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

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What did Larry Summers really think of the Winklevoss twins?


"Rarely, have I encountered such swagger, and I tried to respond in kind," the former president of Harvard said in an interview at Fortune's Brainstorm Tech conference.


Cameron and Tyler Winklevoss were at Harvard at the same time that Mark Zuckerberg launched Facebook, and they had come to Summers for help in their fight for a piece of the action.

Summers dismissed them, a scene dramatized in the movie the "Social Network."

Summers didn't try to dispel the portrayal.


"One of the things you learn as a college president is that if an undergraduate is wearing a tie and jacket on Thursday afternoon at three o'clock, there are two possibilities. One is that they're looking for a job and have an interview; the other is that they are an a**hole. This was the latter case."


/see: http://money.cnn.com/2011/07/20/technology/summers_winklevoss_facebook.fortune/index.htm?iid=Popular

== == ==


they may be a--holes, but wearing a tie seems to a pretty poor reason for throwing them out of the office.

its a cultural thing, and if mr summers had thrown them out for wearing a yulmica, he would have been skewed.

how can he think this comment is alright?

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Well, Microsoft bought Skype, not Facebook (and paid through the nose for it, in my opinion). My gut tells me they bought it simply to stop Facebook or Google from acquiring it. Bearing in mind their strategic tie-up with Nokia, this could get interesting.


Google is getting back into the fray with Google Plus. I think this will provide Facebook with significant competition. Google has expertise, infrastructure and experience.


And Apple now has 75 billion dollars worth of cash and liquid assets to draw upon if they fancy a piece of the action. They have iTunes; building a social network that shares notes with an eCommerce platform and features an extra-whizzy interface for iPhone / iPod may prove extremely lucrative, both boosting sales over iTunes and attracting advertising revenue away from Facebook.


I think $50bn for Facebook is absurd.

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  • 4 months later...

Zynga IPO Flop Proves Social Media Listings Are Still Suspect

DECEMBER 16, 2011


BY KERRI SHANNON, Associate Editor, Money Morning

A strong debut by Zynga Inc. (Nasdaq: ZNGA) today (Friday) could have redeemed the tarnished reputation of social media companies. Instead, the online game-maker became the latest addition to salvage yard full of over-hyped social media companies that didn't live up to the promise of their initial listings.


After debuting at $10 a share, Zynga stock tumbled 7.75% to $9.25 in just four short hours of trading.


Money Morning Capital Waves Strategist Shah Gilani wasn't surprised.


"I don't particularly like the position the company's in. It's got a lot of competition at its heels and I'm not sure about the valuation of the stock," he said on Fox Business' "Varney & Co." program this morning. "I think there's a lot of hype in the social media space."


/more: http://moneymorning.com/2011/12/16/zynga-ipo-flop-proves-social-media-listings-are-still-suspect/

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  • 1 month later...

Not $50 Billion, but XXX


I-bankers rush to get The Book out the door before the market turns down


Stocks set for timid open ahead of Bernanke


February 2, 2012: 8:55 AM ET


NEW YORK (CNNMoney) -- U.S. stocks were set for a timid open Thursday as traders await comments from Federal Reserve chair Ben Bernanke, and keep a wary eye on Greece's debt talks.

. . .

Meanwhile, tech shares will react to Facebook's long-awaited IPO filing, which came after the closing bell Wednesday. The social network's valuation is still speculative until it actually starts trading, but it's attempting to raise $5 billion with its IPO.


/see: http://money.cnn.com/2012/02/02/markets/premarkets/index.htm


NEW YORK (CNNMoney) -- At long last, the Holy Grail of Internet IPOs is here. Facebook filed Wednesday to raise $5 billion in an initial public offering.

In 2011, Facebook earned $1 billion on sales of $3.7 billion. As of December 31, Facebook had 845 million monthly active users.


The company crossed the line into profitability in 2009, five years after it launched in founder Mark Zuckerberg's Harvard dorm room. Facebook earned $229 million that year on sales of $777 million, and has remained profitable ever since.

It's not yet known on which stock exchange Facebook will trade, through it said it plans to use the ticker symbol "FB."


Facebook will likely re-file its paperwork several times over the coming months. Those updates will add more details and could even restate some of the financial information detailed in Wednesday's filing.


In this initial paperwork, companies don't declare how many shares they're going to sell, or how much those shares will cost. Those details will be added in an updated filing shortly before trading begins.


Without that share price information, Facebook's valuation is still speculative.

Facebook has its own guesses, though. The company said it conducted its own valuation of its stock at the end of each quarter, and as of December 31 determined it to be worth $29.73 a share.


/more: http://money.cnn.com/2012/02/01/technology/facebook_ipo/index.htm?iid=GM

=== ===


* If Facebook aims for a high-end valuation of $100 Billion with its IPO, Zuckerberg's stock in the company would be worth $28 billion. Meanwhile, graffiti artist David Choe, who decorated the company's office walls and opted for stock over cash, will likely find himself $200 million richer. (The Wall Street Journal and The New York Times)



COMING : "Several months of distractions... leading to an IPO."

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I understand Facebook has 800 million users, if it's valued at $100 billion then that's $125 per user...


That could seem rather expensive in the future, in a far worse economic environment.


"How Much Is A User Worth





Internet companies are notoriously difficult to value, as investors learned in the dot-com crash 11 years ago. But since the "Web 2.0" companies fueling this year's Internet IPOs rely upon having a reliable group of engaged users, they do offer at least one telling metric: the amount of money each user is worth. That's why venture capitalists evaluating such businesses in their early stages often examine how much revenue a company is generating per user.


Bijan Sabet, a venture capitalist at Spark Capital, which has invested in several Internet companies, including Twitter, FourSquare, and Tumblr, says his firm often considers $2 of annual revenue per user to be an important target threshold for startups. By that measure, several of today's new Web companies show genuine promise, as the chart below indicates.



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Sounds like the kind of thing I wouldn't touch with a bargepole. I see some value because many people do use it. But I just don't see the revenue that would justify valuations that I hear about. They could make it a subscription service, but in this case a competitor, let's call it ButtheadJournal for the sake of a similar name, would pop up and offer it for free again.

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I wouldn't touch the Facebook IPO with a ten foot pole. Make no mistake - I think it's a fantastic, hugely innovative business, and I accept that they could continue to grow their business with new services that make significant money. They certainly have enough really smart people there.

But that's a big "if". Furthermore, the converse is also true. A viable competitor could emerge (GooglePlus, for example). A privacy leak to some dodgy organisation could cause mass exodus by its users. It may simply become "passé" to its current core demographic of users. Mark Zuckerberg might get pushed out in a bizarre echo of what happened to Steve Jobs at Apple in 1985, for a new board consisting of balding, grey flannel-suited executives to ruin everything about it.


Personally I think the stock price will tank within 6 moths of IPO. To be fair, that's also what I said about the Google IPO and I was about as wrong as one can possibly be on that one. But, as I've said before: Facebook ain't Google. You need to be able to effectively search the web for what you're looking for. You don't actually need to play Farmville or "poke" Gladys or "like" Justin Bieber or any of that old guff.


Just me 0.02c

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But, as I've said before: Facebook ain't Google. You need to be able to effectively search the web for what you're looking for. You don't actually need to play Farmville or "poke" Gladys or "like" Justin Bieber or any of that old guff.

Keep in mind, no one needs a mobile phone either. The world worked perfectly well without it. But even in the African bush everyone is striving for one. People just love to chat and "waste" time and money.

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If it's anything like Betfair, an IPO last year, it will turn to shit as soon as shareholders get involved.


I feel their IPO is more of an OUT than an IN


Know what I mean?


Someone's looking to line their pockets quickstyle.


Whilst Fbook is still in the sweetspot.

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Facebook's problems... 2 of 4:


How Much Can You Sell Your Users?

People with Facebook pages are not just the firm's users; they are also the product being sold to advertisers. The firm's core pitch to the advertisers that are filling up its coffers is that it knows an incredible amount of information about individual users, and that Facebook can serve up targeted ads that are likely to make an impact on buying habits.


Facebook strives to get this information from more than just your profile. It wants users to sign in with their Facebook login to leave a review on TripAdvisor or to listen to some music on Spotify. As you move around the web, Facebook can then keep learning more about you and your habits and help craft an advertising message for you. And it goes without saying these targeted ads are worth a lot more than untargeted banner ads.


However, this is all predicated on users feeling like they are still getting value from Facebook in return for handing over personal information. And the pendulum seems to be swinging toward users demanding higher degrees of privacy online. Look at the current discussions over Google's (GOOG) new privacy policy or the uproar over the SOPA/ProtectIP acts. These issues hardly would have broken into the mainstream just a few years ago, but they are now front-page news. Facebook itself even had to pull back from its Beacon platform, which sent information from third-party sites back to Facebook, over privacy concerns.


The firm is trying to alleviate user concerns with better privacy controls and by agreeing to 20 years of privacy audits from the Federal Trade Commission. But this tension between Facebook wanting to maximize its ad revenues and users becoming increasingly weary of being tracked will keep popping up.



Google appears to be the largest competitive threat to Facebook. The two firms are similar in many respects. They may get their user data in different ways (search versus social networking), but they both are trying to use that data to serve up targeted ads.


/more: http://news.morningstar.com/articlenet/article.aspx?id=535846

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The $1.6 Billion Woman, Staying on Message


Facebook's No. 2 executive, Sheryl Sandberg, will reap a fortune in its stock offering. And she hasn't stopped telling the world how women should take responsibility for their careers.


Sheryl Sandberg, chief operating officer of Facebook, with Jeffrey Immelt, left, chairman of General Electric.

SEVENTY-TWO hours before Facebook’s big moment, Sheryl K. Sandberg was half a world away, hobnobbing with the likes of Bill Gates and the Archbishop Desmond Tutu.


Yes, Ms. Sandberg is Mark Zuckerberg’s No. 2. And, yes, if all goes well, she will soon become the $1.6 billion woman. On Wednesday, Facebook filed to go public in a deal that, in all likelihood, will instantly make it one of the most valuable corporations on the planet.


But Ms. Sandberg, who has helped steer this social network to this once-unimaginable height, had more on her mind than securities filings and ad metrics. She was attending the annual World Economic Forum, in Davos, Switzerland, where her subject wasn’t Facebook — but women. Specifically, how women, in her view, must take responsibility for their careers and not blame men for holding them back.


Given that Ms. Sandberg is Facebook’s chief operating officer, and that all of Wall Street was hanging on last week’s news, you might think that she was absurdly off-topic. But Ms. Sandberg sees herself as more than an executive at one of the hottest companies around — more, too, than someone who will soon rank among the few self-made billionaires who are women. She sees herself as a role model for women in business and technology. In speeches, she often urges women to “keep your foot on the gas pedal,” and to aim high.


Her call isn’t simply about mentoring and empowering. It is also about business strategy. A majority of Facebook’s 845 million users are women. And women are also its most engaged users. So Ms. Sandberg is playing to a powerful and lucrative demographic, as well as to the advertisers who want to reach it. Inside Facebook’s headquarters in Menlo Park, Calif., she is considered a not-so-secret weapon for recruiting and retaining talented women as well as men...


/more: http://www.nytimes.com/2012/02/05/business/sheryl-sandberg-of-facebook-staying-on-message.html

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WSJ asks a KEY question about FB:


"Can the social network extract enough money from its members to justify a $100 Billion price?"


(Duped FB users may buy it, but will they make money?)


He compares FB with Linked in. Some accused Morgan Stanley of deliberately undervaluing Linked in, since the priuce rose after listing. But look what happened subsequently:


Linked in / LNKD ... update


For FB, a valuation of $100 Billion would be a PE multiple of 100. Whereas Apple is now on a 13:1 PE, and Google is on 10:1. Does FB really have mor eearnings upside than these two? Google came public at 35x earnings at a time its market share of searches was only 1/3 and was growing rapidly.


Where will FB get the revenues? Cluttering the site with (more) ads will risk alienating its members.

=== ===



Facebook's internal valuation of its shares is: $29.73, implying an overall valuation of $74 Billion.


Facebook derived 12% of last year's $3.71 billion in revenues from Zynga

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  • 2 months later...

Facebook's growth slows down 'rapidly'

- and leaves investors worried over social network's debut on stock market



Revenue slips for first time in two years

Investors worry over upcoming stock market flotation

'It was a faster slowdown that we would have guessed' - analyst



Read more: http://www.dailymail.co.uk/sciencetech/article-2134321/Not-pretty-face-Facebooks-growth-slows-rapidly--leaves-investors-worried-social-network.html#ixzz1syfygYgZ





Are any GEI members thinking of buying Facebook at there IPO ?


I wont be but i would be intrested to know if any of you are and why you think it would be a good buy.

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FB will probably do okay when launched.


But after a surge of a few days, I could see a long slide in the price.


Too many people own it already. And expectations are way too high.


Eventually, FB may stand for Fabulously Bad

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(BEFORE this latest news- things looked good):

Facebook (FB) Valuation Jumps to $102.6 Billion


February 9, 2012

The price of Facebook (NYSE: FB) (NASDAQ: FB) private shares continue to climb following the company's recent IPO filing.


SharesPost completed its latest auction of 150,000 shares of the Class B Common Stock of Facebook, Inc. on February 8, 2012 at a clearing price of $44.00 per share. This puts an implied valuation of $102.61 billion for Facebook.


The latest SharesPost clearing price of $44 per share is above the $42 per share clearing price from February 3.


This shows that pre-IPO demand for the social media juggernaut is high and these early investors see the valuation of the company exceeding $100 billion to open on the public market.


Facebook's filed its IPO on February 1st and is looking to raise $5 billion. It could take a few months before the IPO hits the market.

=== ===


Sharespost News - SecondMarket

Facebook (FB) shares change hands at $44.10 in their final SharesPost auction, as the company shuts down private-exchange trading ahead of its IPO.


Friday, March 30, 6:56 PM Facebook (FB) shares change hands at $44.10 in their final SharesPost auction, as the company shuts down private-exchange trading ahead of its IPO. The closing price translates into a valuation of $104B, or perhaps $110B+ after factoring IPO dilution. Separately, SharesPost rival SecondMarket is laying off 10% of its staff, as it copes with both Facebook's offering and a broader pickup in tech IPO activity.


/see: http://seekingalpha.com/currents/post/230311?source=feed

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  • 2 weeks later...



(last big IPO before the crash)


Facebook to Sell US$5.5 B Worth of Stock in I.P.O.


"some people will buy Facebook stock no matter what."


And they will get Exactly what they deserve.

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(From the BF thread on the Fringe):

sloynaz says:

May 7, 2012 at 4:08 pm

Sunfire word is out that Mark Zuckerberg Arrested any truth from ET&ED’s



I wonder if there is any truth to it ?


When I checked, I found no such news on Google, only stories like this:



Report: Facebook IPO set for May 18


Facebook will go public on May 18, a published report says, in one of the most highly anticipated tech initial public offerings since Google went public in August 2004.


The Wall Street Journal reported Tuesday that the social networking company is set to start its roadshow on Monday, according to people familiar with the matter. The roadshow, a series of meetings with prospective institutional investors, is designed to stir interest in the company's stock.


Mark Zuckerberg, the founder and chief executive of Facebook, will attend some of the meetings, The Journal reported.


/see: http://www.khq.com/story/18028374/report-facebook-ipo-set-for-may-18



I would hva thought there had been some rather deep investigations of MZ by now

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Facebook's IPO already oversubscribed, source says‎Chicago Tribune - 1 hour ago


Facebook Inc.'s record initial public offering is already oversubscribed, a source familiar with the share listing said, days after the world's largest ...

Opinion: Facebook IPO as a measure of social trust‎ Christian Science Monitor


Yeah. sure it is (haha)

=== ===



This was just announced on Bloomberg:


A Poll of investors say at $96 Billion "it is over-valued"


Some said: "Absurdly overvalued."

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bump -

I want to combine the two threads

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Why Facebook may soon cost you money


Now that Facebook has conducted a small test of charging users to promote their status updates, isn't it inevitable that, as a public company, Facebook will have to start dinging users in earnest?





=== ===


As the stock slides,

they will look to squeeze their customers

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If they're making, say, 1bn a year, doesn't 100bn put the pe at 100. That's pretty staggering and would imply a growth rate that I cannot imagine working out. I won't say that everyone who is going to use Facebook is using it, but I cannot imagine they could much more than even double the current monthly user rate of 900 million.


I'd love to see the presentation and see what their plans are.

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