Facebook Expected To Go Public Next Week 192
First time accepted submitter foozie writes "Many credible sources, including Forbes and CBS, say that Facebook will finally IPO next week, raising about $10 billion and valuating at $75 billion, almost three times the valuation of Google at the point of their IPO in 2004. This shift raises questions about how the new ownership will affect the company's ability to innovate and remain on the forefront of social media."
Facebook Innovation? (Score:4, Interesting)
Re:Really? (Score:5, Interesting)
My thoughts were more aking to: "They didn't sell the company yet? What are they thinking? That they have a sustainable business?"
Re:Innovate? (Score:4, Interesting)
We should have.... but Facebook did something what WWW couldn't and that is that every person has a own "website" where they have their contact information, photos, journals and so on.
The 90's boom for WWW was that everyone would have a own website.
It did not succeed as now WWW is primarily only used by corporations and teams (projects etc) but the normal people are far away from WWW idea to have homepages.
Facebook is the "homepage 2.0".
Is it innovative? No.... but is it something? Yes.
To get innovation back to people, from corporations for sake of security. We should have easy way to get normal people to make own pages, for their chosen server provider with small fee (like 1-2 euros a month for 1GB storage).
It should be easy as just drop a package to directory and then open site with editor and drag'n'drop images, resize tables and banners, place input boxes and link to existing data just by drag'n'drop way and automatic galleries with directory hierarchy.
But even today, almost after decade of CMS's and others... It is still too difficult to make a own website. So people love facebook or Google+.
Re:Given Goldman Sachs' non-public/non-US offering (Score:4, Interesting)
...I'd like to know how much ad revenue have they generated in the past year, which would be a small fraction of it's valuation....
To extend on those remarks, two years ago the entire online advertising market was about $25B annually, with about half that going to GOOG for search placement. Old timers like myself will be surprised that only about a third of the online ad market is banner ads. I suppose adblocker-type technology will eventually completely kill off that market segment, or at least I hope it does. Anyway, FB can only be a small fraction of $10B ad revenue.
In normal market conditions companies used to sell for P.E. ratios in the single digit-ish range, but for a couple decades ultra high PE ratios have taken over. Once the baby boomers cash in their 401Ks that'll drop back to normal. Anyway it would not be all that out of line for a couple billion in revenue to account for a couple dozen billion in valuation.
Also the data they have is useful for spam services that are not online. Expect it to be mandatory to link your postal spam mail address and your social security number to your FB account, supposedly to cut down on griefers and spammers, but more likely to make the data they have on you more valuable.
Good news everyone; It's going to DIE! (Score:2, Interesting)
It's the beginning of the end for facebook. I know people have been predicting that forever, but now it's as certain as the pull of gravity.
Once it's gone public, the pressure to maximize short term profits will force their hand, and really put the screw on the user.
Internal bureaucracy, not innovation is dominant for a company at this stage of its life, and totally dependent on the network effect (must remain above critical mass or else). /popcorn
Facebook is going to be torn apart by tidal forces, and there is nothing anyone can do about it.
Re:"company's ability to innovate"? (Score:4, Interesting)
Re:your tax dollars at work (Score:4, Interesting)
http://whoownsfacebook.com/ [whoownsfacebook.com]
Re:IPO of Net ventures (Score:5, Interesting)
Well, one problem was that Netscape didn't actually have a history of making money. The other problem is that they didn't even have a clear idea of how they were going to make money. There wasn't a clear business model. It was basically "hey, this is the Next Big Thing! Get in on the ground floor, and we'll figure out that whole profitability thing later. But hey, this is after all the Next Big Thing, how can you lose?"
Now, that's not how IPOs are supposed to work. You're supposed to go public *after* you have a proven track record- consistent profitability, a history of growth. But Jim Clark really wanted to cash in, so he decided he'd just skip those steps. And that basically set the model for the Internet Bubble. Profitability was meaningless, sound business models were meaningless, the only thing that mattered was getting lots of people to use your software/web site/service. The profitability thing, well, they'd just figure that out later. Except, of course, most of them didn't. Inevitably people realized that most of these companies weren't the Next Big Thing, and the market tanked. The only stocks that ended up being worth anything were the old-fashioned ones. You know, the ones with business models. The ones that made a profit.
So how does FaceBook stack up? Well, according to Reuters, Facebook raked in $1.2 billion in revenue the first 9 months of 2010, and earned $355 million on that, a profit of 30%. That's a lot of money, and that's a really good profit margin. And they're growing. According to a Reuters article, Facebook earned $500 million in just the first six months of 2011. FaceBook is not another Internet Bubble company. They actually know how to make money, and a lot of it. Whether the stock is a good investment will depend entirely on how much you pay for it. Right now, a typical company trades at around 20 times earnings- that is, for $20 for every dollar of profit. This is the P/E (price/earnings) ratio, which is the single most important number to know in looking at stocks. Anyway, If you're paying several times that- 50, 60, or 80 P/E- FaceBook will have to increase its earnings massively in the future to justify that price.
So it's all about how cheaply you can get it. A terrible company can be a great investment if you can get it really cheap. A great company can be a terrible investment if you pay too much. The Wall Street Journal and other publications are going to be chattering a lot about how much the company is really worth. The reality is that the average Slashdot reader probably has just as much clue as they do about Facebooks long-term viability.
So I'm curious. What do people here think- is FaceBook here to stay? Or is this just another social media fad that will go the way of Friendster and Myspace, as soon as something better goes along? Do people still use FaceBook, or have people sort of reached a saturation point with it?