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Facebook's Fake Movie Is Influencing Valuation

|Includes: GS, Morgan Stanley (MS), NYT, TSLA, YOKU

Facebook's Fake Movie Is Influencing Valuation
Goldman pulls a fast one on some Russians
Two Sorkins are making it all taste just right

We don't think the Facebook movie is real. As in being "a totally true story".

There is just no way. This lie really bothers us. It's like the experience Malcolm Gladwell describes in his book 'Blink'. Something didn't feel right when we saw Sorkin pitch his flick and the more we keep digging around, the more we know someone is taking some pretttty big liberties to make a lot of money. Why not? We're just suckers, right?

And now Goldman's doing the same thing with investors. But they're using another Sorkin as their front man.

He's the one at The New York Times. By selling 10% of Facebook to some Russians a few weeks ago (like in April when they sold $2 billion worth of total crap to the germans and shorted it, earning them fraud charges which were eventually settled out of court). Goldman's attempting the exact same lay up.

Have someone - anyone - validate a multiple of 100x earnings, and have DealBook do the rest through incredible "non-fiction" articles sponsored by (seriously) 50 cent and Bill Gates. Wow. Ludicrosity.

If the movie was actually "the real story", Aaron Sorkin wouldn't be selling it so hard as "non-fiction" and pretending Zuckerberg had nothing to do with it. But Zuckerberg had everything to do with The Social Network'. Oh yes he did!

And he's got 30 billion reasons why he'd try to get away with such an insane stunt.

Aaron Sorkin himself told us drafts of the script were given to Facebook's communications director. Who would ever believe those drafts didn't make their way straight to the boss's office? Maybe the same people who think Facebook shares should trade at 100x earnings?

Andrew Ross Sorkin, the still-as-yet-unconfirmed-but-maybe-brother of confirmed-truth-twister Aaron Sorkin triggered our proprietary event-probability matrix which told us Andrew Sorkin is somehow in cahoots with Goldman and his (maybe) brother Aaron to promote the biggest IPO in US history through his esteemed position at The New York Times.

Not that Andrew Sorkin is lying. He's not. He's only making it possible for Goldman, Aaron Sorkin, Mark Zuckerberg and Facebook to exploit an opportunity to make some boys hundreds of billions of buckaroos.

Goldman's going to try to do with Facebook what they did to Youku, Tesla and a bunch of other IPOs: Goldman Sachs is going to pull their pants down. That's slang for 'egregious underpricing' and it's a very profitable way for Goldman to rake in the cake and get its jollies.

Why companies leave that much money on the table is the subject of much academic research and was a primary concern of GM on their IPO, according to media reports. That's the first time most investors had heard that issue raised about an IPO. Morgan Stanley led the GM deal - history's largest - in an orderly and controlled fashion. Goldman was not selected for the marquee mandate but still undercut all the other bankers' fees in a we-don't-win-so-you-won't-either move.

Goldman has it coming. Any connection between the Sorkins will emerge eventually and Goldman may very well be just an arm's length away.

When we wrote an even more onerously meandering blog last week on this same topic, we weren't aware Facebook still faced very serious legal risks. We were just telling everyone to get ready for a new hypermodern era of finance where feature films stretch the truth to help 26 year old males get intergalactic rich. It reminds us of the period when the first reality TV show 'Big Brother' came out and everyone wondered if it was, uh, for real. Reality programming now resorts to more and more elaborate games because people are bored with its fakeness.

When you see illusions of "reality" creeping into securities transactions which can mean the difference between ten or fifty or a hundred billion dollars, it's time to pay attention.

The facebook movie is not "non fiction". And we're not so poor that we can't pay attention.

Get this: Just ninety days ago, Paul Ceglia filed documents to claim ownership of 84% of Facebook. (link sourced below). There are also some twins that some say they have a pretty good chance at appealing their paltry $65 million settlement.

All of this puts Facebook's question of ownership up in the air. Aside from the $30 billion Zuckerberg stands to gain, who really owns Facebook is a pretty good motivation to make a movie...written by an ace at courtroom dramas! Shawwwing!

Maybe the Ceglia lawsuit is a "scam" like Facebook says. That would mean Ceglia forged the documents. Someone should make a movie about how Ceglia was tricked into thinking Zuckerberg signed those documents when actually it was Jesse Eisenberg. Don't call Fincher, though, he's had enough of high finance.  Aaron Sorkin might be interested, though, only because he could redeem himself by truthfully calling "fiction" fiction.

Ceglia's legal threat is what it seems: a considerable,unresolved risk. Why else would Goldman kick off the valuation party by selling 10% to a Russian investor? They could have got that ball rolling in the USA but chose a foreign investor instead to send a signal that is decidedly more vague. Tsk tsk.

But it's no wonder Russia was the only place an investor would fall for the valuation Goldman has established for Facebook. After pulling down the pants of by underpricing their IPO by 161% (!!) and earning egregiously high fees in the process, no rational US institutional investor would believe Facebook should trade at 100x earnings. It's outrageous.

Tesla is another example of another scalping Goldman gave to a naive IPO company that may have believed a one day pop equals success. Or just wanted to cash out regardless of what happens in the secondary market. There are lots of pre-IPO investors like that. Do the IPO, let the company worry about the rest later.

If Aaron Sorkin's movie was designed to be cleverly disguised propaganda, it achieves its goal of making things much harder for Paul Ceglia and future legal suits against Facebook to be successful.

But whether or not any lawsuit succeeds is irrelevant to Facebook's users. Everyone loves the site. It makes the world a better place.But not everyone loves Zuckerberg. And Goldman is playing with fire after almost getting burned on that mortgage fraud mess.

But they were saved by porn. I wonder who leaked that to the media. We're looking into it. Goldman's CEO Lloyd Blankfein has remained stoic the entire time saying Goldman "is doing God's work", whatever that means.

A mere 90 days ago, Facebook called Ceglia's lawsuit a "scam". We're wondering if Ceglia would describe 'The Social Network' in the same way. There was a time when Eduardo Saverin got turfed by Facebook so he went to see a writer by the name of Ben Mezrich. News of Mezrich's book "The Accidental Billionaires" got leaked and prompted Zuckerberg to settle with Saverin, allowing him to retain 5% of the company, currently valued at $2.5 Billion. This is true, not "non-fiction". Facebook wasn't going to let anyone write a movie that might let someone tell the story in any voice but their own. They learned that costly lesson once.

We'd love to say no one is lying, but we can't. We know Aaron Sorkin has lied.
We also think Zuckerberg is exactly like Goldman - both of them use the infinite legal intercept to brush up so close against untruth thatit can be too close to call. But it's a pattern that happens time and again. Probability matrix activated. Beep beep.

All of us know how easy it is to tweak the meaning of things. It just depends on who you're talking to. For example, friends of a married man might refer to his partner in an extra-marital affair as his true love, girlfriend, mistress, special friend, boff buddy, booty call, second wife, woman she's into, part-time lover, other girl, home-wrecker, or gold-digger. A movie that sweeps awards clarifies any of the grey areas for everyone interested. It frames it. She’s no longer a home-wrecker because she’s his true love.

Ceglia might be the true love turned gold-digger. Nassim Taleb has written some great stuff on how hard it is to know the past. He's right. But, as he wisely points out, there is only one unique series of events. Not three. One.

Aaron Sorkin is the perfect fall guy. Look how Goldman threw Fabrice Tourre under the bus. And Lloyd Blankfein told the senate right to its face that he didn't know about the decision to hang Tourre out to dry by exposing his personal sexual emails to the committee. The committee caught onto this. Lloyd said he wasn't involved. Ya, right Lloyd. That's like Zuckerberg saying he had nothing to do with the 'The Social Network'. Preposterous. Pffft. Plausible denial of culpability.

Tourre took the fall for Goldman in the Timberwolf CDO long/short advisor/prop trading scandal. But he's been taken care of. Aaron Sorkin is set no matter what; he's just a reckless guy who loves the biz. But man we hate to see him sell out.

Rather grotesquely, Aaron Sorkin compared his film to Shakespeare and others
way out of his league. Ok. For us, the only line from old Billy boy that came to mind was "I think you doth protest too much". And then we saw the other Sorkin deliver a one-two punch about how Bill Gates and Fifty Cent think Goldman is soooo great under the guise of a Facebook headline and we knew the jig was up.

Our prediction that Facebook will IPO in March by Morgan Stanley has not changed.

Morgan Stanley would never handle things like this. Refer to Google's IPO for how it's done.

-- Follow us on twitter @jackp27

Scanned court documents of Ceglia's contract with Zuckerberg

14 October 2010: Facebook says Ceglia is a "scam"

Sources related to facebook's current legal battles:

Mezrich radio interview on World Conspiracy Radio
Producer Scott Rudin talks with Facebook about the film

See Steve Eisman's quote that he thought David Einhorn's book was "like reading porn"? When we find corporate propaganda like this we might be apt to employ a similar quote.