Well, that didn't last very long.
In case you still had lingering doubts about the investing class's appetite to buy a piece of Facebook, follow the money to find out the answer: the Wall Street Journal reported late Wednesday that Goldman Sachs was so flooded with demand for its recent investment solicitation to investors seeking to buy into the social-networking site, that it has decided to stop taking new orders, according to sources familiar with the situation.
Earlier this week, word leaked that Goldman had ponied up $450 million--Digital Sky Technologies of Russia, a partner in the deal, accounted for another $50 million--to acquire a position in Facebook. That paved the way for Goldman to invite clients willing to invest at least $2 million to buy equity in Facebook, which is still private.
Goldman is likely to reap a fortune from fees resulting from any Facebook stock sales. Investors must pay 4 percent upfront frees to the investment firm as well as 5% on any future gains, according to the Journal.
The creation of an investment vehicle has reportedly spurred an Securities and Exchange Commission inquiry of disclosure rules governing deals where investors are able to buy shares of private companies. Were it a public company, Facebook would be valued at around $50 billion, according to estimates.
Current regulations require companies with 500 or more shareholders to publicly report financial information. Facebook's deal with Goldman Sachs creates a special fund that allows the social network site to stay under that threshold even though some investors will be able to buy up to $1.5 billion in Facebook shares. The SEC declined to comment.
Goldman's investment underscored Wall Street's endorsement of Facebook's potential to make money in online social networking. Facebook is considered to be twice the value of Yahoo and about equal to what well-established names such as Boeing and Kraft Foods are worth on the open market. What's more, the cash infusion buys time for Facebook to keep its books private and not have to worry about the vagaries of the market.