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FB IPO and Valuation
Posted on 5/4/12 at 1:44 pm
Posted on 5/4/12 at 1:44 pm
LINK
Wish I could get in this ahead of time and flip, but its another social IPO that is priced high.
If this IPO flops, it could have a significant impact on the overall market much like AAPL can have
I'm staying FAR away from any of these names
Wish I could get in this ahead of time and flip, but its another social IPO that is priced high.
If this IPO flops, it could have a significant impact on the overall market much like AAPL can have
I'm staying FAR away from any of these names
5
Posted on 5/4/12 at 2:12 pm to greenhead11
One of my co-workers thinks the market is looking for bad news and looking for a reason to pop. I agree with him to the extent of popping the new tech bubble, and I keep telling him that the FB IPO is the inflection point. I think the degree to which it could affect the overall market will be muted, and really not even close to AAPL's impact. I expect the various recent tech IPOs that just launched to be highly correlated with FB though.
Posted on 5/4/12 at 2:16 pm to kfizzle85
Linkedin has been on a tear up about 25% from their IPO.
Posted on 5/4/12 at 2:20 pm to C
Yeah they posted strong numbers yesterday. I think a stock like that will trade pretty strongly correlated with FB even though it really probably shouldn't, but I think every one uses FB (truthfully severely incorrectly in my viewpoint) as a barometer for monetization and growth capability of those companies.
Posted on 5/4/12 at 3:16 pm to greenhead11
Overvalued. How the company is valued close to 100 billion is beyond me. (based on their future earnings and growth)
Posted on 5/4/12 at 3:33 pm to Gujam8
quote:
How the company is valued close to 100 billion is beyond me.
Cause of what they have, which is access to 1/7 of the worlds population.
Posted on 5/4/12 at 4:00 pm to barry
On no planet can you justify their 100B valuation based on their financials. I will beat this horse until there is no horse left to beat: people think facebook is a start up company with start up growth potential; its not a start-up growth company, its almost a decade old and its historical growth is pretty unspectacular in and of itself, nevermind its more current growth (or lack thereof). IPOs and specifically tech IPOs are cash-out liquidity events for early investors, not capital raises to fund future growth.
The other argument is "once they figure out how to monetize blah blah." They figured out how to monetize it a long time ago, that's why they have revenue and earnings in the first place. I do not understand what operational catalyst people are expecting where they're going to all of a sudden be able to produce massive sums of cash when they've been "monetizing" their use base for 5 years and have nearly flat earnings growth over the past year. Its not like they go public and all of a sudden all these giant companies are going to be like "wait wait wait wait, you guys have access to 600M people?! Why haven't we heard of this company before, we'll pay you a ton for advertising!"
The other argument is "once they figure out how to monetize blah blah." They figured out how to monetize it a long time ago, that's why they have revenue and earnings in the first place. I do not understand what operational catalyst people are expecting where they're going to all of a sudden be able to produce massive sums of cash when they've been "monetizing" their use base for 5 years and have nearly flat earnings growth over the past year. Its not like they go public and all of a sudden all these giant companies are going to be like "wait wait wait wait, you guys have access to 600M people?! Why haven't we heard of this company before, we'll pay you a ton for advertising!"
Posted on 5/4/12 at 4:09 pm to kfizzle85
Eduardo Saverin is living the epitome of the OT lifestyle right now...
Posted on 5/4/12 at 4:19 pm to kfizzle85
quote:
On no planet can you justify their 100B valuation based on their financials. I will beat this horse until there is no horse left to beat: people think facebook is a start up company with start up growth potential; its not a start-up growth company, its almost a decade old and its historical growth is pretty unspectacular in and of itself, nevermind its more current growth (or lack thereof). IPOs and specifically tech IPOs are cash-out liquidity events for early investors, not capital raises to fund future growth.
The other argument is "once they figure out how to monetize blah blah." They figured out how to monetize it a long time ago, that's why they have revenue and earnings in the first place. I do not understand what operational catalyst people are expecting where they're going to all of a sudden be able to produce massive sums of cash when they've been "monetizing" their use base for 5 years and have nearly flat earnings growth over the past year. Its not like they go public and all of a sudden all these giant companies are going to be like "wait wait wait wait, you guys have access to 600M people?! Why haven't we heard of this company before, we'll pay you a ton for advertising!"
:kige:
:kige:
:kige:
Posted on 5/4/12 at 4:26 pm to kfizzle85
quote:
On no planet can you justify their 100B valuation based on their financials. I will beat this horse until there is no horse left to beat: people think facebook is a start up company with start up growth potential; its not a start-up growth company, its almost a decade old and its historical growth is pretty unspectacular in and of itself, nevermind its more current growth (or lack thereof). IPOs and specifically tech IPOs are cash-out liquidity events for early investors, not capital raises to fund future growth.
The other argument is "once they figure out how to monetize blah blah." They figured out how to monetize it a long time ago, that's why they have revenue and earnings in the first place. I do not understand what operational catalyst people are expecting where they're going to all of a sudden be able to produce massive sums of cash when they've been "monetizing" their use base for 5 years and have nearly flat earnings growth over the past year. Its not like they go public and all of a sudden all these giant companies are going to be like "wait wait wait wait, you guys have access to 600M people?! Why haven't we heard of this company before, we'll pay you a ton for advertising!"
He asked how they could get a 100 billion dollar valuation. I stand by my answer. Doesn't mean i think its a correct valuation
Also they have 900 million users now
Posted on 5/4/12 at 4:37 pm to GregYoureMyBoyBlue
quote:
Eduardo Saverin is living the epitome of the OT lifestyle right now...
If the shares price @ $35 Sean Parker's stake will only be $2.4B.
Posted on 5/4/12 at 4:41 pm to barry
quote:
How the company is valued close to 100 billion is beyond me.
If I read that, I am reading it as "how do you justify a $100B valuation," or how is it possible for that to be the correct valuation. Without sounding trite about it, your answer of
quote:, is something I'm just assuming basically every one is aware of. I did not take his question to be "so what does this company do" which is effectively what your answer was, and I took your answer to be "they do this and that's worth 100B." So if that's not what you meant then no big deal. 600M number was also purely for making a point, assumed that was rather obvious given the context of my post as well.
Cause of what they have, which is access to 1/7 of the worlds population
Posted on 5/4/12 at 5:36 pm to kfizzle85
Poor choice of words maybe, but I don't see how a 100 billion valuation can be justified looking at their financials.
Even if we go by future earnings, you can't justify that kind of valuation.
Just as an example, Apple trades at around 13 times its P/E on 2011 earnings. To get a 100 billion valuation, Facebook needs to trade at 100 times its P/E. I don't think it's growing that much faster than Apple.
Apple trades 3 times its revenue..to get 100b valuaion, facebook must be trading at more than 20 times its revenue. I don't think so.
Even if we go by future earnings, you can't justify that kind of valuation.
Just as an example, Apple trades at around 13 times its P/E on 2011 earnings. To get a 100 billion valuation, Facebook needs to trade at 100 times its P/E. I don't think it's growing that much faster than Apple.
Apple trades 3 times its revenue..to get 100b valuaion, facebook must be trading at more than 20 times its revenue. I don't think so.
Posted on 5/5/12 at 9:44 am to TheHiddenFlask
Fizz speaking truth
Posted on 5/6/12 at 7:28 am to greenhead11
quote:
Wish I could get in this ahead of time and flip, but its another social IPO that is priced high.
The Right Way to buy Facebook
"1. Don’t buy at the open." (My all-time golden rule)
Similarly, don’t pay too much attention to non-financial arguments that Facebook is sure to soar in value based on concepts like the network effect. The network effect refers to goods and services that become more valuable as more people use them. Facebook is an excellent example. The key is, these goods and services become more valuable to their users, and not necessarily to their investors.
This post was edited on 5/6/12 at 7:33 am
Posted on 5/6/12 at 7:20 pm to greenhead11
They are a viable business based on their decent ad revenues but nowhere near the 100bn IPO valuation. I'm actually concerned about the macro effects a 'disappointing' facebook could have on the market given how precarious this market recovery seems anyway. And what about the rest of their social and digital media buddies in tow?
LINK
quote:
What's more, Facebook's first quarter sales fell 6% from the fourth quarter of 2011. Revenue was unchanged from the fourth quarter of 2010 to the first quarter of 2011. Isn't it a little early for a company like Facebook to be showing signs of the "seasonality" that you usually associate with more mature, cyclical businesses?
quote:
Like Google, Facebook generates most of its money -- 82% in the first quarter to be precise -- from advertising.
quote:
Mainstream media firms like Walt Disney (DIS, Fortune 500), News Corp. (NWSA, Fortune 500) and CNNMoney parent company Time Warner (TWX, Fortune 500) don't trade at triple-digit earnings multiples. Neither does Google.
LINK
Posted on 5/6/12 at 7:27 pm to C
quote:
Linkedin has been on a tear up about 25% from their IPO.
Linkedin gets most of their revenues from their job post business, their premium account subscription and ads. In other words, paid services. Their valuation is not abstracts such as the number of users which is a useless stat because this does not always correlate to revenue and income.
Posted on 5/7/12 at 2:56 pm to kfizzle85
quote:
On no planet can you justify their 100B valuation based on their financials. I will beat this horse until there is no horse left to beat: people think facebook is a start up company with start up growth potential; its not a start-up growth company, its almost a decade old and its historical growth is pretty unspectacular in and of itself, nevermind its more current growth (or lack thereof). IPOs and specifically tech IPOs are cash-out liquidity events for early investors, not capital raises to fund future growth.
This is exactly what I've been telling excited clients. There is nothing to be excited about.
Posted on 5/8/12 at 9:58 am to kfizzle85
When you think about it, the $100B valuation only comes out to roughly $100 per FB user. Looking at it that way, it doesn't sound completely crazy, especially considering FB's attempts to monetize it's user base havn't been as aggressive to this point as most people think.
This post was edited on 5/8/12 at 10:04 am
Posted on 5/8/12 at 11:13 am to Scoop
quote:
When you think about it, the $100B valuation only comes out to roughly $100 per FB user. Looking at it that way, it doesn't sound completely crazy, especially considering FB's attempts to monetize it's user base havn't been as aggressive to this point as most people think.
The more aggressive they try to monetize their base more the more upset their base will come. Also, if their primary source of revenue is ads that is going to be trouble. I use facebook disconnect and ad block plus on google chrome and have never seen an ad on facebook. I didn't even realize they had ads until I was on campus and longed on using IE.
I think that once people realize Facebook is aggressively selling their information and tracking them they will move on to the next social network.
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