The latest, much-anticipated, wave of promising internet / technology players going public seems suddenly now underway. LinkedIn went 2 weeks ago, with considerable success I might add). Perhaps trying to strike while the iron is hot (read: before it cools off), Groupon filed for an IPO yesterday, as did Pandora. How far behind can Facebook be?

Would you be a buyer of these newish endeavors, and if so which ones? Can they develop long-term sustainably profitable business models? Or, are they mostly just hype - a developing bubble doomed to burst before too long ala 2000? Which ones will still be around as major business and/or social players in 5 years?

Fool me once, shame on me.....

I lost too much in the 90s tech bubble fiasco. Got 'in' late and reluctantly..against my better judgement.

Won't be doing that again.

What exactly is the point (from a money-making point of view) of FaceBook anyway? Groupon I can see some value in, but definitely not FB, LinkedIn, etc. Won't invest in any as I'm a poor wage slave. :-(

What exactly is the point (from a money-making point of view) of FaceBook anyway? Groupon I can see some value in, but definitely not FB, LinkedIn, etc. Won't invest in any as I'm a poor wage slave. :-(

Advertising, same reason Google has became so massive.

Facebook IPO Valuation Could Top $100 Billion: Sources (http://www.cnbc.com/id/43378490)

Facebook, the social-networking site that is one of the most closely-watched private companies in the world, is likely to go public by the first quarter of 2012, say people familiar with the matter, at a valuation that could be pegged at north of $100 billion.

The company’s IPO, were it to happen by next spring, would probably be triggered by a section of the 1934 Securities and Exchange Act known as “the 500 rule,” these people say.

Essentially, the rule mandates that once a private company has more than 500 investors, it must begin releasing quarterly financial information to the Securities and Exchange Commission, just as public companies do.

I would buy in as fast as I could. My reason is simple.

When cable TV came out I said "No effing way people will pay for TV when you can get it free. It is a flash and will be gone by 1978."

Then when cell phones came around I said "No damn way this cell phone crap will make it. No one is that damn important they need a phone in their car and no one is going to want to carry around a damn phone all the time."

Not to be outdone when Blackberry came out I said "Who the hell needs to get email and internet on their phone! Stupid idea."

Not satisfied, I said "Yahoo, Earthlink, Amazon.com? They have no earnings! The PE ratio would be retarded. No one will buy that crap."

So now I see Facebook go public, I think it is retarded and worthless as an investment. Given my past track record that is all I need to know and I would buy it, buy all I could get. Of course as soon as the frenzy drives it up to 400% of its IPO I would sell it and maybe even short some of it and wait for the fall.

Of course no regular person can get in on these IPO's so it doesn't matter. By the time the shares hit the open market the $18 IPO offer will be trading at $60.

Pandora's IPO Prices Through the Roof — $16 a Share (http://www.cnbc.com/id/43402447)

Online-radio service Pandora priced its IPO at $16 a share, far higher than expected, putting its market cap at $2.6 billion.

The company's value has been quickly inching up on the heels of LinkedIn's IPO — today's price is up from the $10-$12 per share the company floated last week, which was three bucks higher than the range the company proposed the prior week.

Pandora's IPO Prices Through the Roof — $16 a Share (http://www.cnbc.com/id/43402447)

$2.6B is insane. Some servers, some lisences and air talent? Seriously?

Facebook hires former Clinton press secretary (http://www.cnbc.com/id/43408266)

NEW YORK - Facebook has hired Joe Lockhart, who served as press secretary during President Bill Clinton's second term, as vice president of global communications.

The 51-year-old Lockhart will start on July 15 in his new post. He will move to California from Washington, D.C.

$2.6B is insane. Some servers, some lisences and air talent? Seriously?

My gut reaction would be to agree with you. I haven't read any of the information filed in association with the IPO though, so that initial reaction probably isn't worth much.

It has traded up to about $23 this morning though, so that would put the value closer to $3.7 Billion.

Pandora is trading around $16.25 now and was actually below the IPO price earlier today.

Pandora is trading around $16.25 now and was actually below the IPO price earlier today.

Holy ####! After all these years and misjudged investments I finally got one right?

Facebook Gearing Up for 2012 IPO (http://www.cnbc.com/id/45470637)

Facebook, the world's largest Internet social network, is preparing for a initial public stock offering next year, according to a source familiar with the matter.

Facebook is exploring raising $10 billion, the Wall Street Journal said on Monday. It hopes the offering will value the company at more than $100 billion, according to WSJ, which first reported the story.

Also:

Facebook Settles Privacy Case With US FTC (http://www.cnbc.com/id/45484804)

Facebook will be required to get user consent for certain changes to privacy settings as part of a settlement of federal charges that it deceived consumers and forced them to share more personal information than they intended.

The settlement with the U.S. Federal Trade Commission will also subject the company, which is reported to preparing a $10 billion initial public offering, to 20 years of independent audits.

"I'm the first to admit that we've made a bunch of mistakes," co-founder Mark Zuckerberg wrote in a lengthy post on the company's official blog on Tuesday.

Is Facebook Worth Over $100B? - CNBC Video (http://video.cnbc.com/gallery/?video=3000059698)

In short: Yes, and I tend to agree.

We're waiting on Facebook's initial filing which, reportedly, will come today.

I would buy in as fast as I could. My reason is simple.

When cable TV came out I said "No effing way people will pay for TV when you can get it free. It is a flash and will be gone by 1978."

Then when cell phones came around I said "No damn way this cell phone crap will make it. No one is that damn important they need a phone in their car and no one is going to want to carry around a damn phone all the time."

Not to be outdone when Blackberry came out I said "Who the hell needs to get email and internet on their phone! Stupid idea."

Not satisfied, I said "Yahoo, Earthlink, Amazon.com? They have no earnings! The PE ratio would be retarded. No one will buy that crap."

So now I see Facebook go public, I think it is retarded and worthless as an investment. Given my past track record that is all I need to know and I would buy it, buy all I could get. .

So, given that track record, that is a don't buy recommendation, yes? :lol:

Not bashing you. I have the same record. Point being, whatever I do is wrong even when I do opposite of what I think.

:stupid:

Facebook's initial filing (http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm) was just posted. Many details of the IPO haven't been decided and reported yet, but this prospectus should tell us all the stuff we've wanted to know about (the business of) Facebook.

Headline details: $3.7 Billion in revenue in 2011 and $1.0 Billion in net income, up from $2.0 Billion and $0.6 Billion in 2010; 845 Million monthly active users and 483 Million daily active users; 100 Billion friendships

Morgan Stanley will be the lead underwriter with other underwriters being: JP Morgan, Goldman Sachs, Merrill Lynch, Barclays, and Allen and Company. The ticker symbol will be FB, but we don't know what exchange it will trade on yet.

A letter from Mark Zuckerberg starts on page 67 of the prospectus. It's sort of a mission statement / company philosophy overview. I think the main takeaway for potential investors should be: They aren't going to be focused primarily on making money for now, they're going to continue to be focused on evolving and fostering this great resource for the benefit of society. (Those are not Mr. Zuckerberg's words.)

Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.

We think it’s important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do. I will try to outline our approach in this letter.

At Facebook, we’re inspired by technologies that have revolutionized how people spread and consume information. We often talk about inventions like the printing press and the television — by simply making communication more efficient, they led to a complete transformation of many important parts of society. They gave more people a voice. They encouraged progress. They changed the way society was organized. They brought us closer together.

Today, our society has reached another tipping point. We live at a moment when the majority of people in the world have access to the internet or mobile phones — the raw tools necessary to start sharing what they’re thinking, feeling and doing with whomever they want. Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries.

There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on.

...

Okay, we've got a pretty good idea of what Facebook's IPO is going to look like now. Here's their latest S-1 (amended) (http://www.sec.gov/Archives/edgar/data/1326801/000119312512208192/d287954ds1a.htm) filed yesterday. This will take you to their roadshow video (http://facebook.retailroadshow.com/launch.html) trying to sell Facebook to investors.

Some of the important points:

They'll be offering about 337 million Class A shares at a price anticipated to be between $28 and $35. I'd guess the initial price ends up being closer to the high end of that range. 180 million of those shares are new issuance from Facebook (i.e. the proceeds from their sale go to Facebook), the rest of the offered shares are from existing stockholders. There's also an over-alloment option for about 51 million more shares - so a total of about 388 million shares could be sold at the IPO. By my calculations, that would represent about 14% of the ownership interest of the company. At the midpoint of the price range ($31.50), Facebook would raise about $5.6 Billion through this offering. If the shares price at the high end of the range and the extra shares are sold, Facebook should raise closer to $6.5 Billion.

A point I believe I made in another thread: Anyone considering investing in Facebook either at the IPO (if they have the opportunity) or thereafter should do so fully understanding one thing. Facebook will remain, speaking practically, Mark Zuckerberg's company. He will retain essentially complete control over important decision making. That will be true even though he does not (and will not) hold a majority of Facebook's ownership interest. This is because (1) he owns a lot of Class B shares (which are equal to Class A shares with regard to the ownership interest they represent, but which are entitled to 10 votes each rather than the 1 vote each that Class A shares are entitled to) and (2) he holds an irrevocable proxy regarding the voting rights of many other shares that belong to other people (mostly Class B, but some Class A). The result is that, after the IPO, Mr. Zuckerberg will still control about 57% of Facebook's voting power. Some investors might see that as a good thing, some might see it as a bad thing - but all would-be investors should be aware of it.

A few notes about the business' operations. As of the last quarter (March 31, 2012), Facebook reported 901 million monthly active users, 526 million daily active users, and 488 monthly active users that use mobile products (I think this last metric could end up being pretty important for a number of reasons, but I kinda wish they would report it for daily active users).

They reported $1.058 Billion in revenue for the 1st quarter of 2012, which is up from $731 Million for the year prior quarter. More than 80% of that was advertising revenue, the rest was from Facebook Payments (i.e. its system for making payments on the Facebook Platform - e.g., it keeps up to 30% of the money that people spend on Zynga games). Net income was $205 Million, down from $233 Million. The prospectus I linked at the top of the post has more details.



The high end of the anticipated price range would value Facebook at about $96 Billion. Anyone have thoughts? Is it a good (hopefully long-term) investment at that level?

I see a ton of upside potential for Facebook (e.g., I think one potentially big revenue stream could be location-triggered and/or time-dependent direct to mobile device advertising: e.g., based on your likes or those of your friends, an ad - or even a 10% off offer - might pop up on your mobile phone or tablet when you happen to be in the area of a particular restaurant at lunch time). But I also see a number of headwinds that just can't be ignored. I'm not sure where Facebook goes from here - it could become one of the most important and profitable companies in the world, or its relevance could slowly fade. It's going to depend on execution and the big picture decisions that Mr. Zuckerberg makes in the next few years. Do we trust him to make the right ones? It will be interesting to see what he does.

It seems that demand for Facebook's IPO has been strong. It has increased the number of shares that will be available through the IPO to about 421 million (with about 63 million more available for over-allotments) and increased the IPO price target range to $34 to $38 per share. I continue to believe it will price near the top of the range and possibly even above it. So Facebook itself could raise close to $7 Billion through this offering, while existing shareholders could receive another $11 to $12 Billion (good day for the taxman :smile:). A $38 share price would value Facebook at over $100 Billion. Shares are expected to start trading on Friday on Nasdaq under the ticker symbol FB.

Here is Facebook's most recent amended S-1 (http://www.sec.gov/Archives/edgar/data/1326801/000119312512235588/d287954ds1a.htm).

Oh... and from the Perfect Timing Department there's this:

GM Says Facebook Ads Don't Pay Off - WSJ.com (http://online.wsj.com/article/SB10001424052702304192704577406394017764460.html)

General Motors Co. plans to stop advertising with Facebook Inc. after deciding that paid ads on the site have little impact on consumers' car purchases, according to a GM official.

...

GM spent only about $10 million last year to advertise on Facebook, according to people familiar with the matter. That is a fraction of GM's total 2011 U.S. ad spending of $1.8 billion, according to Kantar Media. It is also a tiny share of Facebook's total 2011 revenue of $3.7 billion, most of which was advertising sales.

The IPO price was set at $38. It looks like trading will begin at 11 am today.

Wow! It's now trading at the IPO price and looks like it will break below it. You could have gotten pretty long odds that that wouldn't happen. Retail investors can get just as good a deal as those who had access to the IPO.

Anyone holding out some hope that the FB IPO would result in any DJIA bounce would appear to be facing disappointment. Its down to 12400 and continuing its week-long slide.

Wow! It's now trading at the IPO price and looks like it will break below it. You could have gotten pretty long odds that that wouldn't happen. Retail investors can get just as good a deal as those who had access to the IPO.

GM shorted it.


:evil:

Anyone holding out some hope that the FB IPO would result in any DJIA bounce would appear to be facing disappointment. Its down to 12400 and continuing its week-long slide.

If anybody thought that they may have been coo coo for cocoa puffs to begin with. I'm surprised the DJIA has held up as well as it has today (and spent most of the morning in positive territory) in light of the Spanish bank downgrades. The Asian markets got hammered overnight.

If anything, the tepid interest in FB at this price level dragged the American equity markets down (particularly Nasdaq).


Wow! It's now trading at the IPO price and looks like it will break below it. You could have gotten pretty long odds that that wouldn't happen. Retail investors can get just as good a deal as those who had access to the IPO.

The price has recovered and is now above $40. The underwriters came in in force at $38 to support the price and make sure it didn't fall below the offering price - there was huge bid volume at exactly $38.

If anybody thought that they may have been coo coo for cocoa puffs to begin with. .

I don't ask for the credentials or medical health certificates from those who write all the financial stories..I just read 'em sometimes. I have noticed that some of those clowns will look for signs of hope in the darndest places sometimes.... :lmao:

Kinda fizzled for all the hype. And now I've seen several financial types say "yeah..who expected otherwise? FB is an empty bag..where's the value?"

That's what I thought too..it reminded me of the old dotcom days more than anything. All fluff..no product..no substance.

Facebook shares have broken issue, trading down to about $33 this morning. From the underwriter's perspective, this is a disaster. But I'm actually a bit happy about it (though I don't think I would be if I owned FB shares :lol:). For once, the insiders aren't getting free money just for being among the insiders (i.e. that had access at the IPO price). They weren't able to convert their (perhaps well earned) status and advantages into instant profit on the backs of the average joe investor.

As for Facebook and the original shareholders that sold in this IPO, it seems that they did very well - they were able to squeeze out as much value as was possible (and, seemingly, more than they should have been able to).

Those things said, I'm quite surprised that the underwriters didn't come out in force this morning to defend the IPO price ($38). Is it possible that they used up all of their ammunition defending it on Friday? I find that hard to believe - they had a good sized over-allotment to work with.


Kinda fizzled for all the hype. And now I've seen several financial types say "yeah..who expected otherwise? FB is an empty bag..where's the value?"

That's what I thought too..it reminded me of the old dotcom days more than anything. All fluff..no product..no substance.

Facebook, the business, is certainly not an empty bag. Unlike some IPO's, it was actually making money before it went public. The valuation here was just huge - seemingly greater than what the market is willing to accept. At $38, we were looking at the company trading at something like 100 times trailing earnings. That's pretty darn steep. The company has a lot of growing to do to justify that valuation - and the business is not without significant headwinds. If the float had been much smaller, perhaps the lack of availability of the stock would have combined with the hype (and fondness for the company among many users) to support this kind of huge valuation. But they put a ####-ton of ownership interest out there from the beginning, enough to overcome the hype and leave enough would-be investors paying attention to the enormity of the valuation.

It should be noted as well that the float is going to increase significantly in 3 months and then again in 6 months. If the stock is struggling right now, there's good reason to be worried about how well it can hold up when there's so much more theoretical supply (though some of those early investors whose stock will be freed up for sale might, having already made a good chunk of change in the IPO, be willing to hold on to it for a longer term hoping to see its value grow as the companies earnings do - and a lot of the shares belong to Mr. Zuckerberg and others that aren't likely to sell any time soon).

Who knows, five years from now this valuation might look like a steal and people might be kicking themselves for not getting in early. But, that's far from a certainty, especially considering that Mr. Zuckerberg has been pretty clear that making tons of money is not his short term goal for the company. I'd be willing to take the chance for the right valuation. The question is, what is it? The market is clearly saying that $38 (i.e. $100+ Billion) is too rich. That doesn't mean the market thinks Facebook is an empty shell though. It's likely to become one of the top 3 or 4 tech businesses in the world. I'd include it with Apple, Microsoft, Google and perhaps Amazon as likely to be the 5 most important going forward.

The valuation here was just huge - seemingly greater than what the market is willing to accept. At $38, we were looking at the company trading at something like 100 times trailing earnings. That's pretty darn steep. The company has a lot of growing to do to justify that valuation - and the business is not without significant headwinds.

Why I called it an empty bag.

I (and many of the pundits that weighed in) might be wrong, but I just don't see the value now and I don't see it getting better either.

Why I called it an empty bag.

I (and many of the pundits that weighed in) might be wrong, but I just don't see the value now and I don't see it getting better either.

Some industry folks are starting to talk about $9 being a more realistic price.

Some industry folks are starting to talk about $9 being a more realistic price.

yup..and its turning ugly fast. My hunches are hunches only..but I had a hunch that the housing crash was pending back in 2007 when I desparately needed cash for my business. As painfull as it was to turn my back on mounds of property equity and not borrow against it...I've been blessed that I didn't yield to the temptation.

I'll stick with my hunches. I had a hunch that FB was an "empty bag".

Fury Over Facebook IPO Grows, Lawsuits Mount | Breakout - Yahoo! Finance (http://finance.yahoo.com/blogs/breakout/fury-over-facebook-ipo-grows-lawsuits-mount-150039330.html)

yup..and its turning ugly fast. My hunches are hunches only..but I had a hunch that the housing crash was pending back in 2007 when I desparately needed cash for my business. As painfull as it was to turn my back on mounds of property equity and not borrow against it...I've been blessed that I didn't yield to the temptation.

I'll stick with my hunches. I had a hunch that FB was an "empty bag".

Fury Over Facebook IPO Grows, Lawsuits Mount | Breakout - Yahoo! Finance (http://finance.yahoo.com/blogs/breakout/fury-over-facebook-ipo-grows-lawsuits-mount-150039330.html)

I agree. Where does his revenue come from? Selling crops on Farmville?

It will be interesting in the next few business days as the details of the law suit unfolds.

I agree. Where does his revenue come from? Selling crops on Farmville?
.

:killingme

Getting uglier by the day.

I was right.

:yahoo:

I think he needs to go buy a Farmville shovel and start digging a really deep hole...
No, wait...he did that in real life!! Low today of $31.77 Closed at $32.81. Net 32.81 -0.22 (-0.67)

-0.67 times how many shares sold = :jameo:

aka::nomoney:

Why I called it an empty bag.

I (and many of the pundits that weighed in) might be wrong, but I just don't see the value now and I don't see it getting better either.

Okay, so by 'empty bag' you were referring to the stock being overvalued at a particular price or price level, not to the company itself being an empty bag? If that was your meaning then, as strange as that choice of words seems to me, I wouldn't disagree with the assessment. Any company, no matter how strong or successful it is, would be overvalued at some price level.

You threw me off (your intended meaning) when you said it had no product, no substance. That made it sound like you were referring to the company itself being an empty bag. Facebook does have product and substance - the great majority of companies in the world would love to be generating $4 Billion in annual revenue and a Billion Dollars in annual profit, especially this early on in their evolution. Heck, Facebook already makes more profit than Amazon does (and, on another note, Amazon stock is even more expensive relative to earnings than Facebook stock is - it goes for something like 170 times trailing earnings).

Facebook is trading at a very high multiple now, no doubt - even with being 16% off the IPO price. The question is what multiple would, all things considered (e.g. potential headwinds and tailwinds, potential external disruptions, potential revenue opportunities, potential management performance, potential growth or decline in usage), be appropriate? Let's put some specificity to your hunches - what do you think is a fair price for Facebook right now? More importantly, what do you think it will be trading at 6 months from now and 2 years from now?

Some industry folks are starting to talk about $9 being a more realistic price.

Which industry folks would they be? I'd be genuinely interested in hearing their reasoning. I think $9 is ridiculous and that there'd need to be some pretty dramatic developments for the price to get that low. I wasn't a buyer at $40 and I've still not been a buyer at $32, but I'd most likely be a buyer if it fell below $20. The potential long-term upside would seem pretty cheap at that level, though a positive return would, of course, not be guaranteed. At any rate, I'd bet that a number of large investors, funds, or companies would be very interested in buying large stakes in Facebook if they could get it near that cheap (i.e. $9 / share, which would represent a value for the enterprise of around $25 Billion). At that price, I can think of a couple of companies that would probably be willing to write a check for the entire enterprise (though Mr. Zuckerberg likely wouldn't be willing to sell).

Facebook isn't necessarily going to be the next Google, or Microsoft, or Apple - but it has the potential to be. And that potential is worth something, even if the price paid represents considerable risk. You generally can't get in for cheap after it's clear that most of the risk has fallen by the wayside.

Lots of discussion ongoing..and lots of it calling 9 or 10 bucks the realistic value of a share. :coffee:

Wall Street struggles to find Facebook's worth | Reuters (http://www.reuters.com/article/2012/05/22/us-facebook-valuation-idUSBRE84L19B20120522)

I agree. Where does his revenue come from? Selling crops on Farmville?

It will be interesting in the next few business days as the details of the law suit unfolds.

:lol: Well, some of the revenue does come from Farmville - from people buying Farm Cash. But most of the revenue comes from the same place that Google and Fox News get most of their revenue from: Advertising. Fortunes have been built on advertising revenue, it can be a lucrative business model.

As for the lawsuits, I think the major question that is as yet unanswered is whether the accusations against Morgan Stanley are legitimate - were they painting a much different, newly revised, less optimistic picture for some of their (presumably bigger) clients while they were telling others something different? I'm also curious, though I've not heard much to this effect alleged, whether Morgan Stanley made a decision to no longer defend the IPO price on Monday morning thinking that they could come in and buy at a lower price and actually make money from the greenshoe allotment (i.e. by covering shorts that they got to sell at $38). That seems unlikely, perhaps even impossible, to me, but I haven't been able to sort out what happened Monday morning. The underwriters were out in force - with a lot of firepower - at the end of the day on Friday to make sure the price didn't fall below $38 / share. Then, on Monday morning, it seemed they were no where to be found. I could have understood if they made a bit of an effort first thing Monday morning and then had to give up because they were overwhelmed by a flood of selling - because they finally ran out of firepower. But, it seems they didn't even make a token effort - they had given up on holding the line.

As for the suit against Facebook, I'm highly skeptical of it. As best I can tell, they did what they were supposed to and disclosed their concerns about the weakness of mobile advertising ahead of the IPO. It's not their fault that investors bought blindly without fairly considering everything that Facebook had reported, or that investors got burned assuming that emotion would drive a wild valuation long enough for them to flip their shares and make some quick money. I've said it before and I'll say it again, if someone doesn't have enough time to research individual stocks (and then follow developments with regard to them), they should not be buying individual stocks. You don't buy investment houses because they seem cool or someone mentioned that such investment are all the rage - you buy them based on checking them out, kicking the tires, trying to figure out - in real terms - what they're worth. At the very least, you go inside and have a look around.

Now, Nasdaq is where the major screw up was. It shouldn't have tried to take orders (and cancelations) right up until the beginning of trading. With the kind of volume involved, that was a recipe for disaster - trying to make all of the right matches, with so many new bids, asks, and cancellations coming in each second (and thus changing the matches that were already made), right up until the last second before trading started, was a mistake. They should have cut off orders 10 minutes before trading started. Some people would have been upset, but the system might have had a chance to work rather than creating a total cluster####. I didn't have any orders (for FB) in that morning, but if I had - and if I found myself in the same situation that so many others did (i.e. with no confirmations, for hours or even days, whether they had bought or sold and at what price), I 'd have been quite upset myself. If you don't know what's happened - don't know what you have or don't have - how are you supposed to figure out what to do next? Nasdaq screwed the pooch on this one. I'm not sure how they'd ever make everyone whole - figuring out what that would even mean would seem near impossible.

Lots of discussion ongoing..and lots of it calling 9 or 10 bucks the realistic value of a share. :coffee:

Wall Street struggles to find Facebook's worth | Reuters (http://www.reuters.com/article/2012/05/22/us-facebook-valuation-idUSBRE84L19B20120522)

If all analysts had a clue what they were doing, I suppose we'd only need a few of them. No chance Facebook stock goes to $9 a share anytime soon. No chance (assuming nothing new and dramatic happens, of course - we can't really accurately account for the impact of, e.g., Mr. Zuckerberg passing away tomorrow or the entire internet being compromised for some unforeseen reason).

Not too long ago I saw an analyst with a price target for AAPL that was well under $200 - coco for cocoa puffs exists in the world. :smile: I remember being amazed at the degree to which so many people missed the real story after Apple released its Q4 FY 2011 results. It was right there in front of us - as obvious as it could be - and yet, many people missed it and soured on the stock. How can people be so oblivious? I don't know, but they often are. I suppose I should be happy about it, it allowed me to make a considerable amount of money (on what I thought was a pretty safe trade), but it dumbfounded me nonetheless. (I just hope they make a similar mistake after the upcoming earnings release.) And the phenomena is most certainly not limited to Apple or other tech stocks - sometimes, hearing what people say about a particular stock (to include so-called analysts), I have to wonder if they've ever even looked at the company's filings or listened to its conference calls. Regardless of what someone does (or purports to do), they can be incompetent - disturbingly so sometimes.

People really need to do their own research - devise and examine their own theses with regard to what individual stocks are worth - if they're interested in investing in them. They should not take a friend's, an analyst's, a broker's, or my word for it when it comes to prudent stock decisions.

Okay, so by 'empty bag' you were referring to the stock being overvalued at a particular price or price level, not to the company itself being an empty bag?





Facebook is an empty BAG - they sell ad space, which maybe popular right now ...... IMHO now that FB is Public, people will see the inner workings, and they will bleed more advertisers ... GM has already drooped out

51% of ALL FB users Never Click an Advert.

ok maybe that means 400 mill still do, but are they purchasing products

FB has created a whole lotta nothing but "ouch"...


Citi unit lost $20 million in Facebook IPO: source | Reuters (http://www.reuters.com/article/2012/05/26/us-facebook-citigroup-idUSBRE84P00O20120526)

Lots of discussion ongoing..and lots of it calling 9 or 10 bucks the realistic value of a share. :coffee:

Wall Street struggles to find Facebook's worth | Reuters (http://www.reuters.com/article/2012/05/22/us-facebook-valuation-idUSBRE84L19B20120522)

I've still only found one analyst with a price target that low (Starmine), and that target price is an aberration. All of the other targets that I've found are between $30 and $49, and 8 of the 9 reported covering analysts have it rated as a hold or buy (i.e. at the then current level of about $32).

Other than Starmine, do you know of another firm or analyst saying the value of FB is $10? Or does "lots of" mean there's one that has said that and different articles make reference to it? I'm not suggesting that the rest of the analysts are right with their targets - it wouldn't shock me if this stock traded lower, maybe $25 or possibly even $20. But you can usually find one or a few people that throw out a much-too-low or much-too-high price target on a stock.

I'd ask again, where do you think FB will be 6 months from now and 2 years from now? And for my benefit, as I'm still trying to decide for myself what a fair value for FB would be, it would be great if you would share your reasoning - your thesis - for why you think that's where it will be. That's not a gotcha, that's a sincere inquiry - it's why I started this thread to begin with. I don't use Facebook, so I'm looking to others to offer feedback - not metrics and insight I can read in SEC filings, but senses people have from real world experience.

Facebook is an empty BAG - they sell ad space, which maybe popular right now ...... IMHO now that FB is Public, people will see the inner workings, and they will bleed more advertisers ... GM has already drooped out

51% of ALL FB users Never Click an Advert.

ok maybe that means 400 mill still do, but are they purchasing products

Are you suggesting that it's an empty bag because its primary source of revenue is selling ad space - as if that's not a viable business model? That's how many businesses make money, and have for a long, long time: Fox News, NY Times, NBC, etc. The television industry was built around selling advertising. Google has made tons of money selling advertising. Meaningfully all of Google's revenues come from advertising (last I looked, 96% - and some of the rest came from providing advertising services if not from selling advertising itself). And Facebook is developing another source of revenue - platform payments - a source that's growing rapidly and now accounts for about 18% of its revenue.

As for the 51% stat, that doesn't surprise me - I might have expected it to be even higher. But as you said, half of (now more than) 900 million people is a lot of people. Further, Facebook doesn't necessarily need people to click on ads in order to get paid for them just as Fox News doesn't need you to click on their TV ads in order to get paid for them. Facebook sells both performance paid ads and impressions paid ads - they get paid for the latter based on how many times they are displayed.

I've said it before and I'll say it again: I can identify a number of meaningful headwinds for Facebook. I see reason to be concerned about its future as a business. But I also see a lot of potential opportunities and think that it is uniquely positioned to leverage opportunities that others probably can't. At any rate, this is a real business already - it makes a considerable amount of money. Selling advertising is not some crazy, fly-by-night, method of making money. It's well proven over many decades - both before the internet age and since.

FB has created a whole lotta nothing but "ouch"...


Citi unit lost $20 million in Facebook IPO: source | Reuters (http://www.reuters.com/article/2012/05/26/us-facebook-citigroup-idUSBRE84P00O20120526)

Just to be clear and for those that might not realize it, that doesn't relate to the value of Facebook - those aren't trading losses. That has to do with the failure of the Nasdaq system to process orders. Citi isn't saying that it lost $20 million on Facebook stock - i.e., because the stock lost value (a whole lot more than that was lost by people that bought and sold FB :lol:) - such trading losses wouldn't even be worth reporting. Traders and investors lose and gain more than that on particular stocks on a daily basis.

Those losses relate to Citi (and other institutions) having to cover clients' trades - or attempted trades. Citi is on the hook for trades (by they're clients) that should have went through but didn't (or weren't confirmed in a reasonable amount of time). Nasdaq has asked large firms for estimates of what they lost as a result of this problem. It intends to reimburse them for some of the losses. There's a cap on how much liability Nasdaq has for this kind of thing, but it has indicated that it plans to reimburse firms beyond that cap. That's probably a smart move for PR reasons, but Nasdaq is still going to have taken a big hit to its reputation as a result of this mess up.

Btw, Facebook is trading below $29.50 now. I'm still trying to narrow the range between where I'd definitely buy and definitely not buy - that being the case, I'm having to keep my powder dry for now.

I see its now being referred to as the "Faceplant IPO".:killingme

I'm gonna through this out there, though I wouldn't recommend that people trade options (I don't myself). I think they can make sense in some situations as insurance on existing positions or as cheap spec plays, but I think there's a lot of potential for people to be taken advantage of by the professionals that really see what's going on and trade options for a living. That said...

If people really think FB might be going to $9 - that there's a meaningful chance that will happen - the market is offering them ways to make big returns on relatively small bets. The ask on a September 2012 put option with a strike price of $15 is now $0.25. A put option is the right to sell someone the underlying stock at the strike price on or before the expiration date. So, for 25 cents, you could buy the right to sell someone FB stock for $15 before September 2012 (it's actually a specific date in September, I don't recall which day is used).

What that means is this: You pay 25 cents per share (e.g. 1000 put options cost you $250). That's your total exposure - the most you can lose (aside from the transaction fees). If the stock never dips below $15 before September 2102, you're out that initial expense. But if the stock dips below $15 at any point between now and September, you can buy it for the market price and sell it to the person from whom you bought the put option for $15. In other words, if the stock drops below $14.75 (it doesn't need to end up there in September, it just needs to drop that low at some point in the meantime) you end up making money (minus transaction fees). Everything below that $14.75 is profit - if it drops to $9, you can make $5.75 / share (e.g. $5,750 on those 1000 put options that cost you $250).

I suppose the takeaway is that the market - the people that put their money where their mouths are - thinks there's very little chance that Facebook will drop that low anytime soon. If someone thinks there's even a 1 in 20 chance that FB will hit $9 over the next few months, this is a great bet - and you don't even need it to go that low in order to make money, you'd make some money (just not as much - only about 3 times your initial investment) if it went to $14.

There are similar put options for a $10 strike price, $11 strike price, $20 strike price, etc. There are also put options that expire in June 2012, January 2014, etc. The current ask on a September 2012 put option with a strike price of $20 is $0.85 - that put option makes money if FB falls to $19 and a lot of money if it falls to $9 or even $15. For 85 cents per share, you could make $10 per share should the stock drop to $9.

Anyway, again, I'm not suggesting that people get involved in the options market. But if someone really thinks this stock is going into the dumper, there's room for them to make a lot of money with relatively small risk (i.e. a smallish amount of money being risked). The market certainly gets things wrong sometimes, but it isn't too concerned about Facebook falling that low.

S&P has reportedly lowered its price target for FB to $27 (IIRC, it was previously $30), which is about where it is trading right now.

And Morgan Stanley's CEO has finally made some comments about the Facebook IPO. It appears that the essence of his comments is that Morgan Stanley did nothing wrong.

Morgan Stanley Speaks on Facebook IPO - CNBC Video (http://video.cnbc.com/gallery/?video=3000093177&play=1)

Morgan Stanley CEO Told Employees Firm Worked '100% Within The Rules' In Facebook IPO (http://www.nasdaq.com/article/morgan-stanley-ceo-told-employees-firm-worked-100-within-the-rules-in-facebook-ipo-20120530-01120)

NEW YORK -(Dow Jones)- Morgan Stanley (MS) Chairman and Chief Executive James Gorman defended the securities firm's role in Facebook Inc.'s (FB) tumultuous initial public offering, telling employees internally that the firm worked "100% within the rules" and calling the steep decline in Facebook's stock "disappointing."

Gorman, in a weekly strategy meeting Tuesday, which was later webcast to employees, said "speculation of nefarious activity" surrounding the social networking company's IPO is untrue. Contrary to some reports, he said, he wasn't "aware of any dissent" among the underwriting firms regarding Facebook's IPO price of $38 a share.

An interesting note:

In the discussion, Gorman went so far as to recount a phone call he received from Facebook's chief operating officer, Sheryl Sandberg, last Friday evening. Gorman said Sandberg praised the company and offered Morgan Stanley a professional reference for its work on the deal.

For those that don't recognize the name, Mrs. Sandberg oversaw ad sales for Google and is generally credited with helping make that company the profitable business that it now is. She was brought on at Facebook a few years ago to, as I see it, kinda be the adult in the room and figure out how to make Facebook a profitable business.

Nasdaq OMX Proposes $40 Million Fund to Compensate for Facebook Losses (http://www.nasdaq.com/article/nasdaq-omx-proposes-40-million-fund-to-compensate-for-facebook-losses-20120606-01190)

Not everyone is satisfied with this. I suspect Nasdaq will end up doing more.

Some reaction to Nasdaq's proposal:

Knight CEO: 'We Got Punched' on Facebook IPO - CNBC Video (http://video.cnbc.com/gallery/?video=3000094872&play=1)

At $40 a share FB had something like half of the valuation of Google with only 1/10th the revenue.... this tells me that even at $10 a share is expensive when compared to Google.

Has Facebook put in a bottom? It's been creeping up for the last week plus and is trading at about $28.50 in the premarket this morning. It was as low as about $25.50 last week.

I really need to know, someone please tell me. :tap:

At $40 a share FB had something like half of the valuation of Google with only 1/10th the revenue.... this tells me that even at $10 a share is expensive when compared to Google.

Only if you assume the companies are at the same stage in their respective developments, which they aren't. You don't buy a stock like FB (now) or Google (when it went public) because you think the price is good based on their current earnings, you buy them because you think the price is good based on their potential future earnings. Google was more expensive right after it went public than Facebook is now. It closed at $100 on its first day of trading (and went mostly up from there) which represented a market cap of about $27 Billion, about 140 times its trailing 12 months earnings of $191 Million. That investment didn't turn out too bad for those that made it, Google is up more than 450% in the less than 8 years since then.

Facebook may or may not be as successful as Google was in growing revenues and earnings in the years following its IPO. But the point remains, speculation / great growth potential plays aren't valued the same way as those plays that have already realized (most of) their great growth potential. If they were, many of the great investment opportunities in our history would have been missed. Early-life IPOs are almost always going to be expensive based on their current earnings. People don't buy them thinking they've already reached their potential as businesses, they buy them because they think they might grow into something much larger / more profitable. 

Only if you assume the companies are at the same stage in their respective developments, which they aren't. You don't buy a stock like FB (now) or Google (when it went public) because you think the price is good based on their current earnings, you buy them because you think the price is good based on their potential future earnings. Google was more expensive right after it went public than Facebook is now. It closed at $100 on its first day of trading (and went mostly up from there) which represented a market cap of about $27 Billion, about 140 times its trailing 12 months earnings of $191 Million. That investment didn't turn out too bad for those that made it, Google is up more than 450% in the less than 8 years since then.

Facebook may or may not be as successful as Google was in growing revenues and earnings in the years following its IPO. But the point remains, speculation / great growth potential plays aren't valued the same way as those plays that have already realized (most of) their great growth potential. If they were, many of the great investment opportunities in our history would have been missed. Early-life IPOs are almost always going to be expensive based on their current earnings. People don't buy them thinking they've already reached their potential as businesses, they buy them because they think they might grow into something much larger / more profitable. 

Thats the thing though, Facebook was not an early life IPO. As far as everyone knows Facebook is a social networking site, people are getting over the whole social networking. Sure social networking is going to stick arround but its no longer "the next big thing" and at the time of the IPO facebook was and still is a one trick pony. Their big revenue was from ads, and right before IPO it leaks out that most people either block the ads or simply have never clicked on an ad on facebook. Googles big revenue is also ads, however you dont have to go to google.com to see the ads, they run ads on basically every website on the internet. Also Google was making money of a fairly new concept, where as facebook to make money needs to take buisness away from google.

Google was basically a preteen at its IPO date, where Facebook had just graduated high school.

Thats the thing though, Facebook was not an early life IPO. As far as everyone knows Facebook is a social networking site, people are getting over the whole social networking. Sure social networking is going to stick arround but its no longer "the next big thing" and at the time of the IPO facebook was and still is a one trick pony. Their big revenue was from ads, and right before IPO it leaks out that most people either block the ads or simply have never clicked on an ad on facebook. Googles big revenue is also ads, however you dont have to go to google.com to see the ads, they run ads on basically every website on the internet. Also Google was making money of a fairly new concept, where as facebook to make money needs to take buisness away from google.

Google was basically a preteen at its IPO date, where Facebook had just graduated high school.

Facebook is at about the same stage of its development as Google was when it went public (as a business, not necessarily as a social phenomenon, but the former is what I was referring to). But it's surely at an earlier stage than Google is at now.

And Facebook isn't nearly as much a one trick pony as Google is. Google gets essentially all of its revenues from advertising. Facebook is already getting about 1/5th of its revenues from other sources - most notably from platform payments, which are growing at a fast pace. Facebook is really in the early stages of trying to monetize its involvement in users' lives, and there's lots of potential for it to do so to a greater degree and with greater effect. It's barely begun to monetize outside of North America and Europe, and in some of those places (e.g. India) it's quickly becoming as popular as it is here.

Again, I don't pretend to know how well Facebook will execute going forward. But it isn't priced based on what it earns now or is sure to earn in the future, it's priced based on what it might earn in the future (weighted for how likely it is that it will be able to achieve that). It's still a bit of a spec stock, not a value stock. The nature of Facebook's relationships with its users is quite different than that of Google, and therein lies some significant differences when it comes to how well the respective companies might be able to generate revenue going forward - particularly as we get further into the age of mobile computer devices when so much content consumption and basic computing functionality will come through those devices.

Mark Cuban with sound advice for investors...

Cuban on Facebook Ownership: 'I Took a Beating and Left' - CNBC Video (http://video.cnbc.com/gallery/?video=3000096105&play=1)

In this particular situation it turned out that the stock came back (it closed near $32 yesterday) - but you can't know ahead of time what's going to happen with a particular stock and his advice is sound in a general context.

Facebook will report earnings this afternoon for the first time since it went public. I'm curious who will be on the conference call, hopefully both Mark Zuckerberg and COO Sheryl Sandberg will.

The stock price of Zynga, which also went public recently, is getting hammered after it reported disappointing results yesterday. That's also pulled Facebook down a little today, it's trading just above $28 now.

Fool me once, shame on me.....

I lost too much in the 90s tech bubble fiasco. Got 'in' late and reluctantly..against my better judgement.

Won't be doing that again.

I rest my case. I said it from day one..and I will remain correct. An empty paper bag.

Facebook revenue growth skids, shares plunge - Yahoo! Finance (http://finance.yahoo.com/news/facebook-second-quarter-revenue-increases-201555890.html)

S made me a lot of money today

Facebook shares hit new lows

Facebook shares swung to a new all time low at about $24, against their $38 issue price, after the company's first earnings report as a public company showed a continued slowdown in revenue growth and flat profits.
The social network reported $1.18bn in revenues for the quarter, in line with estimates analysts had set after Facebook issued warnings that its mobile usage was growing faster than mobile advertising.
Facebook shares hit as ad growth slows - FT.com (http://link.ft.com/r/P75VYY/976A4P/GKRPNB/C4P64L/R39HPB/MQ/h?a1=2012&a2=7&a3=26)

Now $23.

That $9-10 bottom is looking "about right".

Now $21....

$20...


This is starting to feel like a death watch. :razz: