patrick.net

Anyone know how many multi-millionaires stand to be made post-IPO?

Fewer than the number of homes for sale in PA-Atherton, LOL.

Each of them will have a nice house. Some already do, others are likely to upgrade in a year or so.

Okay, answer me this. If these millionaires buy a second or third house for investment purposes, what are they gonna do with that house? Are they gonna let it sit empty and give looters a good opportunity to pillage? Or does it go directly into the rental market, thereby increasing the supply for rentals?

tdeloco says

Okay, answer me this. If these millionaires

OK lets say 6 months after IPO date, employees are able to trade..

He/She wakes up.. sees they are worth $5-6M or more aftertax,
calls broker tells them to sell everthing, calls FB boss/HR and quits.. goes back to sleep.

Your done! make plans to live the easy life ... most likely somewhere nice and far far away... That what happened to many back in late 1999.

You can well image what the politics are like at FB today, especially if your an early employee. Its not a very pretty picture.

If I got a $3m cash injection
I'd probably by a house in Los Altos free and clear, leave a million to live off of and invest the rest.

This is probably what the secretary's plan is.

I'd probably leave the USA and retire wealthy in the Caribbean or southern Europe definitely not buy an overpriced crapbox in bay area.

After the initial hype and price sky rocketing, then the settle to 3x IPO price, then the slow crater once people start seeing that all is not as rosy as expected on the books, I suspect that it will not even have the effect of offsetting the increase in foreclosures at the time. Facebook will eventually struggle, it is inevitable. People get bored and move onto something else. Google+ is one option, and there will be many more. Remember AOL, Lycos, Ask? Anyone remember Prodigy, Earthlink, etc. They all lived up to the expectations. Facebook is such a stupid name as well. Social media is not just a face or a book. Change the name and their chances probably improve.

People would be smart to diversify their investment portfolio. Someone will come along with a better, user friendly product (hopefully soon). I know a handful of people who use fb regularly; the rest check it (like me) to see baby photos and find out what Paul is eating...

why do people take photos of their food? I should be grateful, at least they don't take a photo of the by-product after it's left their body.

elliemae says

why do people take photos of their food? I should be grateful, at least they don't take a photo of the by-product after it's left their body.

It is used as a sample for your E Doctor.

I agree with Ellie. Too much risk for FB's ability to generate NEW MONEY. And any proprietary license could easily be short lived.
I had heard "MY SPACE" & "FACE BOOK" would soon merge. Therefore causing most to spend time sitting on "MY FACE" .

There is not a single detached house with 3 bedroom

I'm sure that there aren't enough people potentially making enough money in that area to have an effect.

Around here they are already talking about how the BRAC base realignment had no noticeable effect, and that brought in thousands or people to the area.

thomas.wong1986 says

most likely somewhere nice and far far away... That what happened to many back in late 1999.

thing is, the Atherton - Los Gatos axis is the nicest place for a geek to live on the planet.

I have a friend with 10+ years of AAPL socked away and he still felt he couldn't pay the Fortress prices after looking for two years.

Crazy place.

I’d quit, move to FL and let somebody else pay CA debt. Buy 300 units multifamily with full management then boating and travel for the rest of life.

i will always have a home base in the bay area no matter how much money I make. I dont really have a desire to live anywhere else in the US but I would possible buy a vacation home in another country.

RentingForHalfTheCost says

After the initial hype and price sky rocketing, then the settle to 3x IPO price, then the slow crater

A large number of employees there have the typical 6-month wait after IPO before they can sell their stock awards, and the awards vest over 4 years (with new ones granted at annual reviews & split over 4 years). So, it sounds like most employees are going to have the same restrictions that anyone at any tech company has. That will be incentive for most employees to stick around & keep kicking ass for at least 6 months, if not a few more years.

I don't really see FB "imploding" like some people here predict. Call it a gimmick or whatever you want, but the ad revenue & commissions from Zynga games aren't going to magically disappear. Social media is what people want, and FB has that market cornered. The place probably has a solid enough business model & enough bright people to keep it going.

I do agree that the stock price will rally initially as everyone & their mother buys FB stock "because they have heard of FB", and then settle down somewhere below that a month after. Chances are that 6 months later, there will be a couple thousand people running around with fresh 6-figure bundles of cash. If you buy it the second it becomes publicly available and promptly sell it at the next market closing, I could see turning a quick profit. I wouldn't buy it as an outsider after 1 week on the market though since that is probably when the froth will all dissipate & it will start settling (until 6 months later when bundles of employees start unloading). Hell, if anything I would short FB around IPO date + 5.5 months.

I would expect a bit of a price kick in PA/MP/etc from the IPO. Would be interesting if it's coupled with some bad tech news when the lockup ends.

Facebook I think will vastly under perform at its IPO but will still do well but I don't think it will have any real impact on the real estate market.

The guy who painted the walls in the facebook office has stock options worth 200 million
http://www.cnbc.com/id/46230759

toothfairy says

The guy who painted the walls in the facebook office has stock options worth 200 million
http://www.cnbc.com/id/46230759

He's clearly an exception. Timing is key in these situations and he was there early when the company had little to pay him, but stock. He'll make way more money than most employees. People haven't been getting 50000RSU signons at Facebook for years.

My guess is that it will have short term large impact on real estate prices. Mainly psychological due to the hype the story has been in the news and the ammo it gives Realtors to pump up urgency.

Mid term, it will impact the mid-high end, the question is how much. My guess that it will slow the decline in prices by 6-12 months.
Most of these engineers most likely already own homes. Some will upgrade, some will buy investment homes, some will stay put. Some will drop massive cash on a PHAT 1bedroom shack in Palo Alto.

In the long run, prices will go back to historical multiples of income/rent.

as for the long term viability of FB. My guess it it will be less of a sucess like Google and fall somewhere between AOL & Yahoo.

People get sick of silly games and social networking sites become "uncool" (see friendster, myspace, geocities, classmates, asian ave, black planet, xanga, etc)

Social network is constantly evolving, will FB stay dominant? maybe, but I wouldn't bet my money on it.

SFace says

Sign-on in SFBA is usally about 30%-50% of your salary.

Heh. That's what I got upon joining the mothership -- worth ~$1.75M today, ::cry::

Re ISOs..read the S-1 and you will see that rank and file employees do not have these. Only RSUs. Don't assume so many 83b elections were made. Withholding will be at source...Sface provides info which is years out of date re IPOs. What FunTime states is more accurate. Remember not so long ago Fbook had a small office on University Ave. Ridiculous to assume 3000 new millionaires.

Easy money from the Facebook IPO will distort the market more than it already is.

I'm glad we're buying now and getting it over with.

SFace says

Here's how I will explain it to those who generally don't understand how these things work (for a normal Joe employee).

While your writing sounds very authoritative, I must disagree that you've accurately described the ISO and RSU compensation packages for all of the SFBA. I've been through three IPOs with three different companies and they were all different.

I haven't read the Facebook S1, so maybe you're pulling specifics. I read what you wrote to be a general description of stock compensation in the SFBA.

SFace says

Sign-on in SFBA is usally about 30%-50% of your salary. If you base pay is 100K, then your stock compensation incentive is about $30K -50K. say 40K

It depends on rank and company. Initial RSU grants can be double base salary at companies that make significant stock grants and zero or a token 10K someplace they don't.