We are about to see a super-scam
The unholy alliance between Goldman Sachs and Facebook tsuggests that a lot of suckers are going to get skinned.
The GS modus operandi, as analysed in a famous Rolling Stone article, is to take a stake in an asset, then blow that asset class into a huge bubble, sell out before the bubble bursts, and watch the suckers lose their money
Last week GS paid £290m for a near 1% stake in Facebook. It is trying to sell Facebook shares to its clients.
In doing so, GS is predicating a value of $50 billion for Facebook. Annual revenues are thought to be $2 billion.
Facebook’s success depends on the favour of tens of millions of young people – a notoriously fickle customer base.
Friends Re-United was bought by ITV for £175m and sold three years later for £25m.
MySpace was bought by News Corp for £375m and sacked half it staff this week. It is believed News Corp wants out.
Bebo was bought by AOL for $850m and sold two years later for $6.5m.
Remember: Tulipmania, the South Sea Bubble, Aussie mining shares and the dot.com boom?
A few may make money on the up-swing if they sell in time.
But what we are about to see, my friends, is a scam.