Will the Facebook Inc (FB) News Finally Get GSV Capital Corp (GSVC) Back to Book Value?

Exit values

Another issue with the Facebook Inc (NASDAQ:FB), Groupon Inc (NASDAQ:GRPN), and Zynga Inc (NASDAQ:ZNGA) positions is that the company remained in those positions long after the IPOs. The intention all along has been the investment in private firms. Any investor is already capable of purchasing shares in those stocks without having to pay the substantial management fees. With the recent rally in Facebook, clearly the market hopes management hasn’t unloaded shares yet. Unfortunately the Groupon Inc (NASDAQ:GRPN) shares were unloaded during Q1 when that stock traded in the $5 range while now sitting at nearly $9. Not to mention, both stocks have multi-billion dollar valuations that somewhat defeat the purpose of a fund that is suppose to be focused more on small firms.

Twitter potential

The goal has to be for a Facebook exit to be near in order to rotate that money into more promising private firms such as Twitter that normal investors don’t have access to for investment. Twitter could ultimately be the make or break investment for the stock. With the success of Twitter and potential to match Facebook, the significant investment in that firm at a valuation of around $8 billion could be the home run GSV Capital Corp (NASDAQ:GSVC) needs for the major gains originally envisioned by investors.

With Facebook soaring to a value of $80 billion, a much higher Twitter valuation is very plausible now. Such a move would not only increase the book value of GSV, but it would likely allow the stock to trade closer to a book value that might be significantly higher.

Bottom line

GSV Capital still provides investors the opportunities to invest in private firms with huge potential such as Twitter or Palantir Technologies. The failures of Zynga Inc (NASDAQ:ZNGA) and Groupon are quickly moving into the distant past while the uplifting news from Facebook could finally push the stock back to book value. If the company can finally hit a home run with one of the potential IPOs, this stock will reward investors with big gains.

Mark Holder and Stone Fox Capital Advisors, LLC own shares of GSV Capital. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Will the Facebook News Finally Get GSV Capital Back to Book Value? originally appeared on Fool.com is written by Mark Holder.

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