"What are you going to say, I thought it was a good deal at 100 times earnings. But this 150 times earnings? That's ridiculous."
FB IPO article.
By FortWayne Follow Tue, 22 May 2012, 1:33pm 2,591 views 28 comments
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I like how they've been blaming NASDAQ, like a trading glitch would steer would be suckers clear. A rat doesn't inspect the floor boards, when they are taking the cheese from a snap trap.
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Davis, CA
I've read there's a lawsuit brewing over this.
Awesome!
http://www.chicagotribune.com/business/breaking/chi-investor-sues-nasdaq-over-facebook-slipups-20120522,0,930879.story
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Facebook? Who cares... Can we just get back to some privacy in this country?
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Redwood City, CA
Hey Zuck,
Welcome to the joys of being a public company, namely shareholder accountability.
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RE: Lawsuit I remember Friday after it went public the mother Zuker, started saying "THEN" that Facebook will be in trouble, because their Moblie architecture is void of any revenue generation.
My wife keeps saying, the only thing she can see on her Droid, and now even the iPad, are the text stuff and pictures. None of the Zenga content, or the other links and badges in the margins of the site. Which if you think about it, that is where the bread and butter is.
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Yeah I do sort of wonder WHERE ads would go on the mobile app. My fiancee is on the FB Android app a lot, and there is very little screen RE as it is (granted, it is a lower-end device she uses). Putting ads on there would probably just piss everyone off since it would REALLY clutter the interface. FB is probably well aware of this & thinking up some way to deal with it. It's a simple but difficult issue, for sure.
Going public, in my opinion, marks the end of FB's heyday. They were still pulling in a sizable profit from ads & stuff as it was, and had it remained private & maybe 30% smaller in terms of staff, it probably could have been a rock-solid medium sized money maker for a very long time. But, in capitalism, enough is NEVER enough. Now, they are beholden to shareholders that only care about profit and likely don't share Mark Z's "vision" for changing how people interact. "Fuck that, make us money. We don't care how, just do it." That's who now has partial ownership of the company. FB still has the advantage of having no real competitors, so they do have some leeway in stuffing the mobile app with ads. People will put up with it because there isn't really an alternative for them to get their passive socialization fix from right now.
However, it does feel like there is growing dissatisfaction with a lot of the FB users that I know, and were something to come along that could recapture FB's original simplicity & ease of use, I think that it would start to take advantage of that dissatisfaction. Google+ dropped the ball badly by making their version way too feature-rich & complicated, in my opinion. All that stuff is nice, but it just intimidates a lot of people and annoys them out of using it. They should have gone simpler, IMO. I had a FB account in 2005 and the "experience" changed a lot up to 2009 when I deleted the account. By 2009 it was starting to feel clunky (the web app, I didn't have a smart phone then). Looking at the web interface now when my fiancee is on there...it feels like Myspace compared to how it used to be...too much going on, too much ability for really large photographs to get worked into the UI.
Overall, I don't think that FB was a bad idea at the start. An easy, one-stop shop to keep in contact with people was a neat concept. Once the monetization efforts really got rolling, it fell downhill. I stopped seeing the value in it, and if anything, I saw it as detrimental to my relationships with people since I called (or even emailed) them a lot less because passively observing them left me feeling like I had been keeping in touch...which I clearly wasn't. Once I deleted the account, I started calling & actively messaging people a lot more, and that is how I prefer to interact. It is more important to have just 5-10 close personal relationships than 300+ friend-acquaintances that I really wouldn't care if I ever saw again.
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I fell out of touch with people I might have known for 6 month, 12 years ago for a reason. One of us, decided the other was an Asshole. I don't need them to find me on Facebook and remind me, what a crappy time we had of it, in our twenties.
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San Jose, CA
we may not agree on many things, but amen Captain.
I deleted my account about a year ago. Despite using an ever so slightly different spelling of my name, extended family and obscure associates from long ago still managed to find me, poke me, guilt me into going to events I would rather not make the drive to, one too many times.
Though I will say one thing for Facebook, if you are off the grid its wonderful. If you are not on Facebook people you are obliged to be cordial to, don't have such an easy time remembering you and you're in the clear. Sadly thats beginning to crumble away as the facebook fad has.
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Santa Cruz, CA
The vast majority of people on facebook would never 1. click an ad 2. spend money.
Facebook is not worth it by any stretch of the imagination.
Facebook is now worth 100 billion, Apple about $550 billion but Apple has 50 times more profit than Facebook.
What does that say about facebook stock, maybe a little bit overpriced for the suckers?
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They dropped another 5% today. (5/29/2012)
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Davis, CA
Wake me when it gets to $10.
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It won't get that low, I'm estimating mid teens to low 20's where demand will pick up.
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FortWayne says
By $25 you'll see a bunch of knife-catchers come in wanting to take advantage of the dead-cat bounce. Some of them will make money on this trade, the ones agile enough to get out before the next leg down.
P/E is Dot-Bomb era high, no real investor would touch this until the stock is priced way lower. Mid teens I suppose I could see, but only if the markets are all floating higher and it's pulled along.
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A realistic price considering it's P/E and size would be sub-$10.
http://seekingalpha.com/article/602711-how-overvalued-is-facebook-stock.
I'd short it, but it's too crowded and visible a target.
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I love articles that predict things a week after they happen. Guess what? I'm going to predict today's winning lotto numbers, tomorrow.
And then there are those of us who knew that facebook was overpriced before the IPO. Where's my press pass? I could have written that article when it mattered.
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The only legitimate purpose facebook ever had was trying to hook up with the hottie in college before others got to them. That's the only reason it was ever successful. That's the only reason any college "face book" is every read. People use those books as a menu of the meat market.
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Vicente says
I also like to look at Facebook's forward PE ratio of 63.72. This is the price of the stock divided by future earnings per share. This is also too high and reflects an overvaluation. I would be more comfortable with a forward PE ratio slightly above average of say 20, which means the stock price would be only $8.60.
If Facebook had an average PE ratio of 14, the stock price would be fairly valued at about $6. Or EPS would need to be $2.73 instead of only $0.43 to make the current stock price fairly valued.
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I am really disappointed at these banks.
They should at least hold the offering price for a week or month.
.
.
.
So I can short it.
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zzyzzx says
one uses the PE as it relates to its peers. Its difficult with new companies in new industries so the best that could be a Google/Yahoo since are competing on AD revenues. Since Google and yahoo are currently around 17 .. you can apply similar PE ratios. around 15-17x maybe better...
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thomas.wong1986 says
That still puts the fairly valued stock price below $10/sh
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The problem is not Facebook.
The problem is that no one will invest in another .com company.
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zzyzzx says
Look up Google PE compared to Yahoo.. Dell compared to HP.. or similar companies in same industry... by far many are the same.
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xenogear3 says
Back in the day... Snapple (when it was public) had a PE of 50.
Many of its peers had their PE around 15.. so Snapple cashed out
and was sold to Quaker Oats at peak price. But the value didnt hold down the road...its all about price to earnings regardless if its dot.com or tea water.
http://en.wikipedia.org/wiki/Snapple
The Quaker Oats Company bought Snapple for $1.7 billion in 1994. The company ran into problems and sold it to Triarc in 1997 for $300 million. Triarc sold it to Cadbury Schweppes for $1.45 billion in September 2000. It was spun off in May 2008 to its current owners.
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jvolstad's website
http://www.hp.com/hpinfo/newsroom/press/2005/050321c.html
A 500 CPU HP (Tandem) Nonstop server. Wow. The largest system I've ever worked on was a 16 CPU Tandem.
Wonder what the issue was?
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Seriously, besides got the IPO offering, who is stupid enough to buy FB?
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xenogear3 says
Neh, they will. History repeats itself.
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xenogear3 says
Facebook is OLD news. Have you heard about maskcodex.com? If lets people share their lives with other people. I guess it is sort of like facebook, but it is better because it ISN'T facebook! They have huge earning potential and it is a sure-thing investment. They haven't published any of their financials, but the idea is so solid it has to be a winner! It's different this time!
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Oh, My, God! Are they still looking for investors?