An Investment Mistake ...One Should Never Make...
PrintListen to this Article
Clearly, no other cult has grown as much in recent times as Facebook. At last count, the social networking giant had membership that had swelled to a mind numbing 500 million. To put things in perspective, if thought as a separate nation, Facebook would be the third largest country on the planet.
Quite certainly then, if a firm of the calibre of Facebook is coming up for listing, one would certainly want to invest in it. But there is a small question that begs itself. To what extent would one be willing to go to become a shareholder in the company? Surely not to the extent that Goldman Sachs has gone we believe. Apparently, the world's largest investment bank has picked up a stake in Facebook that values the latter at a whopping US$ 50 bn!
Allow us to tell you why we think this one of the most ridiculous deals we have seen in recent times. You see, Facebook is expected to generate revenues to the tune of US$ 2 bn in 2010. Thus, Goldman Sachs seems to be valuing Facebook at an exorbitant price to sales multiple of 25 times! To give an indication, Google, which generates nearly 1,300% more revenues than Facebook trades a price to sales multiple of just 6.5 times. Mind you, the fact that Google's multiple also looks extraordinarily high is not even being considered here.
If you thought that brokers and investment banks like Goldman Sachs have your best interests in mind, this example would perhaps force a complete rethink. Make no mistake, by way of underwriting fees and its marketing and sales muscle, Goldman Sachs will no doubt make money from the deal. It will also try and ensure that when the IPO hits the market, the total valuation of Facebook is even more than US$ 50 bn. It is up to you to decide whether deals like these make any sense to you. As per us, such investments should be avoided at all costs. After all, isn't margin of safety the cornerstone of investment success?
Category : Students Zone | Comments : 0 | Hits : 650
NMC Notifies Medical Education reform 2020 The National Medical Commission (NMC), with an of aim affordable medical education has notified its first major regulation titled as 'Minimum Requirements for Annual MBBS Admissions Regulations 2020 to replace the Minimum Standard Requirements for Medical Colleges, 1999 of the erstwhile Medical Council of India (MCI). Applicability: applicable to all new medical colleges proposing to be established, and to the established medical col...
First let us tell you few facts about exams CA CS CMA examinations before moving on to the tips regarding its planning and preparation. ICAI established in the year 1949, has around 2.10 lakh members at present. More than one lakh students join the Chartered Accountancy course every year. ICSI established in the year 1980, has around 62,000 members at present and around 3.5 Lakhs students on the roll of ICSI. ICMA established in the year 1959, has around 70,000 member...
The most feared step in every student’s learning process is the exam. The two terms: ‘exams’ and ‘stress’ go hand in hand. When it comes to the preparation of national level examinations like CA, CS and CMA, students have a great challenge ahead of them because of various factors such as difficulty of the examination, competition, extremely less passing percentage, etc. Due to these reasons, the entire journey from being a student to being a professio...
Passing CA Exam and becoming CA is the dream of every CA Student. The Dream is not only of student but it is of many more associated with him/her like Parents, Relatives, Friends, Teachers, Neighbors, GF, BF, Spouse and Rivals too (Rivals prey for their failure). For fulfilling this dream Students do hard work day and night, study late, prepares notes, do brain storming and many more uncounted efforts but few of them able to crack the same. Why? A Student asked from himself/herself after result...
One Life…….Many Struggles A lot of people already predicted that this article is related to their own lives because they can easily relate themselves with the word in heading above “Struggles” Actually, the reason behind writing this article is just to pen down my own view on this word because I am suffering with this word too. Yesterday, I was talking to my friend and was telling her about my family, and then suddenly I told her “I lived a life full of struggl...
Comments