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Facebook IPO Stumbles Out of the Gate
Facebook's much-hyped IPO kicked off today, but an anonymous reader points out that things didn't go quite as smoothly as investors hoped. "Public trading didn't get underway until about 11:30 a.m. ET, half an hour after it was supposed to. The delay was likely caused by the huge amount of interest in the stock – especially by retail investors. In the first few minutes of trading, Facebook shares were only up between 5 and 10 per cent and by noon were essentially back down to the IPO price of $38. Many observers had expected the stock to double in price by the end of the day, if not sooner." The NY Times has a data visualization showing how Facebook's IPO compares to other tech IPOs throughout the years, and how the first day of trading treated all of those companies. Meanwhile, the debate is lively over whether the social networking giant will be a good investment. "The banks helping take Facebook public want us to value this 8-year-old upstart at as much as $104 billion, more than Disney or Kraft Foods, though those companies earn three and four times more. That top valuation is also more than 100 times Facebook's earnings last year, versus 13 times for the average company. At such a high price, it will take years for this so-called earnings multiple to fall to a more reasonable level, and that's assuming the company can maintain its torrid earnings growth."
"Facebook hasn't yet really spent time on monetization. Their primary goal has been quick growth and they have greatly succeeded in that."
Where have I heard that before? Ah, yes, we're back to valuation based upon "eyeballs" or "clicks." How'd that work out last time?
Maybe I should suggest to my company that they start giving our products away for free just to grow the user base. Apparently having revenues lowers your stock price.
AccountKiller
announced this IPO, I was skeptical. Then they amended it, eight times (I think). Now, it seems to me that we've blown a rather large bubble - as the article says, this 104 billion is 100X their earnings last year. I wonder which set of retirees or naive persons will lose their asses on this one when it pops.
I remember when, recently, myspace was quite large. Does anyone else have a myspace page still? Now imagine if you owned 100 shares of that company. . . . . Now imagine your investment person has most of your retirement tied up in that company. . . .
Thoughts?
Does anyone have a toothpick? I have AstroTurf stuck in my teeth from reading that. I lived through the dot-com boom... Facebook is great and it will/can make money, but I haven't seen this much hype since Pets.com
Sig. Sig. Sputnik
Facebook is the identity of the internet going forward.
MySpace is the identity of the internet going forward.
Geocities is the identity of the internet going forward.
AIM is the identity of the internet going forward.
YAHOO Chat is the identity of the internet going forward.
Opendiary is the identity of the internet going forward.
Fucking 4chan is the identity of the internet going forward.
I think it might be a bit bold to say that this one site will be the face of the internet from now on. . . The internet is a fickle mistress, and small changes today can equal large changes in the future. The only difference between those other companies and facebook? Time. (yes, I know that some of them are still successful, I was making a point, just go with it)
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I wonder if Mr. Zuckerberg knows that the Internet has beat him to it.
Branding would be about the only kind of advertising you do there unless FB gets into phones, gadgets, etc.
Actually, branding is the LAST thing you'd do on Facebook. Place your ad on FB, and your brand would be seen as Spam, instead of as something valuable.
Why would any advertiser place their brands ad next to your friend from high-school throwing up, when they can place it next to a Kate Moss cover story in Vogue?
So, that's how branding works.
Targeted adds...
ARGH!
Sorry, second time I've seen this. Driving me nuts. It's "ads". It's short for "advertisements". Count how many 'd's you see in "advertisement". You see "adds" when a new group of mobs attack you during a fight. You see "ads" in a newspaper. Well, you used to, back when people still read newspapers...
"Convictions are more dangerous enemies of truth than lies."
There are a few issues with Facebook making a lot of money:
(1) - Click through rates of Facebook ads are abysmal, at best.
(2) - People use Facebook to share stuff, not to look for stuff to buy, thus they ignore most ads. Reason Google click through rates are better because people look for stuff on Google, often to buy.
(3) - Growth of Facebook in countries where the population has spending power, thus being desired products by advertisers, has stalled or it's very slow.
Nope ... it was overpriced.
The only thing that prevented the stock from going below the IPO price was MASSIVE underwriter support (i.e. the banks that got paid to do the IPO buying the stock in large volume whenever it hit the IPO price of $38).
Look at the price chart here:
http://finance.yahoo.com/echarts?s=FB+Interactive#symbol=fb;range=1d
See the flatline at $38 from 3:30-4:00pm? That's due to the underwriters buying the stock in massive volume providing support at $38. If you monitored the detailed stock quote during this time (as I did), you'd have seen that the bid volume, normally single or double digit lots spiked to a continuous 99999+ lots (i.e. 10,000,000+ shares) during this time - i.e. the underwriters were essentially buying unlimited volume of the stock at $38 (to artificially support it). From the trade volume during that final half hour, I reckon the underwriters bought well over 50M shares (10%+ of the 420M shares floated).
So... stumbled out of the gate is being kind. It really slithered out like a giant wet turd.