Goldman’s Sacks 0
Writing at Bloomberg, David Pauley dissects Goldman Sachs’s behind-the-scenes trading of Facebook in the “shadow stock marked.” He is skeptical of their valuation:
Investors with short memories will pay whatever the shadow market and Goldman Sachs, the prospective underwriter, say they should.
Back in 2000, Cisco Systems Inc., then already the dominant company in computer network gear, had a P/E approaching 200. It’s now 15.
There’s another even more down-to-earth problem for the company. Facebook is now seen by analysts as a threat to Google as a gatherer of ad revenue. Who’s to say a few years from now another startup won’t pose a similar threat to Facebook?
Based on Goldman’s past, it could easily be that they are betting against the investors in the shadows. They have done it before.
The “shadow” part of the “stock market” should provoke extreme caution.
Remember, in three-card monte, the marks always lose.
