Facebook IPO Stumbles Out of the Gate 423
Facebook's much-hyped IPO kicked off today, but an anonymous reader points out that things didn't go quite as smoothly as investors hoped. "Public trading didn't get underway until about 11:30 a.m. ET, half an hour after it was supposed to. The delay was likely caused by the huge amount of interest in the stock – especially by retail investors. In the first few minutes of trading, Facebook shares were only up between 5 and 10 per cent and by noon were essentially back down to the IPO price of $38. Many observers had expected the stock to double in price by the end of the day, if not sooner." The NY Times has a data visualization showing how Facebook's IPO compares to other tech IPOs throughout the years, and how the first day of trading treated all of those companies. Meanwhile, the debate is lively over whether the social networking giant will be a good investment. "The banks helping take Facebook public want us to value this 8-year-old upstart at as much as $104 billion, more than Disney or Kraft Foods, though those companies earn three and four times more. That top valuation is also more than 100 times Facebook's earnings last year, versus 13 times for the average company. At such a high price, it will take years for this so-called earnings multiple to fall to a more reasonable level, and that's assuming the company can maintain its torrid earnings growth."
ObNelson (Score:5, Funny)
(points) Ha ha!
They remember the Dot-Com Bubble (Score:5, Funny)
A bunch of investors throwing tons of money after dot-com companies on the belief that these companies, despite having no earnings, would somehow grow big. Then in 1999-2000 the bubble burst.
Today's investors are not going to make the same mistake of going after another dot-com company that has almost no earnings. The memory of 13 years ago is still too fresh. (Plus many of them are probably short on cash due to the ongoing recession.)
Re:They remember the Dot-Com Bubble (Score:4, Insightful)
A bunch of investors throwing tons of money after dot-com companies on the belief that these companies, despite having no earnings, would somehow grow big.
Just like Facebook then.
Their income and profits are that of a medium sized business, not that of a top NASDAQ trading company.
Facebook are already stuck in the dinosaur age of the Internet. Facebook is a web 2.0 company, people are moving to mobile and Facebook have nothing to answer. They are not inventing or innovating, just acquiring other companies.
More businesses are going to be overvalued the bubble will pop and the fallout will be huge. Facebook will survive by the skin of their teeth, just like AOL, Yahoo and MySpace do today.
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A bunch of investors throwing tons of money after dot-com companies on the belief that these companies, despite having no earnings, would somehow grow big.
To be fair, there's nothing inherently wrong with that. Amazon.com, for example, once fit exactly this description. In fact, it lost a lot of money for a long time before it ever turned a profit... by that account, Facebook is actually ahead of the game.
The more important issue is that only one out of every 20-50 of these companies ever ends up realizing their promise. If you are an investor who understands that risk, then it's fine to invest in tech startups with big dreams and little or no positive cashfl
When they (Score:5, Insightful)
announced this IPO, I was skeptical. Then they amended it, eight times (I think). Now, it seems to me that we've blown a rather large bubble - as the article says, this 104 billion is 100X their earnings last year. I wonder which set of retirees or naive persons will lose their asses on this one when it pops.
I remember when, recently, myspace was quite large. Does anyone else have a myspace page still? Now imagine if you owned 100 shares of that company. . . . . Now imagine your investment person has most of your retirement tied up in that company. . . .
Thoughts?
Re:When they (Score:5, Insightful)
If you are risk averse, stay away from IPOs? This ain't rocket science... the more risk you are willing to take, the higher return you will get long term. If you are not able or unwilling to stay in for the long term, or a drop in your portfolio will keep you up at night, play it safe. I am a moderately aggressive investor as I have a 30-40 year investment timeline and a Finance background. My mom who works for the government, hates risk and will be retired in five years should have a more passive investment strategy.
Re:When they (Score:5, Insightful)
No, because if this were true, then risk would not be risk. That is, if engaging in risky behavior somehow was safe, then it would not be risky.
The more risk you take, the higher the chance that you will end up sleeping under a bridge.
Re:When they (Score:4, Insightful)
Efficient market theory has one major tennet. Basically that the overall demanded return is directly proportional to the riskiness of an investment. While markets are not 100% efficient, they are pretty efficient and multitudes of studies show this risk/reward expectation holds up in real life.
Risk is safe if you are able to engage in multiple non-correlated risks (your car insurance company does this well) or have a time horizon that allows you to ride out short-term (sometimes short-term can be 20 years or more...) downturns.
Please don't equate financial risk with jumping off of a bridge or even stupid risk like buying into your brother's Ponzi scheme. Financial risk has a precise meaning and it does correlate with long-term reward.
Re: (Score:2)
2) Did you really just compare myspace to Facebook and imply Facebook will go the same route? That's laughable for the foreseeable future.
Re: (Score:2)
foreseeable future
Define foreseeable future. Please.
And yes, yes I did.
Re:When they (Score:5, Insightful)
2) Did you really just compare myspace to Facebook and imply Facebook will go the same route? That's laughable for the foreseeable future.
I'd love to hear why exactly that's so out of the question.
Re:When they (Score:5, Insightful)
There was a time the same could be said for MySpace.
Re:When they (Score:5, Insightful)
Hmm, no. I very much doubt any of that is true. Facebook is definitely past its peak. It's not actively bleeding users yet, but now that they have a bunch of shareholder to answer to, they will get greedier and even more maliciously corporate.
It's not like Facebook has a loyal fanbase. This is not Apple, nor Google, nor even Microsoft. It's a company that most people use for the sake of convenience, but most people have little respect for -- every change they make results in mass protest, and has done since its inception. Its parasitical nature and disrespect for privacy is well-known throughout the World. Just as with MySpace, people would drop it like an hot stone if another social network had their friends on it.
Now, for now, their friends are not on Google+ -- but that can turn on a dime. All it needs it Google to care about taking that top spot from Facebook. A good six month marketing strategy, some high profile users, and Facebook is a dead as MySpace.
That is all it takes. It can happen. And is very likely to happen at some point in the next 5 years max.
Re: (Score:3)
The social web is highly fickle. All it takes is something else to seem "cooler" and the next generation will switch. High school kids don't want to join a social network just because everyone older than them is on it (in fact, that's probably a negative). So, it's up to the arbitrary whim of the next generation's idea of "cool". If facebook gets the UI right, they win another term, if not, they lose, and it all goes downhill from there, very quickly. But it's mostly just pure dumb luck.
In my opinion, FB's
Options trading (Score:2)
What a moronic conclusion (Score:3, Insightful)
A company issues an IPO and the closing price ends up at the same price as the IPO price? Not only is this not "stumbling out of the gate", but it means it was done right. If the price jumps too much, the founders of facebook lost out on a lot of money. If it drops, then the initial investors were suckers.
Whether Facebook is able to increase earnings remains to be seen. My gut is it will increase substantially, but not enough to justify the current P/E ratio once risk is factored in. But others think the opposite. So, the investment bank did a very good job in pricing.
Re:What a moronic conclusion (Score:4, Insightful)
Look at Zero Hedge posts following this today, and see how this is all through NASDAQ execution tricks, and underwriter manipulations.
Failbook was a bust.
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Mod parent up. It's the winner's curse of auctions.
Google also "stumbled" out of the blocks because it's reverse dutch auction shifted a lot of the money to the founders and away from the IPO investors.
Facebook is kind of doing the same thing. They cranked up the price and quantity when the figured out demand would be so high - once again shifting profit to the founders who are selling.
Re: (Score:3, Insightful)
> the closing price ends up at the same price as the IPO price?
but only because it was proped up by the underwriters: http://www.bloomberg.com/news/2012-05-18/facebook-underwriters-said-to-support-stock-at-near-38-a-share.html [bloomberg.com]
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That's all logical and reasonable, but the success of FB's IPO will be based on expectations, however irrationally exuberant. If the stock price fails to meet expectations of unreasonable growth, it will likely be punished by unreasonable declines.
Re:What a moronic conclusion (Score:5, Insightful)
Nope ... it was overpriced.
The only thing that prevented the stock from going below the IPO price was MASSIVE underwriter support (i.e. the banks that got paid to do the IPO buying the stock in large volume whenever it hit the IPO price of $38).
Look at the price chart here:
http://finance.yahoo.com/echarts?s=FB+Interactive#symbol=fb;range=1d [yahoo.com]
See the flatline at $38 from 3:30-4:00pm? That's due to the underwriters buying the stock in massive volume providing support at $38. If you monitored the detailed stock quote during this time (as I did), you'd have seen that the bid volume, normally single or double digit lots spiked to a continuous 99999+ lots (i.e. 10,000,000+ shares) during this time - i.e. the underwriters were essentially buying unlimited volume of the stock at $38 (to artificially support it). From the trade volume during that final half hour, I reckon the underwriters bought well over 50M shares (10%+ of the 420M shares floated).
So... stumbled out of the gate is being kind. It really slithered out like a giant wet turd.
Re:What a moronic conclusion (Score:5, Informative)
You can see time they've stepped in. During that flat line you can see they've stepped in 5 or 6 times in just 20 minutes.
GOOG is undervalued (Score:5, Interesting)
FB knows your stated desires. GOOG knows you're hidden desires. FB gets you when you're goofing off. GOOG gets you when you're actively seeking something and you're ready to buy.
GOOG is undervalued.
Re:GOOG is undervalued (Score:5, Funny)
Eventually GOOG will move into their endgame, where you pay $20 per month for the service of them not sending your "private browsing" search history to every one of your Gmail and Android contacts list entries.
Re:GOOG is undervalued (Score:5, Funny)
FB knows your stated desires. GOOG knows you're hidden desires.
Between the two of them, they could create one heck of a phone sex operation.
one heck of a phone sex operation (Score:3)
FB knows your stated desires. GOOG knows you're hidden desires.
Between the two of them, they could create one heck of a phone sex operation.
Yeah, but "FaceGOOG"? I wouldn't go for it. :-P
Stumbles? (Score:2, Insightful)
They NAILED the IPO, and neither undersold the stock(like LinkedIN did) and lose money that way nor did they value it too high and scare off any potential investors. I'm surprised and impressed.
Sure, for the guys holding the stock at FB it's a letdown, but the company nailed it.
Re:Stumbles? (Score:5, Interesting)
Zuckerberg proves how smart he really is (Score:4, Insightful)
The press coverage of Facebook's IPO is completely idiotic. For years the investment banks have been sticking it to companies doing IPOs. If the stock gets sold at $38 and it ends the day at $100, that means the company *should* have raised more than twice as much as it did. And it means that the employees participating in the IPO also got shafted. The people who benefit in that scenario are the privileged investors who get to buy at $38 and sell a few hours later at $100.
If Facebook ends up close to $38 at the end of the day, it will be a rare example of the stock having been priced correctly at the start. Where it goes from here is anyone's guess, but I have increased respect for Zuckerberg. Google had a different IPO process but also didn't give away a lot of money. They knew what the banks were trying to do to them.
Re:Zuckerberg proves how smart he really is (Score:5, Insightful)
Others have mentioned the underwriter issue, but take a look at this article [latimes.com]. Basically, the underwriters of the IPO stepped in every time it looked like the stock might hit $38 in order to avoid it going negative. So they end up with more stock than they planned on, which they will be hoping to offload in the next few weeks. The idea being that if the stock tanked out of the gates it would shatter confidence and they would lose money, but if they can maintain even or positive valuation for a little while it will increase investor confidence and they will be able to offload these extra shares bit by bit. Basically perfectly legal manipulation of the stock price in an attempt to assuage investor concerns. The fact that the stock didn't really pop does seem to suggest that they didn't undervalue it (which has been a favorite game of underwriters in the past, as it puts more money in their pockets), but you can't really tell from the trading results whether it was overvalued because, at least for now, there are major banks protecting the stock price.
Personally I think the stock is rather overvalued (I'd say by about 2-3 times based on potential for growth; I just don't think there is that much headroom for user growth, and thus far they haven't been terribly good at monetizing their vast user base), but then I'm not a trader and my talent for picking stocks has yet to make me rich (or even a significant profit).
For Future Reference (Score:2)
I'm terrible with money (poor impulse control, I don't think it's because I'm credulous, stupid, or have poor instincts although I guess I wouldn't know), so I don't have the cash to invest in this, just like I didn't with Google or Apple, when people were poo-poohing that stuff too. I realize there's confirmation bias and all, but I haven't made a prediction that turned out wrong yet (I thought people were crazy for buying MS stock in early 2000, that's the only other thing I've been willing to predict), s
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Two points.
First - making any other predictions? Let us say you have a 50/50 chance with FB. In 5 years you could be right because you were perceptive or lucky. Statistics won't tell you which. You need to make a lot of predictions.
Second, why don't you try some type of forced investment planning? Something like investing in your 401(k) and only checking and rebalancing your portfolio once a year? Promise you will put 50% of your next pay increase into savings? If you know you have poor control you can set
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Since people don't remember when they where wrong, you probably have been wrong.
Zynga Tanks (Score:5, Interesting)
No comments about Zynga, the makers of Farmville, tanking?
Twice during the day (so far), their stock dropped more than 10% in 5 minutes and resulted in a halt to trading.
http://money.cnn.com/2012/05/18/markets/facebook-social-media-stocks/ [cnn.com]
Curious (Score:5, Interesting)
I'm curious if price discovery is accurate right now since NASDAQ isn't delivering execution notices for FB orders. I know eTrade was down earlier (even the public website) and Fidelity has a notice that FB trades are stuck and have been since it started trading.
All that makes me curious how many orders are stuck out there in limbo land? Will people find out tomorrow that the order they thought was cancelled got filled?
Seems like a big screw up that NASDAQ doesn't want anyone to know about. I don't think you could have mishandled an IPO any further.
Watching their stock price (Score:3)
If they close in the red there first day of trading, what will it mean to investors and facebook?
Facebook's mission (Score:5, Insightful)
.
I wonder if Mr. Zuckerberg knows that the Internet has beat him to it.
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How is this correct pricing? (Score:3)
I've seen a few comments suggesting that the failure for the stock to rise above the IPO price is a sign that the stock was right priced at the opening.
I don't understand this statement. Is it possibe for the stock to go significantly below the IPO price at this point? I'm sure that the employees with stock options are locked in, and unable to share. Not sure if similar agreements exist with the early investors, but I suspect they do.
How is this right pricing? Seems like the stock really can't go any lower.
The Intangible Pyramid Game (Score:3)
As far as FB goes.. I have to say Im surprised theres not more ducks lining up to play the game, but then again, the CDO's pretty much knee-capped all the big money and I suspect they are still licking their wounds.. (spits out straw)
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
Where have I heard that before? Ah, yes, we're back to valuation based upon "eyeballs" or "clicks." How'd that work out last time?
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
Re: (Score:3, Insightful)
Google was no where as big of a company as FaceBook is now when they IPO'd. I just don't see where the money is to be made unless they branch out into Google's territory of search. FB adds are just harder to target than Google ones. They are half the price but without any click through. Branding would be about the only kind of advertising you do there unless FB gets into phones, gadgets, etc.
If there is a way to make money in social media FB IS the big player here.
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
Branding would be about the only kind of advertising you do there unless FB gets into phones, gadgets, etc.
Actually, branding is the LAST thing you'd do on Facebook. Place your ad on FB, and your brand would be seen as Spam, instead of as something valuable.
Why would any advertiser place their brands ad next to your friend from high-school throwing up, when they can place it next to a Kate Moss cover story in Vogue?
So, that's how branding works.
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Re:It's stupid to compare to Facebook's profit (Score:5, Interesting)
Lots of Slashdotters think branding is a number's formula. It's not.
It's an art.
I'd love to see them try and quantify Kate Moss. It's why Vogue charges $150 CPM, and Facebook $0.01 CPM.
Conde Nast gets $4 billion/yr from about 5 million readers. Facebook needs 800 million people to get that much.
Social media really is useless as an advertising medium. Tech nerds should stay FAR away from the media world. Don't get into the art world if you don't understand art.
Re:It's stupid to compare to Facebook's profit (Score:4, Insightful)
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Google is hugely profitable. Facebook, less so.
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
Google serving ads is different. For anyone seaching for a product they can throw sponsored links at the top of the search results page and they are often relevant to the person searching. This particular advertising mechanism actually makes sense and is probably one of the most effective around. Not that everyone is doing a search where ads are welcome, but that nobody goes looking for products or services on Facebook ads there are never relevant to what people are doing. I suspect FB click-through rate is much lower than Googles. OTOH, FB ads have images and reflect your "likes" even if they are not related to what you're doing at the moment. I suppose the jury is still out on this.
Re:It's stupid to compare to Facebook's profit (Score:4, Interesting)
Google serving ads is different. For anyone seaching for a product they can throw sponsored links at the top of the search results page and they are often relevant to the person searching. This particular advertising mechanism actually makes sense and is probably one of the most effective around. Not that everyone is doing a search where ads are welcome, but that nobody goes looking for products or services on Facebook ads there are never relevant to what people are doing. I suspect FB click-through rate is much lower than Googles. OTOH, FB ads have images and reflect your "likes" even if they are not related to what you're doing at the moment. I suppose the jury is still out on this.
That is true of the search network - but not so much the display network, which Google also aggressively push.
We are running a campaign for our software/web development company as an experiment at the moment. After reviewing the data I was surprised to see we only had a handful of clicks coming through from the 'Search' part of it - the vast majority came from the Display Network (i.e, sites/blogs/etc running Google AdSense to make money). In our first few days it was about a 70:3 ratio.
We decided to run it like that for 2 weeks and then turn off Display and see how it goes (this happened yesterday so no real data yet).
When I started looking for what people thought was the best strategy, I found (as you might expect) a lot of mixed opinions. I did find a Google whitepaper that suggested that using the Display network will result in a better net result, but I haven't read it closely yet.
We - like I imagine most businesses - are not just interested in clicks, we're interested in 'leads'. My data is obviously from a very small period of running ads, but so far it seems that the bulk of the traffic coming from the Display network is "unqualified" and will have a lower overall "yield" when compared to the Search traffic - people actively seeking stuff.
It is pretty interesting stuff to play with though, especially for me - I have no marketing/sales background; I know a lot of this stuff is old hat to people that have been doing it for a while but it's fascinating to see the differences in how people click and what they do in this sort of way.
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Google was the odd man out of the thousands of dot-com IPOs that fizzled, if not crashed and burned. One success story and all the toilet paper stocks are forgotten...
How long have you been working on wall street? Just asking...
Re: (Score:3, Insightful)
That's an unfair comparison. People could see how Google would make money from day one - me included. There is so much uncertainty around Facebook that its a different ball-game. Here are a few obvious issues around Facebook
- Untested and very young CEO with questionable integrity
- Poor privacy record
- Pays a PR company to discredit competition (highly unethical)
- Product of questionable origins (highly suspect)
Everything about Facebook smells bad from day one. The obvious way up from here is to intrude
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
I am not sure which is more disappointing. The parent post or the people who voted this insightful.
Google and Facebook are hitting the Holy Grail of marketing. They do not advertise to generic demographics. Instead they are able to market to the individual. The more information they can find out about you, the more effective their advertising.Instead of marketers blindy throwing out products to 25-34 year old females, they will be able to disect the market in finer terms and use their money wisely. The more effective the advertising, the more money they can charge. So while you laugh at the idea, Google's founders could lose a billion in their couch cushions.
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
I think that's the crux between Google and Facebook, really, and probably why Zuckerberg seems so interested in integrating search into Facebook all of a sudden. I'll bet plenty of people post things to Facebook about how much they like some expensive trinket, but it's Google that gets to see which ones are actually looking into making the purchases. My long term prediction; neither company is going to go away anytime soon, but Google is going to see the growth while Facebook is going to start a slow slide into mediocrity with the next few years unless it can find a major source of revenue in all those terabytes of data it has.
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And that is exactly the point. right now, Facebook has been run by a kid who just wants to build the biggest social network. If Facebook can succeed in learning how to make moeny, they will go from their paltry $1 Billion earnings to a really big number :)
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
There are a few issues with Facebook making a lot of money:
(1) - Click through rates of Facebook ads are abysmal, at best.
(2) - People use Facebook to share stuff, not to look for stuff to buy, thus they ignore most ads. Reason Google click through rates are better because people look for stuff on Google, often to buy.
(3) - Growth of Facebook in countries where the population has spending power, thus being desired products by advertisers, has stalled or it's very slow.
Re:It's stupid to compare to Facebook's profit (Score:5, Interesting)
Google and Facebook are hitting the Holy Grail of marketing. They do not advertise to generic demographics. Instead they are able to market to the individual.
Advertising is still only worth anything if the people seeing the ads actually buy stuff.
Just this week, GM pulled out of Facebook advertising [reuters.com], representing a loss of millions of dollars to Facebook. Here's the money quote, in every sense, from that link:
GM dropped its Facebook ads because they were less effective than other options such as Google's AdSense, the sources said. Facebook's ads garner about half the clicks per page view, a measure of effectiveness, compared with the average website.
It turns out that focussed advertising is much more valuable when it's related to something that someone is searching for or reading about right now, and people who use Facebook a lot are (shock!) not doing it because they enjoy the ads. IIRC, there was another survey reported this week, in which about half of the Facebook users questioned said they would never click a Facebook ad.
The more effective the advertising, the more money they can charge.
Exactly. And Facebook aren't doing very well on that score.
What's more, the growth in their user base so far has been based on social pressure and reaching a critical mass of users who bring their friends along with them through networking effects. There simply aren't enough people in the world for them to carry on doing that at the same rate.
Surprising, I know, but I'm in the "Are you kidding?!" camp on this one.
Re: (Score:3)
Re:It's stupid to compare to Facebook's profit (Score:5, Interesting)
There is a significant difference tho; with google there is actually a fair chance that the searcher is looking for a product related to the actual search at hand, while with facebook you're basically trying to surreptitiously slip sales in to a largely unrelated activity.
Targetted advertising simply isn't that worthwhile if you cant target it temporally. You may know my interest intimately, but you're not going to sell me anything unless I'm actually in the market for that specific thing at that specific time. At best you can build brand awareness, but there are many ways to do that that are at least as good or better by simply targetting specific venues, mags, etc.
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
Seems to have been quite great for Google, which spent its first six years (1998-2004) without making anything and just running things on venture capital.
Actually not quite true, in the year+ before Google's IPO they were making money hand over fist, far more than they had thought they would be, and so they were hiding it:
By 2003, AdWords Select was serving hundreds of thousands of advertisers and making so much money that Google was deliberating hiding its success from the press and from competitors. But it was only a launching pad for the next brilliancy.
source [nybooks.com]
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
That's not true. This information is all public and easy to look up...
Google had $3.2B in revenue in 2004, and their IPO made them worth about $24B. Their net income the quarter preceding the IPO was $80M, and diluted EPS was $0.30.
Facebook had $3.7B in revenue in 2011, and their IPO made them worth over $100B. Net income last quarter was $137M, and EPS was $0.09.
Revenue and income are clearly in the same ballpark, but valuation and EPS sure aren't. Seems to me FB is in fact way overvalued right now...
And even more interesting to note is Google's revenue and income took off like a hockey stick in the quarters following their IPO (and thus so did the stock). I just don't see Facebook's revenue doing the same. There may soon be a lot of disappointed investors who naively assumed FB stock would be going the same route as GOOG just because it's a "trendy company" rather than actually looking at the financials...
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
There may soon be a lot of disappointed investors who naively assumed FB stock would be going the same route as GOOG just because it's a "trendy company" rather than actually looking at the financials...
Those aren't investors, those are gamblers. A fool and his money...
Re:It's stupid to compare to Facebook's profit (Score:4, Insightful)
Re: (Score:3)
Zuck has ... made it very clear he still doesn't give a crap about making money (and probably never will).
For himself or others? Because it's pretty clear that he is making/will make a boatload of money.
Re:It's stupid to compare to Facebook's profit (Score:4, Informative)
If I understand correctly, US law requires companies with more than 500 investors to *publish their finances*, but they don't have to have public shares.
Re:And Facebook will NEVER monetize through ads (Score:5, Funny)
People still print ads? On paper?
It's that stuff you see outside, under the daystar.
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People still print ads? On paper?
It's that stuff you see outside, under the daystar.
What is "outside"? Do you mean the unwalled green and blue room?
Re:And Facebook will NEVER monetize through ads (Score:5, Insightful)
Targeted adds...
ARGH!
Sorry, second time I've seen this. Driving me nuts. It's "ads". It's short for "advertisements". Count how many 'd's you see in "advertisement". You see "adds" when a new group of mobs attack you during a fight. You see "ads" in a newspaper. Well, you used to, back when people still read newspapers...
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
10% Negative? That's a CRASH! (Score:5, Informative)
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN [wsj.com], to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
Re:10% Negative? That's a CRASH! (Score:5, Informative)
Re: (Score:3)
Sure, which is why a lot of the pundits were predicting before the markets opened this morning that at the end of day one the shares would close at roughly double the opening price. Quite a few people are eating their words with a side order of humble pie tonight.
I suspect Facebook is in significant trouble now. Today should have been a spectacular confidence booster that set the tone for future offerings and investment. In reality, it's been a damp squib, and that's going to make a lot of people think twic
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Re: (Score:3)
It needs to close at around $43 or $44 for the IPO to not be considered a failure.
Re:10% Negative? That's a CRASH! (Score:5, Informative)
What makes media happy and what makes the company successful are not always the same thing.
-GiH
Re: (Score:3)
Nice spin, but they're poised to close even, or maybe 1c above offering. The only reason it hasn't gone through the floor yet is likely because there is a large volume of limit buys and sells at $38.00 -- people who want to get out if the price hits offering, and people who will only buy at the offering price.
Re:10% Negative? That's a CRASH! (Score:5, Informative)
Actually.. oddly enough that would mean that facebook priced its IPO perfectly.
From the news I heard, the underwriters had to step in today to assure the stock didn't go below the IPO price. The pricing of the IPO was not as "perfect" as you assert.
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Re:10% Negative? That's a CRASH! (Score:4, Informative)
Insiders aren't even allowed to sell (usually) on IPO day unless their sale was worked into the subscription. Even long after they have to announce their sale a few weeks ahead of time before being allowed to sell. (VC guys would be the definition of insiders).
Ultimately, the only people that make money on a baddly priced IPO are the folks that get in on the initial IPO subscription (outside buyers). That's not good for the company, and it dose nothing for the owners and initial capital investors.
Re:10% Negative? That's a CRASH! (Score:4, Insightful)
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Funny,
This is the most prominent link, on what I supplied:
http://professional.wsj.com/article/SB10001424052702303448404577411903118364314.html?mod=wsj_streaming_facebook-ipo&mg=reno64-wsj [wsj.com]
Subtitle? "Underwriters Stepped In to Support Social Network's Shares at Offering Price"
Next time they want to build a bubble, they'll have to blow us a little harder...
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Profit is how investors get paid.
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He's not right. There are lots of ways to profit from investing, besides just selling it off on the market for a higher price. The first method that comes to my mind is shorting, where an investor sells stocks borrowed from someone else with the promise of buying them back later to return them. If, at any time during the loan, the price drops below what the borrower sold the stock for, the borrower can buy back the necessary stocks to return the loan, and have made a hefty profit. Of course, the lender is n
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He's not right. There are lots of ways to profit from investing, besides just selling it off on the market for a higher price. The first method that comes to my mind is shorting, where an investor sells stocks borrowed from someone else with the promise of buying them back later to return them. If, at any time during the loan, the price drops below what the borrower sold the stock for, the borrower can buy back the necessary stocks to return the loan, and have made a hefty profit. Of course, the lender is now left with shares that are worth less, but that's always a risk of investing.
It all ultimately amounts to the same thing - you make money by convincing someone else to give them to you in exchange for the stock. In that model, the sole value of the stock is in the potential to convince another person to part with more money - if you're the last guy in the chain, all you have is a worthless piece of paper. Yes, in theory it gives you some voting rights, but those are meaningless in practice for vast majority of publicly trading companies.
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Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
Re:It's stupid to compare to Facebook's profit (Score:5, Funny)
MEME TIME
Remember M$ and "Monkey Boy"?
Remember MAFIAA ?
Here's our NEW MEME. Carry this in every Facbook CEO Namecheck:
"Suckerborg".
Thank you. That is All.
Re:It's stupid to compare to Facebook's profit (Score:4, Insightful)
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You make a good point. I'm in at $40 - let's see how the rest of the day goes :)
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make a great service first, and only then focus on profiting.
The only problem is that the initial "great service" needs to be something that leads to a sensible and sustainable business model. If not, then either the business will fail, or it will need to change its "great service" to be something that has a business model.
So assuming Facebook sticks around and they want to make tons of money, it should be leading us all to ask, "How are they going to use our data to make money?" How they use our data today is kind of creepy, and apparently even that's not profita
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
1) Brand new user
2) Posts a multi-paragraph post within a minute of the story going live
3) Glowing review of Facebook that goes against every conventional wisdom
4) Gets basic facts wrong about finance
5) Gets basic facts wrong about business etiquette
Woo. More astroturf.
To be a bit more on-topic: the facebook valuation is insane. A 100 times current earnings? It'll be years before Facebook can justify that kind of price, and that's assuming that it will keep growing as it has - which is an insane proposition, considering that there aren't that many more people who CAN join Facebook.
Re:It's stupid to compare to Facebook's profit (Score:5, Interesting)
And we have absolutely no proof that they ever will be able to effectively monetise Facebook or that it is even possible to the extent that all of these optimists believe that it will be.
Right now Facebook's value is 99% smoke and mirrors, and I would never invest in it.
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The moment they change things in a way to monetize the system is the day users leave in droves to an alternative. They put those ad's front and center, or make you start watching video's to access your wall or any other of a million things that could make them more money and they are going to drive people away.
Maybe they will develop some new neat AI that can figure out when people are about to be in the market for a product and sell advertising to companies that sell that product but I wouldn't bet $1 on t
Re:It's stupid to compare to Facebook's profit (Score:5, Insightful)
Facebook is the identity of the internet going forward.
MySpace is the identity of the internet going forward.
Geocities is the identity of the internet going forward.
AIM is the identity of the internet going forward.
YAHOO Chat is the identity of the internet going forward.
Opendiary is the identity of the internet going forward.
Fucking 4chan is the identity of the internet going forward.
I think it might be a bit bold to say that this one site will be the face of the internet from now on. . . The internet is a fickle mistress, and small changes today can equal large changes in the future. The only difference between those other companies and facebook? Time. (yes, I know that some of them are still successful, I was making a point, just go with it)
Re:It's stupid to compare to Facebook's profit (Score:5, Funny)
Congratulations on missing the point.
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
Once upon a time, a large portion of web sites had Geocities buttons on them, and forums listed AIM names.
Re:It's stupid to compare to Facebook's profit (Score:4, Insightful)
WTF are you talking about?
facebook is growing PROFITS at almost 100% every year. Revenue is up 5X over the last 3 years. they are about at the same point in revenue/profits as when google went public.
the only people i know who still use email are my mom and my kid's baseball team. everyone else i know uses facebook. gmail is mostly for spam and crap email
openID is dead. most legit websites with a login will let you use your facebook account. Facebook is the identity of the internet going forward.
I will say right now that that is only a portion of the population. It may be all that you know of but there are people that avoid Facebook because of one reason or another. Assuming that everyone has an id there, or even uses it regularly is similar to assuming everyone has an iPhone. It may be popular but there will just be people that wish to not use it.
Re:It's stupid to compare to Facebook's profit (Score:5, Funny)
for the 5000th fucking time NO they don't want to play Farmville or meet singletons in their area now.
Tell me about it. I tried to meet singletons in my area, but they kept giving me the same one over and over again no matter how many times I asked for a new one.
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I'm prepared to forgo any further interaction with humanity if signing up for Facebook is the price.
Re:It's stupid to compare to Facebook's profit (Score:5, Informative)
And then there are the people who hate him because he really is a shitty human being long before the social network was made.