Facebook IPO next week...

[Exhaust Muncher]

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

What befuddles me is that I am interested in "What's Next." Facebook is "What's Now."

About $5 billion worth of shares will be sold, though the deal values the entire enterprise at between $75 billion and $100 billion. Only a little more than two dozen U.S. companies have a market cap that size. Remember, all stock trades are ultimately a matter of valuation, and valuation is always a matter of perspective.

Perspective almost always needs to be checked, and that is certainly so with the level of hype that is surrounding this IPO.

To be worth $100 billion in market cap, at 19.6 times earnings, Facebook needs to have $5.1 billion in earnings. At its current net earnings margin of 26.9%, that implies top-line revenue of $19.3 billion, which is 421.3% above 2011 levels. This means Facebook has to double revenue and earnings in 2012 (Not Likely), then double it again in 2013 (Again, Not Likely), then start to have 30% annual growth. If it does that -- which would be an incredible business feat -- it would be worth the top end of its IPO price range.

However, FB trend is clear, its growth is waning. Facebook's business generates revenue of $3.7 billion and nets 26.9%, or $1 billion. The company grew 77.8% from 2007 to 2008. In the next three years, it grew 185%, 154% and 89%, respectively.

Unless I see a method to insure future growth and value, ultimately I dont see FB as a viable long term solution for my portfolio.

[remedyzrider]

What befuddles me is that I am interested in "What's Next." Facebook is "What's Now."

About $5 billion worth of shares will be sold, though the deal values the entire enterprise at between $75 billion and $100 billion. Only a little more than two dozen U.S. companies have a market cap that size. Remember, all stock trades are ultimately a matter of valuation, and valuation is always a matter of perspective.

Perspective almost always needs to be checked, and that is certainly so with the level of hype that is surrounding this IPO.

To be worth $100 billion in market cap, at 19.6 times earnings, Facebook needs to have $5.1 billion in earnings. At its current net earnings margin of 26.9%, that implies top-line revenue of $19.3 billion, which is 421.3% above 2011 levels. This means Facebook has to double revenue and earnings in 2012 (Not Likely), then double it again in 2013 (Again, Not Likely), then start to have 30% annual growth. If it does that -- which would be an incredible business feat -- it would be worth the top end of its IPO price range.

However, FB trend is clear, its growth is waning. Facebook's business generates revenue of $3.7 billion and nets 26.9%, or $1 billion. The company grew 77.8% from 2007 to 2008. In the next three years, it grew 185%, 154% and 89%, respectively.

Unless I see a method to insure future growth and value, ultimately I dont see FB as a viable long term solution for my portfolio.

Exactly. The projected enterprise value is astonishing given the estimated financial performance currently. I believe there's more hype around the valuation than the IPO itself. This ship will sink itself. Adios facebook

[Exhaust Muncher]

This ship will sink itself. Adios facebook

Not so sure if "The ship will sink." I do believe this stock could have potential. However, I havent been provided with sufficient information to confirm that opinion, therefore, until they provide a conceptualization regarding the continuation of their growth. I dont find it appealing, personally, with how their numbers have been substantially declining.

[remedyzrider]

Not so sure if "The ship will sink." I do believe this stock could have potential. However, I havent been provided with sufficient information to confirm that opinion, therefore, until they provide a conceptualization regarding the continuation of their growth. I dont find it appealing, personally, with how their numbers have been substantially declining.

I don't think FB will disappear entirely but I certainly don't think they're anywhere near a $100b company unless they completely change their revenue streams. I feel for FB to generate the revenue investors and the market will demand FB will need to seek actions that will increase the "drop-out" rate (i.e. charging a membership, selling personal info, increased spamming). Their multiples are huge, especially when compared to peers with market caps greater than $100b. For them to fulfill the expectations of these multiples they'll need to go routes counter productive to what their inventory desires. All social media is struggling with this and has been for years. FB no longer has the time to figure this out with the market pressures they're about to face as a public company.

[Vision33r]

FB is a company that should've go public many years ago. They've only been profitable the last 2 years when institutional investors started pumping in money. The problem with FB is they've already conquered the market, I don't think there's more room for growth.

Everyone has a FB account and they don't have any new products or new stream of revenue other than advertising.

FB music, movies, stores? I think FB wants to become more than Google but they have to careful. One wrong move, people could leave in droves like Netflix.

This is a $6bn company in my book.

[Exhaust Muncher]

Everyone has a FB account and they don't have any new products or new stream of revenue other than advertising.

This is the very reason why I dont count FB as a dump. Investors will become the primary focus to achieve and maintain satisfied investors. My question, again, is how does FB plan to innovate from here?

[AIRider]

This is the very reason why I dont count FB as a dump. Investors will become the primary focus to achieve and maintain satisfied investors. My question, again, is how does FB plan to innovate from here?

Ads ads ads. And then more ads.

I'm not sure if any of you have used their payed add services, but it's damn accurate. If you know your target audience, you can create an add campaign and target very very specific age groups, interest group, male/female, religious groups, etc.

it's very effective. I got 100$ free FB add money from godaddy when I got a server, and ran a phony sweepstakes to see how many hits I'd get. And within 2 days, I got all the clicks I was expecting.

It gets expensive if you want your ads to run during peak hours, top of page, etc..

[Harv]

It's all about the AD's for Facebook.

http://searchenginewatch.com/article...-Page-Insights

Their mobile pages have been ad free, but not for long.

The question is will users simply live with it? Or will they say they've had enough when their page is half full of AD's.

[Exhaust Muncher]

It's all about the AD's for Facebook.

http://searchenginewatch.com/article...-Page-Insights

Their mobile pages have been ad free, but not for long.

The question is will users simply live with it? Or will they say they've had enough when their page is half full of AD's.

This will ultimately depend of the layout of their ads. At the moment, they arent annoying because I personally dont even pay attention to them. Marketing isnt something FB will throw by the side and ignore. They will definitely create some strategic marketing approaches. Even now with the best of the best wanting to be apart of this giant. I remember when I was younger and used MySpace, their ads were attrotious and annoying.. If FB gets to that point, yes, their user base will fall. Also, I would like to see the accurate user base when they release it. I would like to know if that counts as oone user with multiple accounts (I.E- Fan pages, bluff pages, business pages, etc.)

[AIRider]

Anymore news on this front .

[The Ninja]

I started in the stock market in mid 2011. We had some extra cash that I invested so we bought F, AAPL, and CTIC. Around November of last year I sold AAPL for a profit of $100 a share so we could put that down on the new car we bought and now we have a very manageable car payment. Yes I know we could have made a LOT more on AAPL but this is not what this thread is about. We also sold CTIC as they will likely never get FDA approval for their cancer drug.

So that leaves us with one stock; Ford. The stock has been good to us. My question is what is the best way to invest long in one stock. Is it as simple as buying shares low? When is the time to get out; when they hit the target? I am in no hurry but I don't want the money to become stagnant.

[a_riot]

Have we forgotten 2001 already? Webvan, Pets.com, Friendster, Napster, etc? I don't think Facebook will be around in a couple of years, at least not in its present form. They bought Instagram for a billion dollars, so they can't be very clever businesspeople. It sounds like a ponzi scheme to me where a bunch of hype will get people investing and then left holding the bag when the tide turns and everyone hates Facebook and leaves en masse. I think its already started to wither on the vine, and within a couple of years will be a shell of its former self.

[mauslick]

i would have to agree with mr. riot on this one
one of the problems most don't realize about facebook is that you can never leave it,
they own everything you post on there, you 'de activate' your account but cannot delete (from what I understand and attempted) someone must know how to get your info off there.

lots of fine print there that most don't know about..........especially in the 'intelectual property' catagorie.......

seems the life span of facebook interest is about 3 yrs

[Exhaust Muncher]

i would have to agree with mr. riot on this one
one of the problems most don't realize about facebook is that you can never leave it,
they own everything you post on there, you 'de activate' your account but cannot delete (from what I understand and attempted) someone must know how to get your info off there.

lots of fine print there that most don't know about..........especially in the 'intelectual property' catagorie.......

seems the life span of facebook interest is about 3 yrs

Apparently after a certain time span, If I remember correctly I want to say a month, it'll apparently delete the account. https://www.facebook.com/help/?faq=224562897555674

However, Facebook is doing what I thought they would do all along. They are trying to buy up other companies that have potential future stability to strengthen and solidify FB as a long term operating company.

This company wont go away if they play the 8-Ball smart. But as I mentioned in another post, I dont see how they are going to evolve FB into a long term social website. MySpace withered away and now holds only, what seems anyway, young teenagers. Twitter seems to be something that'll be around for a period of time with NEW evolutionizing content. Being new players entering into sports every year and new companies starting, current companies releasing news, etc.

When I find myself working 50-60 hours in a week, I hardly log into FB, if at all. However, when I have nothing going on, I find myself checking it more often. FB is a luxury of downtime. No other way to put it. With inflation rising, alongside with debt, I see people working more and more to try and keep their finances in check, I see FB being something that eventually fithering out.

[Vision33r]

Let's take a look at their business, at it's core it is essentially a marketing company. They are selling advertising space and customer contact info.

By estimates they will be trading at 100x earnings based on the IPO pricing of $27-36.

Apple and Microsoft both trades at 11-13x earnings and each post quarter earnings of $25bn+

Instagram acquisition is simply retarded. It's meant to grab additional traffic to Facebook. Mos folks who use Instagram all have Facebook, Twitter, and Google+ The whole point of using Instagram is to tag photos and link them to your buddies back on FB/Twitter.

I think Mr. Zuckerberg is just busy printing money as fast as he could to outspend everyone. FB's business plan doesn't look anywhere close to a billion dollar business. He has received a ton of insider money and that's where the main source of income. The advertising revenue will increase but I don't recall anybody I know on Facebook ever bought a service other than reading an ad which I can find on deals sites for free.

They are not running a search engine, no cloud business, no mobile phone, and no products other than running a website for people that post on just like the vortex on a much larger scale.

It's a classic ponzi.

[saintforlife]

On no planet can you justify their 100B valuation based on their financials. Many people think facebook is a start up company with start up growth potential; its not a start-up growth company, its almost a decade old and its historical growth is pretty unspectacular in and of itself, nevermind its more current growth (or lack thereof). IPOs and specifically tech IPOs are cash-out liquidity events for early investors, not capital raises to fund future growth.

The other argument is "once they figure out how to monetize blah blah." They figured out how to monetize it a long time ago, that's why they have revenue and earnings in the first place. I do not understand what operational catalyst people are expecting where they're going to all of a sudden be able to produce massive sums of cash when they've been "monetizing" their use base for 5 years and have nearly flat earnings growth over the past year. Its not like they go public and all of a sudden all these giant companies are going to be like "wait wait wait wait, you guys have access to 900M people?! Why haven't we heard of this company before, we'll pay you a ton for advertising!"

[rich!]

lottery time http://eresearch.fidelity.com/eresea...calendar.jhtml I'm thinking this one will fall under the 500k asset minimum...

[Vision33r]

It's funny that most of the 99% or 23% are on FB and soon many FB employees will be joining the 1% thanks to the occupy movement folks who are probably posting on FB right now.

[AIRider]

It's funny that most of the 99% or 23% are on FB and soon many FB employees will be joining the 1% thanks to the occupy movement folks who are probably posting on FB right now.

Ain't that the truth.

[Vision33r]

The more I read and hear about FB valuations the more I think the company's future is murky.

This week they've almost doubled the IPO price range and WSJ surveys that most of the companies that own private shares are looking to sell atleast 20% of their holdings on the 1st day. That's a classic case of pump and dump.

[Issam Abed]

They bought Instagram for a billion dollars, so they can't be very clever businesspeople.

Are you on Forbe's top 100 people?
That being said $200M != $1B...
What do people go to facebook for?

1. Photos (pictures of your ex , friends , the usual stalker, etc
2. relationship status

Nothing else really matters to the average person. Buying Instagram was a necessary business move (regardless of how over valued the stock was).

That's a classic case of pump and dump.

What part exactly? The part where they dump 20% their initial investment @ 200% profit and then use the earnings to pick up double the amount of shares when the panic arises?
Sounds like a classic case of making your money work for you considering most of them got in @ an average of $20/share when the private block sales were going through in January.

If you want a good read (and you understand anything about stocks/stockmarket) then go to page 30 , read and crunch your own #'s
http://www.sec.gov/Archives/edgar/da...287954ds1a.htm

This stock will pop....how much it will pop depends on how many shares become available on that day. I have yet to see a stock classified as a "High technology stock" fall below its IPO on its first trading day and if it does FB will yet again become a first.
If FB opens @ $X , expect people to be putting in buying blocks @ $X + Y to ensure their blocks get filled.

Do I think FB is a long term investment? Depends what you call long term.
Do I own or run FB? NO
Do I know what FB's future holds? NO
Does anyone here? NO

....That is my take on the situation. We can speculate all we want about what we *think* the company's value is but in reality no one knows where this is going , not even the founders.

One thing we do know is the FB Monster is uncontrollable. FB archives can tell you more about yourself than you would like to know ....food for thought. Something Google , Linkedin , Apple and all the other popstars could never.

[Vision33r]

What you're preaching for is classic bubble investing and not investing on fundamentals. We haven't seen the bubble pop in this tech bubble rally, yet. There is so much cheap money out today that Wall street doesn't care about fundamentals. They just want to keep cooking these birds like Groupon and FB until it's cooked.

If you look at the stocks restriction on IPO day, you can't buy unless you have a ton of money wired and you can't trade it after you bought it. While the FB employees will be busy selling and exiting their positions.

I believe FB reached it's peak before it went IPO, that's the problem. Even Google was pressured by Wallstreet to extend beyond just search for revenue. FB will be too, the problem is I don't think Zuckerberg is that good. I think he's over-rated. I have yet to see him change FB's company direction. Eventually the social media ad revenue will go south and they will need to change the site to force feed ads and choice other revenue streams. That's why people will leave in droves, because FB is not Google, they don't have other revenue streams in case their main audience bails.

I agree with you that FB will pop, there's money to be made but the outlook on the long term of the company is not so good.

[beng]

Let's take a look at their business, at it's core it is essentially a marketing company. They are selling advertising space and customer contact info.

Facebook is the largest data store of personal information & preferences that has ever existed in the public space.

Its more of a marketing research data mine than it is a marketing firm. The value of selling ad space is dwarfed by the value of understanding, modeling and pedicting user behavior. I don't think anyone is able to fully quantify the value of that information.

[rich!]

While the FB employees will be busy selling and exiting their positions.

probably depends on their vesting schedule and limitations of selling from the IPO date.

[Vision33r]

Facebook is the largest data store of personal information & preferences that has ever existed in the public space.

Its more of a marketing research data mine than it is a marketing firm. The value of selling ad space is dwarfed by the value of understanding, modeling and pedicting user behavior. I don't think anyone is able to fully quantify the value of that information.

This is true, like most social sites even forums such as here it's not so much that Ad space generate the most relevant click-thrus, it's the network marketing potential. I honestly have not ever clicked on an ad off this site or any other site. The only time I ever clicked on an ad is when I'm searching for something and an ad seem to be what I'm looking for.

People go on FB just to browse, respond, and interact with their buddies. It's not a great place to serve up targeted ads. That's my imo and I have worked for an ad agency and dotcom site that specialize in web traffic.

I'm not saying FB is terrible, I think the valuations are way too high unless FB can grow beyond just social media.

[Issam Abed]

I agree with you that FB will pop, there's money to be made but the outlook on the long term of the company is not so good.

Averaged @ 38.90 today for 250 shares and was out by 41.94 (still keeping 20 shares long term) so yes there was money to be made but I find it annoying when people say "Facebook has no future".
I am no fortune teller but I know a guy like Zuckerberg hates to lose. Anything can happen when $$ (alot of it) is involved.

[beng]

Down 12% right now... trading around 33.5

[robr2]

Down 12% right now... trading around 33.5

Zuck loses or makes about $500m for every dollar in value change.

[beng]

Mind boggling

Think he got a pre-nup by the way??

[mauslick]

facebook = big brother

the gov't, employers, insurers, schools, and anyone else that wants info about somebody are all over it............thus garentees it's survival in any regard

they will tap it into the 'data research center ' in utah and it will be a field day of spying on the citizens....

the zuck probably gets a call daily from the NSA, FBI, CIA, DHS, with offers of golf, vacations, etc.

and the boys over at apple get the same.........as do microsoft....

[Diamond Dave]

Let's take a look at their business, at it's core it is essentially a marketing company. They are selling advertising space and customer contact info.

...

It's a classic ponzi.

No other marketing company on the planet holds the amount of user information or up to the moment demographic data.

[jnm2.0t]

Mind boggling

Think he got a pre-nup by the way??

I don't think it really matter at that point.

[SAPJetta]

[ValveCoverGasket]

im waiting on options trades to start on the 29th....

[beng]

im waiting on options trades to start on the 29th....