Slashdot Mirror
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. Yes, there are ads and similar, but they are not yet at the level they could or even should be. Thus it's useless to try to compare to Facebook's earnings. And this is how the game is played, and what even many slashdotters want - make a great service first, and only then focus on profiting. It's not like Facebook is going to run out of cash, they still have great income and assloads of banks and venture capital ready to kick in if needed.
I do have to applaud Mark Zuckerberg. He is definitely a geek that made it, and at such an young age too. I know slashdotters are jealous and hate him, but boy is he something. He even shows the typical geeky attitude of wearing whatever clothes he wants, even to business meetings with banks! Give the guy some credit where due.