAQ:EBAY) and media heavyweight Time Warner (NYSE:TWX). It's estimated that Facebook has revenue in the range of $2 billion annually, and many analysts question the company's ability to monetize the site.
Facebook creator Mark Zuckerberg could use the new money to recruit new employees, develop new products or even pursue acquisitions, the Times reported. Like the earlier Digital Sky investment, the deals could also allow employees to cash out some of their stock.
Last month, reports emerged that the Securities and Exchange Commission has begun an inquiry into the hot private market for shares of tech companies like Facebook, Twitter and LinkedIn. The inquiry could force those private companies to release more financial information on revenue and other metrics.
According to the Times, Goldman has the option to sell up to $75 million of its new stake to Digital Sky. The deal also could help the bank be the one to eventually take Facebook public.
Goldman is expected to raise as much as $1.5 billion from investors for Facebook as part of the deal, the Times reported.
Goldman is also reportedly creating a ‚Äúspecial purpose vehicle‚ÄĚ to allow its high-net-worth clients to invest in Facebook. Because the vehicle would be considered just one investor, the unusual move could be a way to get around an SEC rule requiring companies with more than 499 investors to disclose their financial results to the public.