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FACEBOOK at $38, FB = $104 Billion. Is it overvalued?

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Re Facebook. Not enough data to make a similar assessment but based on the previous years earnings of 0.19 it is barely worth a couple of dollars. HUGE disparity here with current price. Much of this disparity is to my not having any of the data that I would use. But, the quoted pe is now 127 which is exceptional also.

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FB has traded below $20 today

 

Larry P has a target of $14, and thinks we might get there within Augusr, since he expects a big slide this month

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Facebook: 8.7 percent are fake users

Internet & Media

 

Facebook estimates that 4.8 percent are duplicate accounts, 2.4 percent are user-misclassified accounts, and 1.5 percent are undesirable accounts

 

Last week, during its first quarterly earnings report as a public company, Facebook revealed it had 955 million monthly active users and 543 million monthly active mobile users. In the social-networking giant's 10-Q filing published last night, the company disclosed that nearly 20 percent of the latter number, 102 million users, accessed the social network in June solely from their mobile device.

 

So, how many of these accounts are fake? Facebook estimates 8.7 percent, or 83.09 million accounts.

 

That's a huge jump, both in raw numbers and as a percentage, from Facebook's last estimate. Back in March, Facebook said 5 to 6 percent of accounts are false or duplicate. At the time, this meant between 42.25 million and 50.70 million users.

 

http://news.cnet.com/8301-1023_3-57484991-93/facebook-8.7-percent-are-fake-users/

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You'd have to be weak in the head to buy FB for more than a handfull of dollars. And anyone involved on the buy side at the IPO need committing.

 

It is as source of enjoyment to me to watch this stock get trousered day after day.

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http://www.dailymail.co.uk/sciencetech/article-2187801/Were-watching-The-camera-recognise-Facebook-picture-time-walk-shop.html

 

The Facebook camera that can recognise you every time you walk into a shop

 

..... Facebook recently hit the headlines when it bought face.com, an Israeli firm that pioneered the use of face recognition technology online.

 

I'll be more than happy to see companies like this go belly-up.

Talk about Big Brother.

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http://www.dailymail.co.uk/sciencetech/article-2187801/Were-watching-The-camera-recognise-Facebook-picture-time-walk-shop.html

I'll be more than happy to see companies like this go belly-up.

Talk about Big Brother.

Hmm.

Maybe to survive, FB has decided to sellout, as some think Google did to succeed.

(some say, the CIA or NSA is Google's biggest customer.)

 

Meantime, the stock closed yesterday at its second lowest price / FB-chart

 

FB: $20.38 -1.22

Open:21.41 / High:21.60 / Low:20.25

Volume:38,952,496

Percent Change: -5.65%

 

Next stop: The Teens ?

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Zuck: A spotty Teenager ?

 

mark_zuckerberg_01.jpg

 

No, not exactly. But his stock is a Teen now....

 

FB: $19.77 -0.10 // Percent Change: -0.50%

Open: 20.005 / High: 20.08 / Low: 19.77

Volume: 11,012,568

 

They have $4 a share of Cash.

Some target, a level I think makes sense: $12-14.

That is about $10 per share above cash.

=== ===

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Zuck: A spotty Teenager ?

 

mark_zuckerberg_01.jpg

 

No, not exactly. But his stock is a Teen now....

 

FB: $19.77 -0.10 // Percent Change: -0.50%

Open: 20.005 / High: 20.08 / Low: 19.77

Volume: 11,012,568

 

They have $4 a share of Cash.

Some target, a level I think makes sense: $12-14.

That is about $10 per share above cash.

=== ===

 

yes and their equity per share is about $6.00 thanks to ipo :)

 

but can they make any money? earnings are everything to me, not book value. if capital does not make money, say like a rusted old tractor, then it is worthless regardless of what it cost to procure it.

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yes and their equity per share is about $6.00 thanks to ipo :)

 

but can they make any money? earnings are everything to me, not book value. if capital does not make money, say like a rusted old tractor, then it is worthless regardless of what it cost to procure it.

Without the cash from IPO would it be worth zero? Maybe not more than $5-10

 

It just goes to show how over-valued and over-hyped FB was.

 

We saw through it (on GEI), but most of the Mainstream was right behind it, pumping out the stories and pumping up the price. So many sheeple fell for it, without really thinking clearly about what they were buying.

 

I do think that FB will save itself, by eventually "selling" out to someone who will find a way to strip mine the personal data on the site (from the inside).

 

Personally, I value my privacy too much to use it regularly.

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Based on Friday's Close ($19.05) / FB-chart

 

FB's Market Cap is down to $41.4 Billion

 

We thought it was over valued at $50 Billion (that's more like $58 bn, after the IPO proceeds),

and it is now: -xx below that.

 

We were right !

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He's in over his hoodie': Experts call for inexperienced Zuckerberg to step down as Facebook's CEO as stock price continues to plummet

 

Read more: http://www.dailymail.co.uk/news/article-2190682/Hes-hoodie-Experts-inexperienced-Zuckerberg-step-Facebooks-CEO-stock-price-continues-plummet.html#ixzz2440uvHJV

 

=========================================================================

 

Some say he is in over his head,

I don't think so. While he might run the company on paper, And also be the face in the media. I don't believe that he is being let lose to run the company all on his own. One there will be the board, And two I'm sure that he has advisers that look after the day to day running of the company while showing him the "ropes" so to speak.

Then there are the big banks that back the company. They too will be having a big say In whats going on at the company.

 

A company is bigger than anyone person .

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He's in over his hoodie': Experts call for inexperienced Zuckerberg to step down as Facebook's CEO as stock price continues to plummet

 

Read more: http://www.dailymail...l#ixzz2440uvHJV

LOL!!!

 

IIRC, Zuckerberg has maintained a controlling stake in the company (something like 51% of the stock). If this is the case then the executive board will remain nice and compliant or risk lose their cushy well-paid non-jobs. I don't think Zuckerberg would tolerate back-stabbers!

 

 

Nevertheless, I am truly astonished by the short memories and utterly asinine opinion of some so-called "experts". They just never learn, do they?

 

 

Corporate experts have suggested that the 28-year-old founder should stick to what he does best as a technological innovator and hand the CEO reins over to a more experienced executive

 

Yeah. Just like Apple did when they ousted Steve Jobs in favour of John Sculley. Nice move from the bozos on the board there!

 

Are these muppets for real? They blame the wildly successful existing company CEO barely a month after IPO because they paid wildly over the odds for the stock on the say-so from some spiv from Goldman Sachs? You just couldn't make it up.

 

If, by some awful freak turn of events, Zuckerberg does get ousted and some bland half-wit bean-counter, or smug dunderhead MBA-wielding ex-Goldman spiv, or some other blue-chip chinless wonder chump who has learnt a few buzzwords like "leveraged buyout", or Donald Trump takes over (let's collectively refer to any one of these ghastly imbeciles as a "stuffed shirt") , two things will happen:

  • The stock price will decline inexorably over time. What on earth would a "stuffed shirt" know about social media, a relatively new concept where no-one has any idea of the viable long-term business models? Software tech business needs smarts, vision and purpose. How's Microsoft been doing since Bill Gates left? ("quite crap" is the answer if you're a long-term shareholder). Parachuting in a dime-a-dozen cookie-cutter stuffed shirt that focuses on the latest quarterly report in order to curry favour (and a corresponding mega-salary that their purported business acumen deserves so much) from institutional shareholders will not facilitate the production of interesting new products or services. Rather, stagnation - the inclination to "play safe" will be irresistible. Most stuffed shirt muppets have never had an original idea in their lives. Indeed, the extent of their self-proclaimed genius rarely tends to amount to anything more than announcing a large share buyback scheme, citing improved stockholder value through an increase in earnings per share. Then the stock price will tank some more and the stuffed shirt will either be fired or resign. Either way they'll be replaced with another stuffed shirt. The replacement won't be any better.
  • Because they don't understand software, the stuffed shirt will look to obsolete, stupid or just plain bad business models when they try to interfere with ways to increase revenue. Expect Facebook to announce the sale of all names and email address data to Nigerian spammers and bank fraudsters. Sell credit card usage and purchase demographics to the Russian mafia, Sell spicy images that are marked "private" to tawdry amateur pornography outfits (read the facebook terms of service, it's their data now, so don't bother suing). Correspondingly expect everyone with half a brain to erase as much personal information from Facebook as possible (actually you're a complete idiot if you haven't already done this, and you're already quite dozy for putting it there in the first place. So there.). Expect people to start deleting their user accounts. This will hurt the intrinsic value of FaceBook, perpetuating a decline in the value of the business.

Given the tendency of markets to over-react, I still wouldn't buy FB stock.When they hit $15/share I'll give the numbers another scroot: Assuming Mark Zuckerberg remains as CEO, I think it'll be an interesting company to watch. With the creative and intellectual firepower they have at their disposal, established and extensive infrastructure (some 180,000 servers according to the most recent rumours) and rather deep pockets (thanks in no small part to the gullible hordes that just threw money at them in the IPO), they can ride out tough economic conditions and quite possibly build a hugely profitable business out of multiple mutually supporting revenue streams.

 

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http://www.elitetrader.com/vb/showthread.php?threadid=247187&perpage=6&pagenumber=3

I think FBs' largest source of revenue will end up being data-mined personal info sold to Government and private marketers. This is often overlooked in the FB debate. Still, I wouldn't own it.

 

Good statement, but you have a problem -Facebook has 1 billion users, and there are 7 billion people in the world. Are you suggesting that with their top rate performance they will level off at 1 billion forever? You said 90%, which is completely wrong. Facebook has under 50% of the current internet market share, and much less share counting the people who will be using the internet in the close future.

I wish so many people wouldn't emotionally hate Facebook. I'm not buying now, but HurricaneUS is wrong in this case.

Lets say there is a restaurant on an island and most of the people on the island eat at this restaurant. Now there are a few other restaurants, but by far 90% of the island eats at this restaurant....(Well call the restaurant Fish Bucket, or FB for short) So the owner of Fish Bucket decides he wants to sell. How much does he want to sell it for. Well the business makes $100,000 per year so the owner of Fish bucket, Mike Zacharyburg, decides to put it up for sale for $7,170,000. Now, we know the business can't keep growing much because nearly everyone on the island eats there, and there is always a risk that a new restaurant might pop up one day that sells better tasting fish. After all...Fish Bucket did once replace "MyFish" as the number one restaurant on the island some years back.

 

So tell me...would you buy Fish Bucket for $7.1 million dollars when it only makes $100k per year and you know it cant grow much more and it runs the risk of being replaced by a new restaurant one day?

Because Facebook and Fish Bucket are the exact same thing (at todays closing price of $20.72.) Fish Bucket is just scaled down.

It shocks me that so many people just hear "facebook" and no price matters. The name is popular enough to justify the price in their eyes.

 

 

 

 

 

http://www.elitetrader.com/vb/showthread.php?threadid=247187&perpage=6&pagenumber=4

You may well be right, but this in a way is even worse than charging for an account. People would desert it in droves if they got the idea that Big Brother was watching. Of course, it doesn't seem to hurt GOOG, so I may be wrong.

For now however, FB hasn't shown any ability to generate actual money. This is a crucial distinction with GOOG, which a lot of investors didn't understand but they could see it produced money.

Another factor that would worry me if I were an institutional holder of FB is Zuckerberg. It is one thing to give up virtually all voting control to a Steve Jobs. I wasn't exactly blown away by him on the last CC.

 

Truth be told, lots of these tech giants - GOOG, FB, ebay, paypal - have ties to the CIA. Most were founded or provided seed money through In-Q-Tel or one of it's partner organizations. In-Q-Tel is a CIA venture capital outfit that funds tech startups. Whether that holds any water to FB's longevity, probably. It's public information companies like google and FB now work with the NSA on "cyber-security initiatives" etc. This all lends me to think that even if FB can't generate a profit, so long as it remains popular, it'll continue to operate.

 

 

Good statement, but you have a problem -Facebook has 1 billion users, and there are 7 billion people in the world. Are you suggesting that with their top rate performance they will level off at 1 billion forever? You said 90%, which is completely wrong. Facebook has under 50% of the current internet market share, and much less share counting the people who will be using the internet in the close future.

I wish so many people wouldn't emotionally hate Facebook. I'm not buying now, but HurricaneUS is wrong in this case.

Yes

Amazon -with all the failing retail co's, Amazon is expected to really grow. This is why their price is big.

 

and of those 7 billion about 1.5 billion are children leaving 5.5 billion. And of those 5.5 billion left only 83% are literate leaving 4.5 billion. Another 750 million are old and not likely to use facebook leaving 3.75 billion. 1 billion already use facebook so thats 2.75 billion potential customers. Of course, China has its own social networks Qzone, renren, 51.com, and Kaixin001 which comprise pretty much most of the internet using chinese market. (743 million users combined as of 2010) So that leaves 2 billion potential customers.

Remember though that 60% of the worlds population lives on less than $2 per day. So its a good bet since most of the people that have computers and internet are already on their social networks, that those leftover 2 billion are probably a good portion of the 2 billion that do not have enough money for internet or computers or even live in areas with access to computers. Dont forget about the millions of people in prison that wont be using facebook. I estimate that BEST case scenario is facebook could grow by 50% and then will only grow with world population growth. This means that facebook, once all the hype is gone will be worth at best no more than $11 with a 25 P/E ratio in my opinion.

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He's in over his hoodie': Experts call for inexperienced Zuckerberg to step down as Facebook's CEO as stock price continues to plummet

Read more: http://www.dailymail.co.uk/news/article-2190682/Hes-hoodie-Experts-inexperienced-Zuckerberg-step-Facebooks-CEO-stock-price-continues-plummet.html#ixzz2440uvHJV

LOL.

It was never run as a business.

Zuck always said : "We have a mission, and it is not primarily about making money."

 

So people then Buy the stock and Lose Money, and they complain?

 

(Max Keiser said that Facebook was an obvious "pump-and-dump" operation- as were Groupon and Zynga- and had been saying so all along. I agree.)

 

If I was Zuckerberg, I would resign, and have the company buy back my stock.

He has more wealth now than he, or generations after him could spend.

 

He can start another company, and implement his "mission" there, and let FB get turned into a surveillance arm of the Cabal (like Google), which it was always "intended to be." When the Users figure that out - They will desert FB in droves.

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Facebook hit $18.75 yesterday : That's half the the $38 IPO price

 

There was a refreshing article in Tuesday's Asia WSJ:

 

FACEBOOK FACEPLANT - by Holman Jenkins

 

"Facebook is a nice little business. Should Mark Zuckerberg made it clearer to IPO investors he didn't intend to run it to justify the implausible $100 Billion market cap the IPO was about to give it?"

 

Highlights:

====

+ Zuckerberg serves at his own pleasure. He can fire the board. They can't fire him.

+ Let's acknowledge that FB's initial unrealistic valuation is the real source of Mr Z's trouble

+ Compare: "Google did not present potential investors with the paradox of a company coming to market at a valuation that none of its visible ways of making money could possibly support"*

+ No, Mr. Z never actually told investors his company was worth $100 billion

 

+ Investors seemed to be betting that a big market cap would give it the capability of doing something big - to justify iteslf

+ That has not happened

 

+ (Zuck should) "get on with running a business whose scope, prospects and share price are limited by the limited prospects of advertising on Facebook."

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Groupon Investors Give up

 

GRPN / Groupon .. update : Down from $31.14 high to $4.65

 

FB, ZYNG, GRPN

"Unlike many dot-com era start-ups, the current companies have healthy revenues, and in some cases are turning a profit - but their results are not meeting expectations."

 

"Part of... a recent trend of prominent investors jumping into young companies shortly before their IPOs... Critics say this phenomenom builds unsustainable valuations for those young companies."

 

MESSAGE TO THE PREDATOR INVESTORS: The Public is waking up !

They will stop paying the ridiculous IPO valuations that you are trying to foist upon them !

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MESSAGE TO THE PREDATOR INVESTORS: The Public is waking up !

They will stop paying the ridiculous IPO valuations that you are trying to foist upon them !

Well... you'd think so, but I doubt it.

 

Ben Graham recommended investors to steer clear of IPOs, as a general guideline, in his book "The Intelligent Investor" for precisely the reasons we've seen illustrated by the Facebook flotation. The odds are stacked against you as there are vested interests vying to float at the highest possible price - a price which can subsequently only go in one direction: Down. Warren Buffett and Charlie Munger have reiterated this, too.

 

Ergo, a phenomenal number of investors have either disregarded the advice of the investors with the world's greatest track record, or have never even bothered to read them after all these years. The results are laughably predictable.

 

What's amusing is that, in this internet age of freely available information, there's this herd-like mass of novice investors who view shares as potential lottery tickets; queueing up at the stockbroker to p!ss their hard-earned dollars up the wall without pausing to consider the motivations of the Jim Cramers of the world.

 

A fool and his money... 'Twas ever thus.

 

What's not so amusing is that a lot of so-called "professional" and institutional investors must have been suckered in, too. Folks, that kind of idiocy is what the absurdly high annual management charge on your pension fund is paying for.

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Good comment, Big Guy

 

In Hong Kong,

we have seen IPO shares selloff over the first 3-6 months.

 

But after that initial selloff, they are often a good investment.

FB at $12-14 may also prove to be a good investment

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In Hong Kong,

we have seen IPO shares selloff over the first 3-6 months.

 

But after that initial selloff, they are often a good investment.

FB at $12-14 may also prove to be a good investment

 

Maybe, though I think it's a very risky investment. Not one to bet the farm on.

 

Really, one is getting into the "guess the bottom" phase and your guess is as good as mine. I can see quite a lot of merit in Peppa Pig's ballpark $6/share, particularly when coupled with Mr. Market's tendency to overshoot fair valuation on both the way up and down. I don't think we're into the "revulsion" phase yet.

 

I think that the price will drift slowly lower and lower with much volatility on the way (given current economic uncertainties, this isn't exactly prophetic). In other words, for every five sellers there will be four buyers who are betting on the price having bottomed out, only for their naive optimistic dreams smashed later on the rocks of reality. It also doesn't take a genius to figure out there will be sudden drops and short-lived relief rallies as original early investor tranches become eligible for trade on the exchanges.

 

I really should point out that I could be talking out of my backside, though. I really thought the Google IPO would tank and a big player like Microsoft would take over the search market share along with search-directed ad revenue. Furthermore I still think my reasoning behind that opinion was quite sound. But I was still wildly wrong, although at least I didn't lose any money as a consequence (disregarding opportunity cost perhaps). Still, as the sage of Omaha has alluded, you really don't have to swing for every ball.

 

However, a $15/share price still values the company around $50billion IIRC, which I personally think is still a nutso valuation. As others have stated, where's the growth going to come from when every man and his dog already have a Facebook account?

 

This is why I think it's only investable with Zuckerberg in charge. Zuckerberg will continue to run the company like a lean-and-mean startup, always on the lookout for creating revenue from the huge dataset that Facebook has already amassed, on the cheap, without compromising the principles of "fair play" that would ultimately damage the business. And there's a lot of scope there, as anyone familiar with the parlour game of "six degrees of separation" should know. This is a company that, with a little creativity and ingenuity, has the ability to, for example, turn the mobile communications industry on its head overnight. Like I say, at around $15/share I'll consider scrutinising the business to determine a good value entry price.

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creating revenue from the huge dataset that Facebook has already amassed,

 

That huge data set could be a target for some of these cowboys from Anonymous, any indiscretion in their eyes and the hackers might go for it, and post it online, if that happens FB will drop like a stone.

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LOL.

It was never run as a business.

Zuck always said : "We have a mission, and it is not primarily about making money."

 

So people then Buy the stock and Lose Money, and they complain?

 

(Max Keiser said that Facebook was an obvious "pump-and-dump" operation- as were Groupon and Zynga- and had been saying so all along. I agree.)

 

If I was Zuckerberg, I would resign, and have the company buy back my stock.

He has more wealth now than he, or generations after him could spend.

 

He can start another company, and implement his "mission" there, and let FB get turned into a surveillance arm of the Cabal (like Google), which it was always "intended to be." When the Users figure that out - They will desert FB in droves.

 

 

I agree with that FB and others like groupon were pump and dump.

 

Some company's and parts of the market have been looking like the dot com boom again.

 

I do believe that groupon could make good money at some point in time. But there is no way the company is worth or every will be worth billions. Or even hundreds of millions. I just can not see it.

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The problem with groupon is that it's easily replicated. I suspect it won't be long before google integrate the idea into adwords. They already have a "coupon" idea.

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Good to see that GEI members were way ahead of the curve on this one, and have largely been proven right so far!

If we have a chance to buy at $12-14, and FB bottoms there,

It will be a "Grand Slam Homerun" for GEI-ers

 

BTW, I think a nice handful of us also had some great calls on Silver at $50,

but that SUCCESS got mis-labelled and ridiculed by some of the aggressive Gold Bugs

who were posting here then. I don't want to open old wounds, but i am glad we avoided

this squabbles and dramas with FB. We seem not to have any aggressive (& defensive)

FB Bulls here.

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