[Aberlour10]

What do you think about the current Facebook-Hype?

[hrothgar]

Aberlour10, on 2012-May-17, 13:05, said:

What do you think about the current Facebook-Hype?

I've been wrong way too often about IPOs
For example, never thought that Google would live up to the hype.

I steer very clear of them for this reason

[phil_20686]

Never buy a tech stock in a new industry at a high P/E. Where is the up side? If FB grows its earnings by a factor of 10 in the next few years, then it will be fairly valued, and you will not have earned anything.

Its different if you are an institutional investor, as they normally get to buy at the IPO direct from the company at great prices, rather than buying in the open market

[Cthulhu D]

phil_20686, on 2012-May-17, 13:27, said:

Never buy a tech stock in a new industry at a high P/E. Where is the up side? If FB grows its earnings by a factor of 10 in the next few years, then it will be fairly valued, and you will not have earned anything.

Its different if you are an institutional investor, as they normally get to buy at the IPO direct from the company at great prices, rather than buying in the open market

This is what I said about google (and google's P/E ratio is still not there), but yet that would have been a great IPO.

Still, I struggle to see the value in FB. The model is open to total collapse at any point and their forward projections just are not there. It remains to be seen if they can avoid the myspace factor, though it appears they have.

[helene_t]

Cthulhu D, on 2012-May-17, 17:49, said:

The model is open to total collapse at any point

disagree.

A hardware giant can collapse as soon as a competitor comes up with a better product since consumers find it very easy to switch hardware brand.

A social network is the opposite. Even if "everyone" can see that google+ is better than facebook, people don't switch because their friends are on facebook. Social networks are much more rigid. Basically it causes me less emotional troubles to replace my toothbrush than to replace my friends.

Software and non-social network services are somewhere in between.

[Aberlour10]

OK, about 1 billion people are in. But how to earn money with them, constantly growing gains, this is the simple question. There is no clear answer at the moment IMO, but a lot of high hopes only. General Motors stops the advertising on FB, this is a fact.

[mike777]

Aberlour10, on 2012-May-17, 13:05, said:

What do you think about the current Facebook-Hype?

yes of course it is


next question?
--


Let me put it this way:

What is the most important question, today. regarding facebook?...Not what is your answer, today.

[barmar]

Facebook killed Myspace.

Yes, Facebook has much more penetration now than Myspace ever did. But I think people could still abandon it if something better came along. It might be a slow migration, and for a while people will use both (as they did with Myspace). The new player would probably have to provide ways to make the transition easy, like automatically importing settings and friend lists (similar to the tools ISPs use to make it easy for you to switch to them).

FB probably won't ever die, but it would be possible for a new service to take its place as the market leader in social networking. I don't know how likely it is -- someone would have to have really big balls to try to take them on, rather than partnering with them as most of the specialized services do. Google is ballsy enough -- if they decide to really push Google+, maybe they could do it.

[Mbodell]

Full disclosure, I may be biased as I know dozens of folks who work at Facebook. I've also been quite wrong on Google in the past as I didn't see how it would make money in 1999, and again in 2001, and again in 2002, and didn't think it would hold its IPO value (oops!).

That said, I think Facebook is close to fairly valued. I, however, don't think it is that likely to stay where it is. I think it has a much larger than average likelihood of dropping in value by 10x or even 100x over then next 5+ years, but also has a much higher than most people think chance of increasing by 2x or 5x or even 10x (yes I know, $100 billion isn't cool, $1 trillion is cool).

Amortized across the worlds entire population, on average, every person in the world spends 2 minutes a day on Facebook. And the richer first world people spend more time than the poorer half of the world (most of whom aren't on at all). If you discount sleeping, that means about 1 in every 500 minutes is spent on Facebook, across the entire world population, again with more of it by the richer people. World GDP is between $60T and $65T. If you ignore the fact that people don't consume much of the day (like when at work), but imagine that Facebook gets about a fair share of that amount (I.e., 1/500th of the world GDP in revenue), you could imagine making $125 B a year in revenue. At, say, 50% margins and 20 P/E that would imply $1.25T. Now, obviously, this is a pretty optimistic back of the envelope. But the network effect is valuable. Smart people (including some former US junior bridge players) are working on how to better monetize the users. The wealth of data and amount of information people give up about themselves is huge.

But on the downside mobile might kill Facebook. People might eventually revolt over privacy and data concerns. Facebook could start being more obnoxious about its advertising. Facebook may (continue to?) have a hard time attracting and keeping talent. It could all disappear (or at least disappear the way AOL or Yahoo! or My Space or other supposed "failed" companies have).

If you asked me if I wanted to pay $38/share to buy Facebook, I'd say no. But I wouldn't have bought Google for $85/share either. That's why I like investing in low volatility, low cost index funds.

Also, I find the coverage of the Facebook IPO in the press obnoxious. Yes Facebook didn't go up 50% or 100% or 200%, but that means Facebook did a good job setting the price! Facebook gets more IPO money at a higher price, and it is better for Facebook to set the price at $38 and open flat, then set the price at $7 and have a 500+% day end value of $38. Much better for Facebook to capture the value than for Bankers and inside institutional investors and what not to get the big gain.

[Vampyr]

Mbodell, on 2012-May-19, 01:16, said:

Full disclosure, I may be biased as I know dozens of folks who work at Facebook. I've also been quite wrong on Google in the past as I didn't see how it would make money in 1999, and again in 2001, and again in 2002, and didn't think it would hold its IPO value (oops!).

How does Google make money?

[phil_20686]

Vampyr, on 2012-May-19, 09:06, said:

How does Google make money?

Almost all Advertising (about 99% supposedly).

Also: Sales of their operating system for mobile phones (android), they also have their own brand mobile phone. A host of programming solutions to real world programming problems including: Voice recognition, speech recognition, security software, etc. They are developing driverless cars, and glasses combined with a monitor. In the future you will probably wear your computer monitor, rather than have it on your desk.

Google's key proiftability advantage, is that they can advertise a product, exactly when you are looking for it. This is the ultimate in targeted penetration.

[Aberlour10]

Reports say the underwriter Morgan Stanley has bought for about $2 billions all offered shares in the last trading hour to keep the share on $38 level. It will be interesting to see how long they will be able to prop up the stock.

[hrothgar]

Mbodell, on 2012-May-19, 01:16, said:

Also, I find the coverage of the Facebook IPO in the press obnoxious. Yes Facebook didn't go up 50% or 100% or 200%, but that means Facebook did a good job setting the price! Facebook gets more IPO money at a higher price, and it is better for Facebook to set the price at $38 and open flat, then set the price at $7 and have a 500+% day end value of $38. Much better for Facebook to capture the value than for Bankers and inside institutional investors and what not to get the big gain.

Agree completely on this point...

The fact that Facebook stock didn't spike should be viewed as a good thing for the company.

[hrothgar]

Aberlour10, on 2012-May-21, 03:25, said:

Reports say the underwriter Morgan Stanley has bought for about $2 billions all offered shares in the last trading hour to keep the share on $38 level. It will be interesting to see how long they will be able to prop up the stock.

Closed today at 33...

[Aberlour10]

I think, we will see the real price at the moment the lock-up period is finished.

[mike777]

todays price should reflect all future known information including lock up period.

Your bridge bidding should reflect all known or knowable future bids by everyone else.

[Winstonm]

Ritholtz sizes up Facebook as not really having as many users as claimed

[Aberlour10]

28,80, even the news about FB smartphone or buy the Opera can't stop the fall.

[Aberlour10]

free fall at the moment. all these virtual billions are burning.

[PassedOut]

A Letter from Mark Zuckerberg, posted by Andy Borowitz

Quote

Dear Facebook user:

Hey it’s Mark.

It seems like just yesterday that Facebook had its historic I.P.O. and, thanks to you, my net worth soared to a staggering $20 billion. What an awesome day that was for both of us.

Today was a different kind of day. Facebook shares are plunging because the geniuses on Wall Street expect us to, and I quote, “make money.” That’s why your Facebook friend Mark needs your help.

Facebook only makes money if people click on its ads. Do you know what Facebook ads are? They’re those things on your Facebook page that you have never clicked on even once.

But at Facebook we’re looking to change that. After doing extensive market research, we learned that there is one time when people actually do click on Facebook ads: when they’re drunk. This is the same business model that iTunes is based on.