Facebook IPO next week...

[inivid]

So, FB's IPO is finally going to be sometime next week. What do you think? Will it tank like Zynga did, or will we see some good momentum?

[bon mot]

At the proposed valuations of the IPO ($75-100 billion), the only money to be made will be on the investment banking side (the banks taking them private). FBOOK will have a market cap similar to that of CSCO (CSCO's TTM income is likely higher than FBOOK's TTM revenue). Even FBOOK's 2015 projected revenue of $25-$35/user at 50% EBITDA (very optimistic IMO) still would be rich with a $100 billion market cap.

[Matt15]

noob question:
why would a $100bn company want/need to go public?

[GoFaster]

noob question:
why would a $100bn company want/need to go public?

To make the existing owners very rich.

Plenty of people will buy this stock just because of the name. I won't be.

[AIRider]

To make the existing owners very rich.

Plenty of people will buy this stock just because of the name. I won't be.

Yeah, there's gonna be a new wave of silicone valley millionaires very soon.

Nobody really knows if Facebook is profitable, they haven't disclosed any numbers yet, have they.

Plus the pressure to keep the investors happy once they do go public will change the atmosphere at Facebook inc.

[robr2]

So, FB's IPO is finally going to be sometime next week. What do you think? Will it tank like Zynga did, or will we see some good momentum?

Well the IPO isn't next week. They are expected to file paperwork with the SEC regarding an IPO. The actual IPO is months away.

noob question:
why would a $100bn company want/need to go public?

The company isn't worth $100bn - that's an estimate of what it might be work if it were public. By going public, there is an actual value placed on the company and the current shareholders then have the opportunity to sell their shares based on that open market value. Facebook had revenue of $4.3bn last year. Even assuming a gross profit of 50% - I just don't see how it can be valued at $100bn.

[ValveCoverGasket]

Plus the pressure to keep the investors happy once they do go public will change the atmosphere at Facebook inc.

this is probably the biggest thing...

[Harv]

If your a huge institution or a VC, then yeah you'll be happy with FB IPO.


Individual investing? By the time we can get it I think it will be very overvalued.

[AZGolf]

noob question:
why would a $100bn company want/need to go public?

It is explained in this article. Basically they are required to go public by law because the company has too many investors to remain private. If they could restrict the total number of owners then the company could remain private, otherwise they are better off just going public.

Facebook had revenue of $4.3bn last year. Even assuming a gross profit of 50% - I just don't see how it can be valued at $100bn.

Well if their profit was sky-high, like $2B in earnings with a 50x PE ratio could support that valuation. However; meanwhile the rest of the market is sitting around with 10X PE ratios. Microsoft is under 11x. Apple is under 13x. Even Google is under 20x. If we find out Facebook's real earnings are more like $1B then it would be hard to picture valuation anywhere even close to $100B.

I've read articles indicating that a sixth of the world population has already signed up for facebook at least once and that in the USA membership peaked and is slightly falling now because it's no longer trendy. It's hard to give Facebook internet startup valuation when Facebook is honestly already very mature and unlikely to double or triple earnings in the next 5 years like so many internet startups can do.

[synthsis]

Individual investing? By the time we can get it I think it will be very overvalued.

basically, there's no way for a guy like me to get in on the ground floor tomorrow morning?

[SteveMKIIDub]

I don't know what it is, but I just have no desire to get into these types of things. I guess I just prefer business that I understand.

Not that I don't understand Facebook

[ValveCoverGasket]

I guess I just prefer business that I understand.

this one always cracks me up

[Salty VW]

I feel like it's too much of a household name not to see at least one good jolt out 'the gate.

Long term? Who knows, It may very well become the next Myspace. But short term I almost can't see how it wouldn't be profitable.

[AIRider]

something cooler, better, sexier will come along in a few years, 5,10, doesn't matter and facebook will die out. it's almost too popular to be cool anymore …

ever since I stared having old, mature, and super young family members join, it stopped being fun ..

[synthsis]

god article on the IPO:

http://gizmodo.com/5881223/reminder-...-make-you-rich

[Harv]

basically, there's no way for a guy like me to get in on the ground floor tomorrow morning?

They are filing for an IPO, the actuall stock you can buy won't be out until May (?).

But no, I bet 95% of the stock is already spoken for. But the time it hits us it will be so overvalued that Zuckerberg could buy a 3rd world country.

[Salty VW]

You're all forgetting one thing though: Everyone and their grandma is gonna want Facebook stock the day it hits the open market, whether it makes sense long term or not.

[AIRider]

You're all forgetting one thing though: Everyone and their grandma is gonna want Facebook stock the day it hits the open market, whether it makes sense long term or not.

true. but what if it's like google… 100$ to 600$ in a few years. user wise, 800 mill people is alot of people … I see FB moving more towards sales of product, that being more ads, etc ..

I wouldn't be surprised if they develop an algorithm that pre-reds your messages and implements product links in your posts, private messages, etc. or even outright send you private messages, promos etc, to your inbox.

[AZGolf]

800 mill people is alot of people … I see FB moving more towards sales of product, that being more ads, etc ..

They are already moving that direction with Facebook Credits. It won't be long before that can be used to actually pay for goods instead of using your PayPal account. Now instead of just "like"-ing your favorite company on Facebook, you could buy goods from them through facebook, or at least use facebook as the payment, similar to how paypal is the payment engine behind virtually every website nowadays. I'm sure they would like to have a "Pay with FB Credits" button on websites instead of "Pay with PayPal". I imagine that's the direction they are heading.

[Salty VW]

Definitely wouldn't be surprised if they made an attempt at complete interweb dominance, ala Google.

FaceTube, FaceMail, FaceVoice, etc.

[AIRider]

They are already moving that direction with Facebook Credits. It won't be long before that can be used to actually pay for goods instead of using your PayPal account. Now instead of just "like"-ing your favorite company on Facebook, you could buy goods from them through facebook, or at least use facebook as the payment, similar to how paypal is the payment engine behind virtually every website nowadays. I'm sure they would like to have a "Pay with FB Credits" button on websites instead of "Pay with PayPal". I imagine that's the direction they are heading.

isn't the paypal one of the facebook shareholders,

[robr2]

isn't the paypal one of the facebook shareholders,

No. Paypal is owned by eBay.

According to wiki, these folks have shares of Facebook:

Mark Zuckerberg: 24%
Accel Partners: 10%
Digital Sky Technologies: 10%,
Dustin Moskovitz: 6%
Eduardo Saverin: 5%
Sean Parker: 4%
Peter Thiel: 3%
Greylock Partners and Meritech Capital Partners: between 1 to 2% each
Microsoft: 1.3%
Li Ka-shing: 0.75%
Interpublic Group: less than 0.5%
A small group of current and former employees and celebrities own less than 1% each
The remaining 30% or so are owned by employees, an undisclosed number of celebrities, and outside investors.

[Harv]

true. but what if it's like google… 100$ to 600$ in a few years. user wise, 800 mill people is alot of people … I see FB moving more towards sales of product, that being more ads, etc ..

I wouldn't be surprised if they develop an algorithm that pre-reds your messages and implements product links in your posts, private messages, etc. or even outright send you private messages, promos etc, to your inbox.

Good point, but right now Google has so much more than Facebook. You could argue that Googles IPO gave them the resources (cash) to bring in the world best engineers and other employees to come up with Google Maps/Earth, YouTube, Cell Phones, etc..


But I'm still sticking to the fact that in the short-term, Facebook will be way overvalued.

[AIRider]

Good point, but right now Google has so much more than Facebook. You could argue that Googles IPO gave them the resources (cash) to bring in the world best engineers and other employees to come up with Google Maps/Earth, YouTube, Cell Phones, etc..


But I'm still sticking to the fact that in the short-term, Facebook will be way overvalued.

Good point as well! Google for me is much more useful than Facebook, but I can see how the money brought by the IPO could bring some drastic changes to Facebook, at least in terms of outside acquisitions, employees, new off- products, a la YouTube for google, PayPal for eBay, etc.

Overvaluated yes, but sometimes it seems that mr.Market doesn't care ad throws logic out the door.

I'll be buying some once they become available for us low time investors.

I believe in buffets logic, buy into products that you use everyday and like. And damn, I do use FB a few times a day.

[SteveMKIIDub]

something cooler, better, sexier will come along in a few years, 5,10, doesn't matter and facebook will die out. it's almost too popular to be cool anymore …

ever since I stared having old, mature, and super young family members join, it stopped being fun ..

We could have said that about Google too, but now it is the dominate search engine. I still wouldn't put my money into Facebook, but I can see the potential.

Or LinkedIn.

[AIRider]

No. Paypal is owned by eBay.

According to wiki, these folks have shares of Facebook:

Mark Zuckerberg: 24%
Accel Partners: 10%
Digital Sky Technologies: 10%,
Dustin Moskovitz: 6%
Eduardo Saverin: 5%
Sean Parker: 4%
Peter Thiel: 3%
Greylock Partners and Meritech Capital Partners: between 1 to 2% each
Microsoft: 1.3%
Li Ka-shing: 0.75%
Interpublic Group: less than 0.5%
A small group of current and former employees and celebrities own less than 1% each
The remaining 30% or so are owned by employees, an undisclosed number of celebrities, and outside investors.

sorry, I got mixed up, former paypal CEO Peter Thiel, owns nearly 45 million shares.

I bet that Class B shares will start around the 25-35$ mark, and if they do, I totally see them hit 50$-60$, just because of the hype.

and you know what's sad, that there is going to be a HUGE, and I mean HUGE bandwagon effect with this. People who are professionals, and total beginners will jump in. It will be all over the news, and everyone will want a piece of the pie, thinking it will be the next big easy money maker. Its' going to be a frenzy.

can someone tell me, when was the last time/company this big, this influential that went IPO.

[Vision33r]

There will be a lot of departures at Facebook once they lift the restrictions on trading their own shares.

[Vision33r]

Good point, but right now Google has so much more than Facebook. You could argue that Googles IPO gave them the resources (cash) to bring in the world best engineers and other employees to come up with Google Maps/Earth, YouTube, Cell Phones, etc..


But I'm still sticking to the fact that in the short-term, Facebook will be way overvalued.

That's the problem with Google, they are doing too many things and none of which they do well at.

Google+, won't ever replace Facebook. If Facebook dies out, the entire category will be dead.

Youtube, burning more cash than raking in. Google's still trying to figure out how to make money from it.

Google maps, it's a good mapping utility. Bing's Maps are actually quite good.

Android, may have the lead on marketshare because it's Free! But it's not bringing Google as much money which lead to investors dumping the stock after earnings report.

Microsoft actually projected to make more money per device than Google, brings in health profits quarterly but gets no attention by investors.

[Oliver@triplezoom]

It is explained in this article. Basically they are required to go public by law because the company has too many investors to remain private. If they could restrict the total number of owners then the company could remain private, otherwise they are better off just going public.

Just to clarify, they aren't required to take the company public. They just have to publicly disclose certain things now that they have in excess of 500 shareholders.

At that point though, you might as well go public, because you've lost one of the key advantages of being a private company.

[Diamond Dave]

noob question:
why would a $100bn company want/need to go public?

b/c until it goes public, it's not a $100B company.

[jnm2.0t]

b/c until it goes public, it's not a $100B company.

A $100B company is a $100B company, private or public.

[AIRider]

if you guys have timeline, did you notice new sponsored ads in your pictures?

[jnm2.0t]

if you guys have timeline, did you notice new sponsored ads in your pictures?

Don't have it but it doesn't surprise me.

[Diamond Dave]

A $100B company is a $100B company, private or public.

Forecasted to be a $100B company prior to IPO isn't the same as being a $100B company. But if you know differently about how this works, please feel free to elaborate.

[jnm2.0t]

Forecasted to be a $100B company prior to IPO isn't the same as being a $100B company. But if you know differently about how this works, please feel free to elaborate.

Going public just changes the pool of potential owners.