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."
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: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.
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.
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:Stumbles? (Score:5, Interesting)
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:2, Interesting)
Yep, a lot of people I know avoid Facebook because of the privacy issues, because its easy to say the wrong thing, because of the shitty ads, because for the 5000th fucking time NO they don't want to play Farmville or meet singletons in their area now. They also don't like how much time is chewed up with nonsense postings ("Lol, here's me drunk! Hehe!") or the creepy integration with every damn website out there. Or the even creepier image recognition tagging.
The people I know who religiously use Facebook tend to be slightly dim girls who feel the need to share their entire lives with everybody.
Anecdote, yes. Worthless? We'll see in a few years. I'm sure Marky Mark is quite bright and will try to push into areas such as search or a Friendface phone but there's really not much higher to go and probably a lot further to drop.
We saw all this before in the UK (albeit on a smaller scale) with Friends Reunited. Epic levels of hype, much cash changing hands, site slowly collapses to a fraction of its original size. Ten years ago almost everybody here with an Internet connection was on FR & every day there were stories in the paper about it. Unlike Myspace Friends Reunited was as successful here at gaining a multi-age demographic as FB is now. Still didn't save it.
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, 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.