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Facebook IPO

john.quinn

Sr. Refresher
Dec 2, 2009
979
580
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First Name
John
Can someone please tell me how a company's best revenues are $3.7B but the company is valued at $75B-$100B?

85% of it's revenues are from advertising, a dollar amount about 10x less than Google's $30B. And to boot? FB ad sales are "slackening," according to eMarketer.

AMAZING Social Network and "social" property!!

But how does that make it a good BUSINESS investment?

The really cool thing? (if you are a business) is that the Revenue Pressure Model is ON! once you are public. Look for major, major changes from FB this Summer to live-up to the hype.

Then again, if those changes mitigate a mass migration to G+, Pinterest, (Twitter??), or God Knows What, then....

Question: how did that whole Tech Bubble thing begin and end in the Late 90's??
 

kcar

Sr. Refresher
Jun 14, 2011
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B
Data, they can sell data and make billions alone.. You know how many companies and governments would love to buy that data.. A lot! It's not just personal info, there's much much more data Facebook has. They could prob sell the data right now to a few groups and pull $30 billion together. We're talking data on almost everyone on the planet, nothing can match it.
 
Reactions: Alex Snyder

bzweifel

Jr. Refresher
Oct 13, 2011
223
85
28
First Name
Blake
I will agree and disagree with you at the same time.

This doesn't make main street sense.
This makes perfect wall street sense.

Yes the share price has alot of hype built into it but it's not abnormal; Google did the same thing. It traded at an extremely high p/e for years until it grew into it's stock price.

Google preformance from Feb 2008- Feb 2012 [4 years]
Revenue +73%
Profit +115%
stock price +3%


Try to make some logic out of that... you can't. A stock is worth what people will pay for it. We are irrational creatures. If everyone is willing to overpay for it, are they really over paying? I would say "well, yes and no".

You have to trade the stock, not the company.
 
Reactions: 4 people

bzweifel

Jr. Refresher
Oct 13, 2011
223
85
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First Name
Blake
Thanks Blake!!

You just affirmed/reminded me how I lost a couple hundred thousand on tech stocks 12 years ago.

Perfect!
Im not sure if youre complimenting or insulting me lol.
 

john.quinn

Sr. Refresher
Dec 2, 2009
979
580
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First Name
John
I know NOTHING about the stock market, I assure you, other than its propensity for making smart people look dumb (and vice-versa!!) So I offer NO advice!!

But I kinda think I kinda thought like you when I was kinda your age and I kinda.... Well, past results are no indicator of future gains, right??
 

Chris Cachor

Sr. Refresher
Apr 29, 2011
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Chris
There's seems to be another web bubble forming (LinkedIn, Groupon, LivingSocial to name a few). I just read Living Social spends over $2 for $1 revenue. Ouch. There's real money being made at Facebook, but the valuation is silly. They'll try to monetize some more, but I feel like Facebook will eventually be like AOL. And now they have shareholders to answer to! This day and age, why even go public?
 
Reactions: 1 person

bzweifel

Jr. Refresher
Oct 13, 2011
223
85
28
First Name
Blake
I know NOTHING about the stock market, I assure you, other than its propensity for making smart people look dumb (and vice-versa!!) So I offer NO advice!!

But I kinda think I kinda thought like you when I was kinda your age and I kinda.... Well, past results are no indicator of future gains, right??
Just to clarify, I would not buy shares of Facebook in the IPO. There's no risk-reward. I was not saying that I agree with the valuation, I was saying that the over-valuation is 'business as usual' and not that big of a deal.







Tesla Motors Inc (TSLA) <== watch.

 

bzweifel

Jr. Refresher
Oct 13, 2011
223
85
28
First Name
Blake
And now they have shareholders to answer to! This day and age, why even go public?
FB was about to have more than 500 private shareholders (mostly company employees via private stock options). A private company is required to post quarterly financials once you pass the 500 shareholder mark. FB figured they may as well make some money from an IPO if they are going to be releasing financials to the public anyways.
 

joe.pistell

Uncle Joe
Apr 7, 2009
3,988
1,511
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Joe
Great understanding of the markets Blake, 2 thumbs up!

The market is forward looking (buy the rumor, sell the news)
The market is an auction

In any auction, you try to find "undiscovered future value" and buy it. FB is like gold lately. Everyone either has it or is asking about it. Where is your advantage? It's an auction... I see no advantage.


p.s. I just sold my gold and silver ETF's yesterday ;-)

p.p.s. ck out XOMA ($1.36). Biotech, Dollar cost averaging. I'll be adding if >$1.50 and again if >$2 with a $4.40 target (on my tweet yesterday)