Facebook Reportedly Filing $5 Billion IPO Today

hypnosec writes "Today is the day when Facebook may be submitting all required paperwork to regulators for its $5 billion initial public offering. According to the source close to the deal, Facebook has selected Morgan Stanley along with four others — Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and Barclay's Capital to handle this IPO. Morgan Stanley will be taking "lead left" role in this supposedly biggest IPO from Silicon Valley. According to International Financing Review, the preliminary target of $5 billion will be increased by many folds in coming few months as a response to the demands of investors. Sources close to this matter disclosed that this might turn out to be defining moment for current web investments. The deal might rise to $10 billion which eventually will make Facebook a social networking empire valued between $75 billion to $100 billion. In fact, $75 billion is definitely an undervaluation compared to previous expectations."

Comments

Well it's hot and techy, what could go wrong?

[elrous0]

Time to tap into the kids' college fund. They can thank me later.

Re:Well it's hot and techy, what could go wrong?

[Anonymous Coward]

That's only a P/E of 400. Seems reasonable.

Re:Well it's hot and techy, what could go wrong?

[EdIII]

my gmail is my spam/marketing honeypot these days and social networks are used for communication........but then again geeks and techies are usually the last ones to GET trends like this.

LOL.

Uhhh, no. I "got" it. Then threw it back like the steaming turd that it was and still is.

I got a fake Facebook account some time ago to keep connected with younger relatives since it seemed the only way to get their attention was to play Mafia Wars or place a message sign on their farm in Farmville. Being a geek and techie, I saw Facebook for what it really was:

1) A huge personal data sink where I could put all of my information in one basket to be sold to the highest bidder, analyzed, and then acted upon with absolutely no benefit to me.
2) A marginally effective communication tool. Signal to noise ratio sucked, because much like Twitter, you had a constant stream of information that was barely useful, relevant or interesting. Especially, when there is a huge trend to manipulate you into posting other people's content on your wall for marketing purposes.
3) A gaming platform thinly disguised as a social networking platform where Facebook was constantly fighting to get a real piece of the financial action taking place. Starting their own credit system was basically a coup against Zynga which was valued in the billions initially because of revenue, most of which was illicitly gained through dirty tactics like premium charges on cell phones and other such instances of fraud. One of my younger relatives got hit with a $300 cell phone bill one month and honestly did not know the consequences of wanting some shiny that Zynga was offering.

So, No you are quite wrong. Most of us geeks and techies completely understand the trend that Facebook is. When we disagree, refuse to participate, and quite often make condescending and derisive comments towards other people that don't understand what we see you misinterpret that as us "not getting it".

What I wish is that other people would get what Facebook really is.

Your comment about SPAM and marketing is utter hilarity considering what the Facebook experience was like for me for the short while that I had it. Marketing overload anyone........ I had less SPAM and useless information coming into my junkmail folder at Yahoo, and that is saying something.

Anybody that puts money into this is a sucker. They are just making the payday dreams of the early and special investors come true and then you are holding the bag of shit. Same with Zynga.

Facebook might be hot for awhile, but the real trend is an evolving method of communication. To say that Facebook has the lock on that it is incredibly untrue. So many different projects in the works to satisfy this new kind of communication methodology, and with far better signal to noise ratios too.

At the end of the day Facebook has revenues tied to something that you would be foolish to call "stable". It's damn near whimsical over the long run.

Put your thinking cap on for a second. 75 billion. With a B. How can that possibly be true in reality? We are not talking Exxon here that makes something tangible that we are literally addicted too. This is based off credits and advertising revenue, both of which don't have a strong foundation, and can have a huge swing in profitability and volume.

Facebook and Zynga are incredibly over valued and over hyped. God help everyone who buys into it at the high range.

Re:Well it's hot and techy, what could go wrong?

[Beardo the Bearded]

Mark, get a fucking /. account already.

Re:Well it's hot and techy, what could go wrong?

[DerekLyons]

So, No you are quite wrong. Most of us geeks and techies completely understand the trend that Facebook is. When we disagree, refuse to participate, and quite often make condescending and derisive comments towards other people that don't understand what we see you misinterpret that as us "not getting it".

No, he's quite right. You've built an elaborate justification for why you dislike it - but you've shown not on quanta of evidence that you get it.
 
If you believe it's only a marginal communications tool... Well, for it be a useful communications tool you've got to either want to communicate in the first place, or know people worth communicating with. (You and many other geeks keep blaming Facebook for your own failings.)
 
Here's what I've done on Facebook just today over the last eight hours:

• Commiserated with friends, family, and high school classmates over the sudden (and much too young) death of a classmate on Sunday.
• Got a status update from a friend whose newborn is still in the hospital and quite ill.
• Continued planning, with a bunch of old shipmates, activities for our next re-union.
• Shared with family and friends photographs from a photowalk last week. (I.E. not phone pictures, but serious pictures I took and uploaded to Flickr.)
• Got tips from my sister (a professional chef) and some foodie friends on a new dish I'm trying to cook for the first time for tonite's dinner

Etc... etc...
 

Your comment about SPAM and marketing is utter hilarity considering what the Facebook experience was like for me for the short while that I had it. Marketing overload anyone........ I had less SPAM and useless information coming into my junkmail folder at Yahoo, and that is saying something.

Amount of Spam in my Facebook stream today - one. And with two clicks of a mouse, I'll never see spam from that game again. People in my contacts list who forward spam have either long since been silence or unfriended. As with the S/N ratio you complained about, the problem isn't Facebook, it's your ignorance or unwillingness to use the tools Facebook provides to control Spam and S/N.
 

Put your thinking cap on for a second. 75 billion. With a B. How can that possibly be true in reality? We are not talking Exxon here that makes something tangible that we are literally addicted too. This is based off credits and advertising revenue, both of which don't have a strong foundation, and can have a huge swing in profitability and volume.

Sounds like you'd have reccomended that people keep their money in good solid buggywhip and horse feed stocks rather than investing in that new fangled telephone invention. And do I really need to point out Google's stock prices - and that virtually their entire revenue stream depends on advertising? No, you're not insightful, you're just spiteful. You not only don't get it, you proudly revel in how little you get it.

Re:Well it's hot and techy, what could go wrong?

[kiwimate]

Don't know quite what you're doing, but your rant does demonstrate that, yeah, you really don't get it.

1) A huge personal data sink where I could put all of my information in one basket to be sold to the highest bidder, analyzed, and then acted upon with absolutely no benefit to me.

You do realize you don't have to put in lots of information, don't you? There's very, very, very little that Facebook actually requires you to enter.

2) A marginally effective communication tool. Signal to noise ratio sucked, because much like Twitter, you had a constant stream of information that was barely useful, relevant or interesting. Especially, when there is a huge trend to manipulate you into posting other people's content on your wall for marketing purposes.

Signal to noise ratio was a bit off for me, to start. So I blocked anything coming from games and turned off anything coming from the small number of people who were on my Friends list who were the worst offenders at constantly posting status updates. If I want to know anything about them, I go to their profile page.

Which turned Facebook into an incredibly useful communications tool for me. YMMV. I have regular conversations with a cousin who I hadn't seen in years because we lived on opposite sides of the world (literally) and I didn't know her e-mail address. Friends change e-mails? I don't have to know - they stay in the same place on Facebook.

3) A gaming platform thinly disguised as a social networking platform where Facebook was constantly fighting to get a real piece of the financial action taking place.

No, it's a social networking platform that sees a lucrative side business in gaming. Don't like it? Don't play the games. You don't have to, you know.

I have tried a handful of games from time to time. Yes, I tried Farmville to see what all the fuss was about. Bored me. Deleted. End of that.

And I can't imagine why you're getting a whole load of spam. I have never gotten spam from Facebook. Not once. I have received e-mails that I signed up for, until I decided, ehh, not interested, and changed my prefs. Result=nothing. As in no more e-mails. Easy.

When we disagree, refuse to participate, and quite often make condescending and derisive comments towards other people that don't understand what we see you misinterpret that as us "not getting it".

Well, yes. What's the alternative? Either you are refusing to admit that something that's not useful to you might possibly be useful to someone else, or you're just being smug and - you said it yourself - condescending because you're too cool to use Facebook, in which case you're just being an immature jerk. Or you don't get it. Which is it?

if you don't like Facebook, don't use it. Easy. Done. Move on with your life. Let the insignificant masses who are so inferior to you have their fun.

Anybody that puts money into this is a sucker

Insert standard disclaimers - past performance is no guarantee of future performance, you should only invest as much as you can afford to lose, all investments carry an element of risk, etc. An investor either makes an educated gamble, or they do something on a whim. If it's the latter, well, it doesn't matter if it's Facebook or HP, they're making an uneducated gamble.

Re:Well it's hot and techy, what could go wrong?

[rtb61]

They will fix this by going on a buying spree, using the shares as junk bonds to buy companies that actually make money. When it all washes out the only real losers will be the pension funds whose executives got paid tax haven purchasing commissions.

Re:Well it's hot and techy, what could go wrong?

[mlts]

I'd add to your #1: Any info put on there can have very negative consequences. For example, if a profile scraper services sees a share or a like of a "hey, why do I need to press #1 for English?" picture, one is branded as a racist for seven years. Or if one likes tents or stealth camping, they might be branded as a supporter of OWS. A like of a smoking product can get one's health insurance company to demand a physical and bloodwork to see if someone's status changed. Liking of a park after dark and mention of that can get someone arrested months to years after the fact for criminal trespass.

My recommendation to everyone who has an Android device: Download the app "Exfoliate", making sure you have the right app from Michael Devine. Set what you want deleted, let it log in for you, and let it run. It will likely take days to finish, and it uses a lot of bandwidth. However, it is worth it, so a post from several years ago doesn't haunt someone in the future. After cleaning the profile, find another avenue to post one's thoughts, preferably one's own website.

Geeks know the danger about Facebook. In fact, I never bothered with an account until before I got my current job, where interviewers would ask me what my FB account ID was, and when I said that I didn't bother with one, I'd either be looked at like I was an imbecile, or explicitly told that if I don't keep up with social media, I'm too old to be in IT. So, I created accounts on the usual social networking sites with a nice clean persona, just to keep the HR droids happy.

What would be nice would be a geek-friendly social networking site designed from the ground up for privacy and security. It would likely cost something for membership, but that means that the cost is up front, and not paid for by privacy (the subscribers are the customers unlike FB where the true customers are the advertisers, and subscribers are at best a necessary evil.) It would use an object based system with each object (be it a message, a photo, a +1/like, etc.) being encrypted with a key object list to decrypt it. This way, unless a person explicitly gives access to someone (and this includes the public), the piece of data is encrypted, with a list of keys of whom can decrypt it (one of the keys being an ADK for law enforcement stored offline.) This way, it would be a lot harder to compromise someone's personal messages, while providing the judge with the search warrant a reason not to shut the service down and jail everyone involved.

Re:Well it's hot and techy, what could go wrong?

[kiwimate]

Hmm, Score:5, Insightful. Apparently there are at least three or four moderators who suffer the same overwhelming superiority complex and lack of connection to the real world as you do.

Here are some hints.

1. Yes, it's +5 insightful. No, that doesn't mean it really is insightful.

2. Get over yourself.

3. The geeks I know with more than half a brain have the ability to interact socially, recognize that there's more to life than just geek stuff, and are mature enough to run their lives based on what they want to do and accomplish instead of desperately seeking validation from some smarmy commentary on the internet, of all places.

4. They also have sufficient intelligence to recognize that Slashdot is a social networking site for geeks. Yes, really.

4a. ...and not care, so long as it serves their aim.

A label is just a label. Deal with it.

Watch it grow.

[lorinc]

And then watch carefuly the bubble explode...

Re:Watch it grow.

[vlm]

You're assuming it'll grow. For a good laugh check out a recent zerohedge post (ZH is kind of the /. equivalent for the economic community?) showing graphs of share price as a % of IPO price for numerous recent (last year or so) tech stocks. All cratered below IPO price except for zynga which is somewhat volatile.

To have a bubble, first you have to have growth, and we're just not seeing that in recent tech IPOs.

Re:Watch it grow.

[Kenja]

I think the bubble will last up till the point where Facebook realizes they have to now disclose to share holders what they do to make money.

Re:Watch it grow.

[tahyk]

http://www.zerohedge.com/news/facebook-ipo-because-time-its-different

$225

[greap]

Based on that absurd valuation the average Facebook profile is worth $225.

Re:$225

[Hognoxious]

Should be a bull market.

I think you're about half right...

How do the investors get paid?

[cptdondo]

I'm having a hard time figuring out how the investors expect to get their money out....

Facebook reportedly has, what, 10% of the world's population? What's its growth model from here?

And how will it make the sort of money needed to pay the investors?

I guess I'm sort of stumped at the "business opportunity" offered here. At a guess, Z and 499 other shareholders are going to come out of this with a wad of cash and everyone else will be holding a deflated balloon in a few years....

Re:How do the investors get paid?

[grub]

Facebook reportedly has, what, 10% of the world's population? What's its growth model from here?

Farms. Lots and lots of farms.

Re:How do the investors get paid?

[CanHasDIY]

I guess I'm sort of stumped at the "business opportunity" offered here. At a guess, Z and 499 other shareholders are going to come out of this with a wad of cash and everyone else will be holding a deflated balloon in a few years....

Well, you see, according to the largest private bank in the world, Goldman Sachs, that's precisely how Wall Street is 'supposed' to work.

Your logic and reasoning abilities have no place amongst the powers that be.

Re:How do the investors get paid?

[Lev13than]

That said: I don't understand how they are running this IPO. Don't they usually set an initial offering price? Are they trying to auction the initial shares? I'll start the bidding with a nickle for the lot.

An IPO's price is set just before the shares hit the open market. The vast majority of a company's shares are either owned by current investors (employees, executives, angel funds etc...) or purchased by investment banks as part of the IPO (when all the shares are purchased in advance it's known as a bought deal). This gives the IPO company a guaranteed source of cash and simplifies the whole process. The investment banks then try to maximize their gain by selling their shares to their clients at a higher market price.

As an investor, you go to your bank and put in a request for X shares. You won't know the exact price until you buy, and your request may be fully/partially/not filled at all. Generally the pension funds get first crack (usually at a discount) and small investors are often left to fend for themselves.

By waiting until the last second to set the market rate the investment banks can gauge demand and maximize the revenue they get from selling their shares to their customers. Once the shares are distributed the stock starts to trade on the open market, and anyone can get in. However, strict rules block the vast majority of insiders from selling immediately so demand is heightened by the limited number of shares. That makes the price go up and everyone is supposed to be happy.

In case you missed it in the description above, the average investor is the mark and the company, the investment banks and then pension funds are in on the con.

(This is a bit of simplification but covers the gist of it)

Re:How do the investors get paid?

[stanjo74]

FB is the One Entity that knows about everything that happens in peoples lives. FB can do a lot more with the type of information they have than Google. I'm not saying it's moral, but nothing can stop FB from using the information any way they can make money, especially with new ownership (after the IPO).

Examples:

- Political parties spent $120+ on a vote last elections. How much would a political party pay FB to know the names and contact info of undecided voters or voters who seem to be able to influence others?

- Your dishwasher just broke, you complain about it on FB. How much Sears or BestBuy would pay to be notified this same instance about your misfortune?

- You buy a vacation with Travel Agent 1, go there to find out the hotel is a dump, you bitch about t on FB. How much would TA2 pay to know about this and contact you with an alternative offer?

The possibilities are endless, especially for the new owners with zero moral standards like Goldman Sachs and the likes. The growth will not come from more subscribers, but with ever increasing ways to analyze the information flow.

Re:Shares

[fuzzyfuzzyfungus]

No; but all the shareholders who aren't major investment banks get their dividends paid out in ZyngaCash and/or Facebook Points...

Google opened at $98 a share...

[tekrat]

If I recall, Google was almost $100 a share when it IPO'ed and I thought that was way too much. So I did not buy, because I couldn't figure out how they were going to sustain that.

Well, I was quite wrong because Google went up to $200 then $300, then $400 and has been at something around $500 a share for the last 6 or 7 years. Crazy.

So, I don't know what to think about Facecrook. On one hand, I find the company utterly despicable. On the other hand, companies that are utterly despicable tend to go up in value -- a lot.

They are going to be the top dog in social media for at least the next 5 years, which is enough time to buy some shares, watch them go up in value, and then sell in about 3 or 4 years with no regrets if it goes up further.

Re:Google opened at $98 a share...

[kaellinn18]

Here's the major difference I see. When Google had its IPO, they were coming out with new services all the time. It wasn't just a search engine. Since then, they've developed Android and have a good share of the cell phone market. Facebook has made... well, Facebook. That's it. Not only that, but every time they have "improved" it, it's almost always made it worse. I don't even use it anymore. Unless Facebook is going to unveil some innovative plan about where they are going, there is zero reason to buy this stock.

The Emperor's New Stock

[ackthpt]

I can't help but feel there's some irrational exuberance at work here. Exactly why is Facebook worth $75 or $100 Billion? Do they have a revenue stream like Google has?