Jersey #10 Posted May 19, 2012 Posted May 19, 2012 I think its a good short term investment. you will see the prices rise over a couple of years but drop massively after that
Prakat Posted May 23, 2012 Posted May 23, 2012 This article covers the same ground as my earlier post. The company makes a pitiful and shrinking $5 per customer per year, which puts it somewhat ahead of the Huffington Post and somewhat behind the New York Times' digital business. ... From a revenue perspective, it's an ad-sales business, not a technology company. To meet expectations—the expectations that took it public at $100 billion, the ever-more-vigilant expectations needed to sustain it at that price—it has to sell at near hyperspeed. http://www.technologyreview.com/web/40437/?p1=A1
The Outsider Posted May 23, 2012 Posted May 23, 2012 A lot of arguments against Facebook's valuation are valid and make sense. However, they fail to take into account the fact that Facebook cannot be evaluated just on traditional parameters. Someone above gave a pertinent example of Heinz - now think about how one buys ketchup and uses Facebook. Even the most die hard fan of Heinz ketchup wouldn't think twice about picking up an alternative from the grocery store, whereas even a casual Facebook user is hooked on to it. Like Google, expect Facebook to branch out in different areas over the next few years and use this large dedicated user base to generate much more revenue.
punjabi_khota Posted May 23, 2012 Posted May 23, 2012 If P/E ratios could tell everything, every fourth grader could be a wall street analyst.
Lurker Posted May 23, 2012 Posted May 23, 2012 1) Stuff like P/E etc are good for Warren Buffett and co. For bulk of shareholders the source of information, in an ironical way, is the many Websites that show which shares are worth buying. All it takes for a company like Facebook is to shell a few hundred thousand and many bankers will straight away give them top buy rating. This is why most of these IPOs are done via big investment bankers anyway because they can have Underwriter overvalue these stocks. 2) Facebook, while not producing anything, has quickly become a medium around which many folks revolve their life. Everything from getting laid to putting family pictures and what not. It may not make money but these folks are going to stay around. 3) Lastly what does it say about our generation that we would use services all day long so long as they are free but the moment there is a charge we bail out. Entitlment generation anyone?
ganeshran Posted May 23, 2012 Posted May 23, 2012 If P/E ratios could tell everything' date=' every fourth grader could be a wall street analyst.[/quote'] P/E is just one of the indicators that can be used to judge the potential of a stock. Its not the only one but the extremely high P/E and market cap for Facebook shows that valuations are on the higher side. Look at the ratio for Google/Apple/ Microsoft - all are in the 10-20 range, which indiciate that the company has solid revenue flow to justify its share prices. If FB isnt making enough money, at the end of the day it will lose out, no matter if it has 500 million or 2 billion users.
ganeshran Posted May 23, 2012 Posted May 23, 2012 Facebook's challenge is to go beyond being just a social networking site and build a whole ecosystem of products that run on the platform. Zuckerberg had talked about this a couple of years back - they want to become a social layer - an interface between the user and the web which runs on every platform - desktop, mobile etc. Its whether they succeed in this strategy which will determine the long term future of FB. Remember MySpace was bought for 500 million and in just two years was sold at 35 million.
akshayxyz Posted May 23, 2012 Posted May 23, 2012 Zuckerberg sold 30m stocks. http://www.sec.gov/Archives/edgar/data/1326801/000120919112029812/xslF345X03/doc4.xml
yoda Posted May 23, 2012 Posted May 23, 2012 So they apparently lied about the earnings, rather withheld information from the public which was made available only to select clients by Morgan Stanley. Class action lawsuit already filed. This is a bad way to go public.
Swing_n_Speed Posted May 23, 2012 Posted May 23, 2012 BB I'm in India so it isn't possible for me to invest but you could have alteast invested few dollars :P http://www.zerohedge.com/news/nasdaq-lying-about-what-it-knew-facebook-ipo-day Be thankful you're in India dude. During peak trade Nasdaq went down for 17 seconds, thereby controlling the price and not allowing it to go beyond 38 as buy orders were not accepted. Conspiracy theories state that perhaps Nasdaq itself was buying the shares. Huge conspiracy brewing. Another conspiracy, http://finance.yahoo.com/blogs/daily-ticker/facebook-bankers-secretly-cut-facebook-revenue-estimates-middle-133648905.html
jairamesh Posted May 23, 2012 Author Posted May 23, 2012 I think its a good short term investment. you will see the prices rise over a couple of years but drop massively after that :sherlock: "drop massively" came abit earlier then expected.
Sachin=GOD Posted May 23, 2012 Posted May 23, 2012 :sherlock: "drop massively" came abit earlier then expected. :phehehe: waisey mainey toh pehle hi kaha tha ki FB is over rated :--D
Crookbond Posted May 25, 2012 Posted May 25, 2012 CEO Gaffe of the Week: Facebook First, Facebook insiders chose to sell a ridiculous amount of their shares relative to the last major Internet-related IPO, Google (Nasdaq: GOOG ) . When Google went public, insiders dumped 28% of their shares. Facebook insiders, on the other hand, sold 57% of their shares on Friday. But the biggest gaffe of all could be Zuckerberg's insistence that Facebook boost the amount of shares sold by 25%, on top of his attempt, reported by The Wall Street Journal, to raise the IPO offering price as late as Thursday at the behest of the underwriters. The underwriters , not Zuckerberg, are in place to judge investors' ability to absorb shares, yet it appears he was unwilling to listen. http://www.fool.com/investing/general/2012/05/25/ceo-gaffe-of-the-week-facebook-nasdaq-and-morgan-.aspx
Lurker Posted May 25, 2012 Posted May 25, 2012 But the biggest gaffe of all could be Zuckerberg's insistence that Facebook boost the amount of shares sold by 25%, on top of his attempt, reported by The Wall Street Journal, to raise the IPO offering price as late as Thursday at the behest of the underwriters. The underwriters , not Zuckerberg, are in place to judge investors' ability to absorb shares, yet it appears he was unwilling to listen Thats not a gaffe but simple case of bankers/underwriters bending over backwards for greed. If my CEO puts his put down and wants valuation of 50$ for a 10$ shares and pulls it off, all power to him. The issue here is FB debuted at 38 and yes many people did buy it at that price. They are a loser now but FB folks are a winner. That is a weirdly unfair game that seems to grow common every single day.
bulbul Posted May 25, 2012 Posted May 25, 2012 :sherlock: "drop massively" came abit earlier then expected. in stock market anything can be possible..who knows it may rebound and raise fast
Sachin=GOD Posted May 27, 2012 Posted May 27, 2012 Saving Face ItÃÔ not every day that a man takes his company public, gets a valuation of a $104 billion, pockets about $22 billion for himself and also gets married. ItÃÔ also not every day that a company loses its ÃÕoo big to fail status, has its stock prices tank within hours and suddenly has the world predict the beginning of its end. And all of this happens within one week. Welcome to the world of Mark Zuckerberg and Facebook. ItÃÔ a Biggie The Facebook IPO was a momentous occasion. It was proof once again about how bulletproof the online world was and the confidence investors had in ÃÃew age business. The Facebook IPO was all about big numbers: the company valuation made it 10 times bigger than Google and even bigger than Disney, Amazon and McDonaldÃÔ. It made Zuckerberg one of the richest men on earth and every person who has a Facebook account (you) was personally valued at around $110 each. Those were the good parts. The not so good are equally exciting. In 2011, FacebookÃÔ net income was only about $1 billion and some change. When that number gets thrown in, it makes it equivalent to over 100 times the net earnings. ThatÃÔ historic. Compare that to Apple Inc. (14 times) and Google Inc. (19 times), and itÃÔ a disaster waiting to happen. LinkedIn, Groupon and Zynga all of them suffered after an IPO. But that pales in comparison to what could happen here. Facebook could take some brutal hits, resulting in the stock price going down to half or even one third in less than 18 months. It can also have a ripple effect on its users. Could this IPO be the start of the downfall of Facebook? Just one? There is no denying the fact that the biggest problem is the over- valuation. Facebook as a company just isnÃÕ worth $100 billion. This is turning out to be a typical story of greed as well as impossible-to-manage expectations. To justify that kind of pricing, Facebook will have to perform out of the box and it just hasnÃÕ shown any proof until now that it can. Yes, it has 900 million users and growing. Yes, it has some pretty good (as well as some pretty sneaky) ways of earning revenue. It has been aggressive, has always been trying new things, doesnÃÕ give two hoots about your privacy and has made strategic acquisitions (some at silly pricing). But put all this together and it has still made just $1 billion. That is a problem. A huge one. Pesky Stuff Many believe that the best from Facebook is still to come. That it can mine data better, create more personalised advertisements and outgun Google. Hogwash. Advertisements on Facebook are very different. When Google pops up a targeted ad, itÃÔ because you are actively searching for something and it gives you relevant ads in sync with your activity. But on Facebook, your primary purpose is to put up updates about yourself and comment on someoneÃÔ new pictures. ThatÃÔ it. Advertisements here are taken to be pesky, random and unsolicited. 13 and counting A critical surge for Facebook must come with an even bigger number of users. While Facebook is losing momentum in some countries, it is still growing in most but not at the same pace. Many users are already feeling Facebook fatigue and donÃÕ use their accounts as much as they used to. The new, aggressive publicly held Facebook will need to turn this slight slowdown around in a big way. One of the controversial ways it may do it is to relax the minimum age down from 13 (denied by Facebook), thus fuelling in millions of new young users. I find that almost comical. Millions of users are already under 13. If you are under 13 and really want to be on Facebook, there isnÃÕ much to stop you from just lying and getting on with your business. The deluge wonÃÕ come from here but it must come from somewhere. On the Go Another huge source of income can come from Facebook on mobile phones. More people own mobile phones than computers and people prefer to check into their accounts on the go. As a whole new generation of mobile users come in, Facebook could get some serious numbers. Unfortunately this will remain a pipe dream. The mobile phone screen isnÃÕ very conducive to all this activity. Between all the updates, pictures and streams, there is hardly any space to throw in advertising and other revenue earners. In fact, the backlash to a cluttered small screen has already been felt by Facebook. So while it may grow its user base on the mobile, it may not be able to make much of it. Dear Mark... Congratulations on the wedding and the IPO. It must be quite a feeling to have pulled off both with varying degrees of success. I know that a mix of greed and bad advice led you to upping the stock price days before the IPO. ThereÃÔ nothing seriously wrong with that after all, it increased the money in your personal pocket by a few billion dollars. But now itÃÔ time to forget about whatÃÔ been done and move to the next level. A level where you show the people who had faith in you, investors who put in their hard-earned money and savings into your stocks, and the people who still believe in you why you think your company is worth a freaking $100 billion! Forget all those who say $104 billion isnÃÕ bad for a stolen idea or even that this is the beginning of the end for you. ItÃÔ time to put those naysayers in their place. Maybe you have plans that nobody knows about, radical ways of justifying this kind of valuation, revolutionary ways of earning 10 times what you do today. Buddy, I sure hope you do otherwise 900 million people are going to feel cheated and let down. YouÃ×e been poked now itÃÔ time to sit up and pull off the greatest miracle in the history of the world. Rajiv Makhni is managing editor, Technology, NDTV, and the anchor of Gadget Guru, Cell Guru and Newsnet 3. From HT Brunch, May 27 Link
Crookbond Posted May 28, 2012 Posted May 28, 2012 The Facebook Fallacy http://www.technologyreview.com/web/40437/?p1=A3 On the one hand, Facebook is mired in the same relentless downward pressure of falling per-user revenues as the rest of Web-based media. The company makes a pitiful and shrinking $5 per customer per year, which puts it somewhat ahead of the Huffington Post and somewhat behind the New York Times' digital business. (Here's the heartbreaking truth about the difference between new media and old: even in the New York Times' declining traditional business, a subscriber is still worth more than $1,000 a year.) Facebook's business only grows on the unsustainable basis that it can add new customers at a faster rate than the value of individual customers declines. It is peddling as fast as it can. And the present scenario gets much worse as its users increasingly interact with the social service on mobile devices, because it is vastly harder, on a small screen, to sell ads and profitably monetize users.
Recommended Posts