Facebook Worth $50B After Goldman Sachs Investment

Facebook Jan. 21 grabbed $1.5 billion in funding from Goldman Sachs and Digital Sky Technologies, stoking the social networking for gritty competition vs. Google in 2011.

Facebook said Jan. 21 it has raised $1.5 billion in funding from Goldman Sachs and Digital Sky Technologies, which brings the social-networking company's value to $50 billion.

Goldman Sachs clients overseas invested $1 billion in Facebook Class A common stock in a funding round that closed Jan. 21. The latest investment follows a $500 million infusion in December by Digital Sky Technologies, the Goldman Sachs Group and funds managed by Goldman Sachs.

Facebook could accept $375 million to $1.5 billion from the Goldman Sachs overseas offering. While the offering was oversubscribed, Facebook decided to limit the offering to $1 billion.

Facebook said in a statement that, while it has no immediate plans for the funds, it took the money to bolster its cash reserves and to "build and expand its operations."

The funding round is overshadowed by controversy in the investment world. Goldman limited the offering to overseas investors because the firm was concerned that recent media coverage could have violated securities guidelines installed to rule private investments. The move angered Goldman's U.S. clients.

Facebook is not a public company; however, it was revealed this month that regulators are concerned by the considerable amount of interest it, LinkedIn and other Internet companies were drawing in privately traded shares.

The Securities and Exchange Commission requires companies with more than 499 shareholders to disclose financial information whether they are publicly traded or not.

Facebook said it expected to have more than 500 shareholders in 2011, and many expect the company to schedule an initial public offering by April 30, 2012, because it will have to disclose its finances under SEC rule.

That date comes 120 days after the first fiscal year in which a company exceeds the 500-shareholder threshold. Facebook's fiscal year ends Dec. 31, so the latest possible date would be April 30, 2012.

A Facebook IPO would be the hottest since Google went public in 2004, ironically under similar circumstances regarding the 500-shareholder threshold.

With 600 million-plus users, whose user engagement exceeds the amount of time spent online at Google and other Internet destinations, the social network has emerged as a powerful rival on the Web.

The company's online advertising revenue has grown exponentially as well, rising to $1.86 billion in 2010 from $740 million in 2009.