A one-page investment profile appears to have gone out to investors who expressed interest in Goldman Sachs’ offering of Facebook shares. No one at the companies can officially confirm nor refute reports from sources that requested anonymity when leaking details to the media. If this deal weren’t private, we’d have a lot more certainty about what’s going on.
Without seeing the offering document ourselves, we can’t fact check any of the information that’s circulating. So we’re taking it all with a grain of salt, and highlighting for you here the most novel details being reported.
For starters, the Goldman Sachs memoranda states that Facebook already has 600 million users, according to Business Insider. We suspect that number is a rounding-up by the bankers rather than an official tally by the social network.
And, at the very end of the offering document, Goldman Sachs offers a disclaimer that Bloomberg News quotes as, “GS Group may at any time further reduce its exposure to its investment in Facebook (through hedging arrangements, sales or otherwise), without notice to the fund or investors in the fund.”
That brings to mind a stock market equivalent of what happens when your mortgage lender your loan to another bank — only here the private investors would receive a letter saying that another institutional investor has become the custodian of the shares. This could refer to derivatives transactions, such as shorting the Facebook stock. What else would serve as a hedge?
Reports have also surfaced to the effect that Goldman briefed the SEC about the deal before word of it leaked to the press in the first place. Perhaps such a briefing constitutes the full extent of what the media has called an investigation of buying and selling private stock in Facebook — mind you, we’re not saying the newest revelation makes the prior reports inaccurate.
And even if the latest transaction were to bring the number of official shareholders in Facebook to 500, triggering the requirement to disclose finances publicly, the social network wouldn’t have to do that until April 29, 20o12; the rule sets a deadline of 120 days after the end of a company’s fiscal year, as Kara Swisher brilliantly points out on AllThingsDigital.
Facebook’s fiscal year follows the conventional calendar, ending December 31, and beginning to report activity at the end of the next quarter would put the social network on the same type of reporting schedule that public companies follow. By the time April 29, 2012 rolls around, the company might be closer to its thresholds, whatever they are, for going public.
And it seems that nothing Facebook could possibly disclose would dissuade prospective investors from wanting to buy the stock. A Wall Street Journal blogger humorously points out how the language in Goldman’s first message to clients about the investment opportunity resembles some of the spam she has personally received. We don’t see as much of a resemblance, but duly note the big picture: People are so eager for this opportunity that they ignore possible risks.
Readers, what do you make of all these revelations about Facebook, Goldman Sachs, the SEC and possible transactions? Does any of this affect whether you crave the investments offered to the wealthy? While we’re at it, how would you go about hedging an investment in Facebook?