Facebook IPO

[EvrClrx311]

realistically... if it hits about $10 a share I'd invest, hoping that they come up with something new in the future that could send the stock back up. The company does have the exposure to an incredibly large audience... just a boring and outdated product that isn't profitable. If they started making gadgets (like cell phones, teleportation or time machines), and revolutionizing how we access and view the world, then I'd get a little more interested... just being a free digital parking lot for people to post data is not appealing anymore. The advertising market is huge, don't get me wrong... but it is a difficult business to be in... specially if its your only business... since people can block or ignore it.

 

[Midpack]

I watched a Charlie Rose interview last night with Larry Page (Google co-founder) and they mentioned that FB is trying to break into search, that might improve their ad revenues. This morning on CBS one of their financial talking heads stated that advertising was FB's only serious revenue stream currently. All that being said, Apple had a near death experience a long while ago and you'd have been dead wrong to have bet against them then...I suspect there's money to be made and lost with FB.

Apologies if the charts below have already been posted...

 

[EvrClrx311]

... that advertising was FB's only serious revenue stream currently. All that being said, Apple had a near death experience a long while ago and you'd have been dead wrong to have bet against them then...I suspect there's money to be made and lost with FB.

... Facebook at its core is more of a public service (helping connect everyone), and they've done a great job with that. They don't physically make or produce anything to sell, IMO they need to change that if they want to become a success on wall street.

 

[CCdaCE]

The most interesting comparison I recently heard was to market caps of Amazon or McDonald's. At the FB IPO, all three were right around the same market cap of $100 B.

I'd sure rather own one of those two companies than FB.

-CC

 

[Midpack]

The most interesting comparison I recently heard was to market caps of Amazon or McDonald's. At the FB IPO, all three were right around the same market cap of $100 B.

I read the same yesterday...

 

[Midpack]

And now down from 38 to 31 per share, more than 18% after 2 days trading! Wowza...

 

[explanade]

Google is mostly making money from advertising. They have a very compelling core product but it exists to generate ad revenues.

I remember a Yahoo employee told me a few years ago that they charged as much as Friends got in the heyday for a 30-second ad, to get placement on the main Yahoo page.

I believe FB is more "sticky" than any other Internet service, meaning they keep eyeballs for a longer period of time than any other service.

Again it's a question of monetization. Ads will probably become more obtrusive.

 

[Nords]

Went ahead and picked up 50sh each at $31.60 today. Hope we get a little upward volatility to go with the downward.

Has anyone taken the time & trouble to decrypt the IPO red herring and financial reports to figure out a price at which we'd be willing to hold our noses and buy?

Only 175 more days until the lockup expires and floods the market with more "cheap" FB shares!

 

[kcowan]

Saw a piece on CNBC this AM where a startup is offering fractional shares via FB for any company that purchases their services. The idea is to open up stock holding to the 72% of the consumers that hold none. If FB can get a piece of that action, it makes more sense than ads.

Same with any purchases through Zynga.

 

[Midpack]

Who knows if it's true, we'll see

And now comes some news about the Facebook IPO that buyers deserve to be outraged about.

Reuters Alistair Barr is reporting that Facebook's lead underwriters Morgan Stanley, JP Morgan, and Goldman Sachs, all cut their earnings forecasts for the company in the middle of the IPO roadshow.

This by itself is highly unusual (I've never seen it during 20 years in and around the tech IPO business.)

But, just as important, news of the estimate cut was passed on only to a handful of big investor clients, not everyone else who was considering an investment in Facebook.

BOMBSHELL: Facebook Bankers Secretly Cut Forecasts For Company In Middle Of IPO Roadshow - Business Insider

 

[EvrClrx311]

this is turning into a circus... I read another piece this morning talking about how Zuckerberg is one of the most atypical CEO's you'll ever find (in a bad way for shareholders). Titled "Why facebook hates its shareholders"

http://money.cnn.com/galleries/2012...acebook-hates-shareholders.fortune/?iid=HP_LN

Here are five signs CEO Mark Zuckerberg doesn't care what happens to Facebook's stock and why that might be a problem.

Summary:
1) "Facebook's CEO delayed going public as long as he could. In the end, he only took the company public because Securities and Exchange Commission rules forced him to. On the day of the IPO, Zuckerberg told Facebook's employees that it wasn't his mission to go public."

2) "You don't have a vote. Facebook has two classes of stock. The ones the company is selling the public only get one vote each on matters such as who should be on the company's board of directors, executive pay packages and company bylaws...The result: After the IPO, Zuckerberg will own 18% of the shares, but control 57% of the votes"

3) "Facebook may have offered its shares to the public, but only at a huge mark up. At its IPO price of $38, Zuckerberg & Co. valued his company at more than 6 times Google and nearly 8 times Apple. What's more, when it looked like those shares would sell, Zuckerberg decided to back up the truck, and dump some more stock, basically dooming its IPO. And for what? Facebook is far from cash strapped."

4) "Zuckerberg has said again and again that profits aren't his first goal. He's on a social mission. That's fine for a private company."

 

[CCdaCE]

Has anyone taken the time & trouble to decrypt the IPO red herring and financial reports to figure out a price at which we'd be willing to hold our noses and buy?

<snip>

What? and take time to look away from the entertaining trainwreck of an IPO? Crazy!

...no, for me anyway, the "evidence" is piling up that a "good company" doesn't always make for a good investment. This is all pure entertainment, I don't even have a FB acct., but, the DW does. Man, I must be missing out.

-CC

 

[clifp]

Well that was $1800 lesson in "I should listen to Clifp"

If I could have gotten shares at the IPO price (I didn't try very hard), I'd be right there with you.

All investors remember the stock that really wanted to buy but didn't for some reason (Apple@80 Fall 2008) that go up. None of us ever remember the stocks that we thought about buying but didn't that go down.

 

[clifp]

t

Summary:
1) "Facebook's CEO delayed going public as long as he could. In the end, he only took the company public because Securities and Exchange Commission rules forced him to. On the day of the IPO, Zuckerberg told Facebook's employees that it wasn't his mission to go public."

2) "You don't have a vote. Facebook has two classes of stock. The ones the company is selling the public only get one vote each on matters such as who should be on the company's board of directors, executive pay packages and company bylaws...The result: After the IPO, Zuckerberg will own 18% of the shares, but control 57% of the votes"

3) "Facebook may have offered its shares to the public, but only at a huge mark up. At its IPO price of $38, Zuckerberg & Co. valued his company at more than 6 times Google and nearly 8 times Apple. What's more, when it looked like those shares would sell, Zuckerberg decided to back up the truck, and dump some more stock, basically dooming its IPO. And for what? Facebook is far from cash strapped."

4) "Zuckerberg has said again and again that profits aren't his first goal. He's on a social mission. That's fine for a private company."

I have to admit that I am biased against Zuckerberg, cause I saw The Social Network, but I do have to believe that making shareholders money isn't his top priority.

It is interesting that at times I have owned shares in many companies with a dual voting class. Berkshire, Ford, Playboy, Google, AWX (my 2012 speculative stock pick) and Kinder Morgan. In a couple of case, Berkshire and Kinder Morgan, the founder seemed to be concerned about making the minority shareholder money. In case like Ford, and Playboy it was clear that Hugh Hefner and the Ford family always did what was best for them, minority shareholders be damned. My guess is that Google will be more like Buffett, and Facebook will be more like Playboy.

 

[kcowan]

Abusing shareholders and customers seems to be Zuck's approach, all for the good of FB and its founders.

 

[Midpack]

I have to admit that I am biased against Zuckerberg, cause I saw The Social Network, but I do have to believe that making shareholders money isn't his top priority.

No surprise, he's been completely upfront about it...

In the S-1 document that Facebook filed today [Feb 2012] in advance of its planned public offering, founder and CEO Mark Zuckerberg laid out his personal philosophy--the one he says will guide the company after it goes public.

"We don't build services in order to make money," he wrote in a personal letter to shareholders included in the filing, "we make money in order to build better services."

Zuckerberg wrote about how he started Facebook as a way to connect people. "Facebook was not originally created to be a company," he said. "It was built to accomplish a social mission--to make the world open and more connected."

Needless to say I don't have a dime invested in FB, but it's fun to watch it all unfold.

I'm not sure making 'shareholders money can be the top priority' for most companies, it's one of several that have to be considered...customers, employees, shareholders, etc. Even Buffett has repeatedly said he just likes the challenge of being the best investor.

From setting that goal aged 11 of becoming a millionaire by 35, Buffett seems to treat investing as an intellectual challenge. He probably learned this from his great mentor Benjaman Graham, who seemed more bothered by being right than being rich, and for whom investing was just one of several high-end hobbies.

I don't think Buffett's top priority is making shareholders money either, but he does align his interests with those of his shareholders so they can benefit (or lose) when he does - that's indeed not the case with all CEOs, BODs, etc.

 

[rescueme]

Abusing shareholders and customers seems to be Zuck's approach, all for the good of FB and its founders.

I like your comment ...

BTW, I have no FB shares nor intend to directly invest in "the product".

I try to invest in only those companies of products I "use" (not on FB, nor ever plan to be), but I/DW may get a few shares in our MF holdings.

I wish them well (regardless of our personal preference for investing) but it seems that they are following somewhat in the tech "fever" of the late 1990's; we all know how that turned out.

Just my simple POV...

 

[ronocnikral]

I may actually learn how to short a stock (or whatever it is called when you bet against it). Thinking....thinking....thinking....

 

[EvrClrx311]

found this particularly damming:

Reddy said that he prefers Google (GOOG) to Facebook. Google trades at just 13.7 times 2012 earnings estimates. If you take that multiple and apply it to Facebook's consensus earnings estimate of 55 cents a share for 2012, you get a Facebook stock price of only $7.56! That's nearly 75% below its current price.

I may actually learn how to short a stock (or whatever it is called when you bet against it). Thinking....thinking....thinking....

I'm with you there... I've never been one to short, but when it comes to facebook's price by the end of the year. I simply cannot see how it's not going to drop at least another 25%... may even end the year under $15

 

[kombat]

In reality, everyone is leery of what Facebook gathers and wants to protect their privacy.

I don't think that's true at all, at least not for FB's primary userbase (teenagers and young adults). I think you're drastically overestimating the importance teenagers place on their online privacy. In my (admittedly limited) experience, they don't care about online privacy at all. They're more than happy to post every intimate detail of their lives online, and think nothing of it.

The notion of the sanctity of privacy seems to be, sadly, an old-school principal no longer held in any regard by the upcoming generations.

 

[EvrClrx311]

I don't think that's true at all, at least not for FB's primary userbase (teenagers and young adults). I think you're drastically overestimating the importance teenagers place on their online privacy. In my (admittedly limited) experience, they don't care about online privacy at all. They're more than happy to post every intimate detail of their lives online, and think nothing of it.

The notion of the sanctity of privacy seems to be, sadly, an old-school principal no longer held in any regard by the upcoming generations.

The teenagers you're talking about have very little to do with facebook's financial picture and stock price... at least for now. Advertising to them is arguably worthless because they aren't the ones spending money... their parents are.

That said... you are correct that every generation seems to care less and less about big brother and their own privacy. I'm sure in 50 years, when these teenagers are in their 60's they'll be dumbfounded at the next batch of teenagers who won't care that the government has installed security cams in their houses and monitor their bowel movements to assess (no pun intended) everything from taxes to health care insurability.

 

[MichaelB]

I don't think that's true at all, at least not for FB's primary userbase (teenagers and young adults). I think you're drastically overestimating the importance teenagers place on their online privacy. In my (admittedly limited) experience, they don't care about online privacy at all. They're more than happy to post every intimate detail of their lives online, and think nothing of it.

The notion of the sanctity of privacy seems to be, sadly, an old-school principal no longer held in any regard by the upcoming generations.

That's possible. Of course, it's also possible that FB's primary userbase hasn't experienced the downside of too much sharing, and when they do, they may be more disposed to control rather than share their personal data.

 

[Midpack]

I remember when people were clamoring to get on MySpace, though that doesn't mean it's inevitable that Facebook will see a similar decline. That all depends on whether someone comes along with something better and/or more fashionable (users can be unpredictably fickle).

 

[ronocnikral]

under $29....

 

[H2ODude]

I just don't get it (Facebook). I'm 61 and have no desire to use it or Twitter (nor do my 35 and 36 year old "kids"), and frankly I'm sick of all the "check us out on FB, follow us on Twitter, blah blah blah." I about puked last night when I turned on Deadliest Catch and they were posting tweets on the damn picture...as if the continuous network logos and banner ads on TV weren't bad enough. As for a stock completely predicated on advertising revenue, I cannot imagine that it is that powerful to warrant the projected returns. I've always thought that if everyone spent like I do, the economy would collapse, and I suspect most on this board behave (consumer wise) the same way I do. I have to think long and hard to tie any purchasing decisions I have made to advertising. Won't say I'm immune, but I'm a fan of generics and value purchasing. The FB hype reminds me so of the dot.com bust. When it comes to an IPO like FB I have to ask, "why would these billionaires and Wall Streeters offer me, the retail investor, a good price on something that is worth a whole lot more eventually?" Does that even make sense? Sorry for the rant.