$50 Billion? Hah! Insiders Say Facebook's Goal Is To Be The First TRILLION Dollar Company
Goldman Sach clients are buying $1.5 billion worth of Facebook stock at a $50 billion valuation. — Yesterday, Wedbush analyst Lou Kerner said that if Facebook were a public company, it would be valued closer to $100 billion right now.
Context & Ripple Effects
Facebook's private-market price has climbed on a steep arc in just over three years: the $15 billion round in November 2007 drew no outside takers, and by December 2010 shares were changing hands at a $56 billion valuation in a significantly oversubscribed secondary auction. Goldman Sachs' placement of $1.5 billion with its clients at $50 billion is the first big primary check at this scale — and it lands days after a Digits piece framed the company as the Google-of-its-era story circa 2004.
The trillion-dollar ambition in the headline is an insider rumor, not a confirmed target, but it fits the mood: Wedbush analyst Lou Kerner argues the $50 billion price actually undervalues the company, saying it would fetch closer to $100 billion on public markets.
First-order effects
- Goldman Sachs converts its client base into a distribution channel for Facebook equity, giving accredited investors access to a company whose last auction was already oversubscribed at a higher implied valuation.
- Kerner's $100 billion public-comps estimate hands bulls a ready-made argument that the $50 billion entry price carries a built-in private-company discount.
Second-order effects
- The gap between the $50 billion primary price and December's $56 billion secondary print puts pressure on both sides — buyers will push for the lower mark, holders point to the auction as the truer signal.
- Rivals and would-be competitors now face a rival valued near half of what Kerner thinks it is worth publicly, raising the bar for any acquisition or talent-pooling play against Facebook.
Third-order effects
- If mega-rounds like this become routine, the late-stage private market — not the IPO — becomes the venue where internet giants reach their defining valuations, with banks like Goldman acting as gatekeepers instead of underwriters.
- A trillion-dollar framing, even as unconfirmed insider talk, resets the reference point investors use to judge social-networking assets: the question stops being whether Facebook is worth $50 billion and starts being how large a consumer-internet platform can get before public markets ever price it.
The trend: Late-stage private placements are displacing the IPO as the moment when top internet companies establish their headline valuations, with investment banks recast as private-access brokers.