Social networking site Facebook is now valued at $50 billion taking it ahead of companies like eBay, Yahoo and Time Warner as it raised $500 million from Goldman Sachs and a Russian investor, New York Times reported citing unnamed people involved in the transaction.
With this money, Facebook will now get more power to make new products, poach employees and perhaps even pursue acquisitions that too without being a publicly traded company.
Goldman Sachs’ investment also signals the growing might of Facebook. The investment is also likely to allow earlier shareholders including Facebook employees to cash out at least some of their stakes, the report said.
Facebook may now be under pressure to go public with the new money as did Microsoft and Google with their popularity of shares in the private market that forced them to go public.
However, Facebook’s executives have resisted such moves as its chief executive Mark Zuckerberg has brushed aside the possibility of an initial public offering or a sale of the company. “Don’t hold your breath,” he had said at an industry conference in November on the topic of going public.
The report cited people involved in the fund-raising effort suggest that Facebook’s board has indicated an intention to consider a public offering in 2012.
The stake by Goldman Sachs follows an inquiry by the Securities and Exchange Commission into the hot private market for shares in Internet companies including Facebook, Twitter, gaming site Zynga and LinkedIn, an online professional networking site.
The report said inquiry is focused on whether some companies are improperly using private market to get around public disclosure requirements.
Analysts estimate Facebook to be profitable with annual revenue of $2 billion although it does not disclose its financial performance even as the deal is likely to stir up a debate about what the company will be worth in the public market.
Goldman has invested $450 million, and Digital Sky Technologies, a Russian investment firm that had already sunk about half a billion dollars into Facebook, has invested $50 million, the report said citing people involved in the talks.