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."
(points) Ha ha!
"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?
A bunch of investors throwing tons of money after dot-com companies on the belief that these companies, despite having no earnings, would somehow grow big. Then in 1999-2000 the bubble burst.
Today's investors are not going to make the same mistake of going after another dot-com company that has almost no earnings. The memory of 13 years ago is still too fresh. (Plus many of them are probably short on cash due to the ongoing recession.)
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
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?
Profit is how investors get paid.
My facebook is always covered in ads for young hot single women in my area. If they're generating that much revenue then they must be incredibly wealthy young hot single women and it should be easy to find myself a sugar mama.
Last time I heard it was Google's IPO. That turned out pretty darn well.
I'm bummed out that Put options on this overpriced turkey won't start trading for six days. (The mechanics of genuine Shorts are too ugly for my taste.)
Seems to have been quite great for Google, which spent its first six years (1998-2004) without making anything and just running things on venture capital.
A large percentage of the people who hate The Zuck do so because he was portrayed as a shitty human being in The Social Network.
Another large block hate him because his product purposely reduces privacy on the internet.
And for the rest of us there's just plain jealousy. Hell, I don't even care about the money; I just wish I could go back and be 28 again.
A company issues an IPO and the closing price ends up at the same price as the IPO price? Not only is this not "stumbling out of the gate", but it means it was done right. If the price jumps too much, the founders of facebook lost out on a lot of money. If it drops, then the initial investors were suckers.
Whether Facebook is able to increase earnings remains to be seen. My gut is it will increase substantially, but not enough to justify the current P/E ratio once risk is factored in. But others think the opposite. So, the investment bank did a very good job in pricing.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
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
FB knows your stated desires. GOOG knows you're hidden desires. FB gets you when you're goofing off. GOOG gets you when you're actively seeking something and you're ready to buy.
GOOG is undervalued.
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN, to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
"Flyin' in just a sweet place,
Never been known to fail..."
They NAILED the IPO, and neither undersold the stock(like LinkedIN did) and lose money that way nor did they value it too high and scare off any potential investors. I'm surprised and impressed.
Sure, for the guys holding the stock at FB it's a letdown, but the company nailed it.
She: Hey, are you a traitor? Me: No, I'm atheist.
- New account? Yes!
- Only commented on this article? Yes!
Probably a shill/marketer? Yep.
The press coverage of Facebook's IPO is completely idiotic. For years the investment banks have been sticking it to companies doing IPOs. If the stock gets sold at $38 and it ends the day at $100, that means the company *should* have raised more than twice as much as it did. And it means that the employees participating in the IPO also got shafted. The people who benefit in that scenario are the privileged investors who get to buy at $38 and sell a few hours later at $100.
If Facebook ends up close to $38 at the end of the day, it will be a rare example of the stock having been priced correctly at the start. Where it goes from here is anyone's guess, but I have increased respect for Zuckerberg. Google had a different IPO process but also didn't give away a lot of money. They knew what the banks were trying to do to them.
You make a good point. I'm in at $40 - let's see how the rest of the day goes :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Geek Insufferable Douchebag
And no, it's not jealousy. I applaud many people who make it big, just not jerks that abuse and insult their customers, treat business associates dishonestly, and try to take basic rights from others in order to increase the padding in their own wallets. Whether he was making $5.00 or $5T, he's an asshole, and assholes don't deserve respect; even rich assholes.
Since Facebook (like Apple) doesn't pay dividends, that hardly matters. The only way you can profit from buying Facebook's stock is sell it at higher price and that is not tied to profit, or by buying share large enough (though only 18% of Facebook's shares were made available, and big investors like the Russian Digital Sky Technologies have had access to buy before anyway)
Seems to have been quite great for Google, which spent its first six years (1998-2004) without making anything and just running things on venture capital.
Actually not quite true, in the year+ before Google's IPO they were making money hand over fist, far more than they had thought they would be, and so they were hiding it:
By 2003, AdWords Select was serving hundreds of thousands of advertisers and making so much money that Google was deliberating hiding its success from the press and from competitors. But it was only a launching pad for the next brilliancy.
source
MEME TIME
Remember M$ and "Monkey Boy"?
Remember MAFIAA ?
Here's our NEW MEME. Carry this in every Facbook CEO Namecheck:
"Suckerborg".
Thank you. That is All.
"Flyin' in just a sweet place,
Never been known to fail..."
I am not sure which is more disappointing. The parent post or the people who voted this insightful.
Google and Facebook are hitting the Holy Grail of marketing. They do not advertise to generic demographics. Instead they are able to market to the individual. The more information they can find out about you, the more effective their advertising.Instead of marketers blindy throwing out products to 25-34 year old females, they will be able to disect the market in finer terms and use their money wisely. The more effective the advertising, the more money they can charge. So while you laugh at the idea, Google's founders could lose a billion in their couch cushions.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
I'm terrible with money (poor impulse control, I don't think it's because I'm credulous, stupid, or have poor instincts although I guess I wouldn't know), so I don't have the cash to invest in this, just like I didn't with Google or Apple, when people were poo-poohing that stuff too. I realize there's confirmation bias and all, but I haven't made a prediction that turned out wrong yet (I thought people were crazy for buying MS stock in early 2000, that's the only other thing I've been willing to predict), so I'm posting this to give me an opportunity to be wrong:
Buying Facebook stock now will result in making a bunch of money.
If I'm wrong in 5 years, feel free to rub my nose in this post.
<xml><I><am><so><damn>Web 2.0</damn></so></am></I></xml>
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)
Eh, nowhere it stays Facebook's shares crashed. In fact it raised quite fast, and then again lowered down to slightly higher level than the initial $42.05. Let's not also forget that Facebook valued them very highly to begin with, which is one of the main things even slashdotters are crying about - it's not going to rise much higher, since they probably put it into a sweet spot already.
make a great service first, and only then focus on profiting.
The only problem is that the initial "great service" needs to be something that leads to a sensible and sustainable business model. If not, then either the business will fail, or it will need to change its "great service" to be something that has a business model.
So assuming Facebook sticks around and they want to make tons of money, it should be leading us all to ask, "How are they going to use our data to make money?" How they use our data today is kind of creepy, and apparently even that's not profitable enough.
Apple pays dividends. But your point is silly and not true, go understand investment and ownership better.
1) Brand new user
2) Posts a multi-paragraph post within a minute of the story going live
3) Glowing review of Facebook that goes against every conventional wisdom
4) Gets basic facts wrong about finance
5) Gets basic facts wrong about business etiquette
Woo. More astroturf.
To be a bit more on-topic: the facebook valuation is insane. A 100 times current earnings? It'll be years before Facebook can justify that kind of price, and that's assuming that it will keep growing as it has - which is an insane proposition, considering that there aren't that many more people who CAN join Facebook.
Those who can, do. Those who can't, sue.
I don't know what you're smoking. Facebook as email? That's only if I don't know their email address (or vice versa) and it's only to ask for their real email. I've never gotten a facebook message of any importance.
Login via facebook? Sure, it's far more common than open id, but when I see a website start using it it's always to complaints from the user base, and usually the userbase shrinks by 50%. Facebook as identity is a joke.
I'm not saying FB isn't profitable or isn't a good business. But its growth is unmaintainable, and anyone buying their stock is taking on one hell of a lot of risk. I wouldn't buy it at 1/4 the price.
I still have more fans than freaks. WTF is wrong with you people?
Google was no where as big of a company as FaceBook is now when they IPO'd. I just don't see where the money is to be made unless they branch out into Google's territory of search. FB adds are just harder to target than Google ones. They are half the price but without any click through. Branding would be about the only kind of advertising you do there unless FB gets into phones, gadgets, etc.
If there is a way to make money in social media FB IS the big player here.
has no clothes....
And we have absolutely no proof that they ever will be able to effectively monetise Facebook or that it is even possible to the extent that all of these optimists believe that it will be.
Right now Facebook's value is 99% smoke and mirrors, and I would never invest in it.
Troll is not a replacement for I disagree.
Indeed. My first trade ever (Yay), I just bought a single share for about $40.
If it sinks, who cares? But if (for some reason) it explodes, I'll get something out of it.
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
WTF are you talking about?
facebook is growing PROFITS at almost 100% every year. Revenue is up 5X over the last 3 years. they are about at the same point in revenue/profits as when google went public.
the only people i know who still use email are my mom and my kid's baseball team. everyone else i know uses facebook. gmail is mostly for spam and crap email
openID is dead. most legit websites with a login will let you use your facebook account. Facebook is the identity of the internet going forward.
I will say right now that that is only a portion of the population. It may be all that you know of but there are people that avoid Facebook because of one reason or another. Assuming that everyone has an id there, or even uses it regularly is similar to assuming everyone has an iPhone. It may be popular but there will just be people that wish to not use it.
No comments about Zynga, the makers of Farmville, tanking?
Twice during the day (so far), their stock dropped more than 10% in 5 minutes and resulted in a halt to trading.
http://money.cnn.com/2012/05/18/markets/facebook-social-media-stocks/
Learning HOW to think is more important than learning WHAT to think.
I'm curious if price discovery is accurate right now since NASDAQ isn't delivering execution notices for FB orders. I know eTrade was down earlier (even the public website) and Fidelity has a notice that FB trades are stuck and have been since it started trading.
All that makes me curious how many orders are stuck out there in limbo land? Will people find out tomorrow that the order they thought was cancelled got filled?
Seems like a big screw up that NASDAQ doesn't want anyone to know about. I don't think you could have mishandled an IPO any further.
Natural != (nontoxic || beneficial)
Can anyone who keeps more track on the stock market tell me if my suspicion that the stock buyers are slowly learning that a hyped (tech) IPO initially only benefits those already with stock?
The stock market really feels like a game and people are slowly learning the rules.
Also, I think part of the problem with facebook is that it is so well known. A large part of the US (and the world) has a facebook account so most people know what the deal is about. I think that many can accept that there is value in the company in itself and the service for the users. However I also think that many find it problematic to "monetize" on it. Since the company really only have one product, the site, thinks can get sour quick if the users start to leave.
Right, because Facebook did such a sterling job of finding people whose profile made it appear like they had with the cash to spend on a General Motors car. OK, maybe a bad example given the current state of global finances, but when was the last time you heard mention of a successful Facebook marketing campaign? I don't even think Zynga has done that, and they are about as linked at the hip to Facebook as you can get.
I think that's the crux between Google and Facebook, really, and probably why Zuckerberg seems so interested in integrating search into Facebook all of a sudden. I'll bet plenty of people post things to Facebook about how much they like some expensive trinket, but it's Google that gets to see which ones are actually looking into making the purchases. My long term prediction; neither company is going to go away anytime soon, but Google is going to see the growth while Facebook is going to start a slow slide into mediocrity with the next few years unless it can find a major source of revenue in all those terabytes of data it has.
UNIX? They're not even circumcised! Savages!
People still print ads? On paper?
It's that stuff you see outside, under the daystar.
-- This space for lease, low setup fee, inquire within!
He is right. Apple only now just started paying a dividend. If you buy monopoly money you wont gain a dime unless someone is willing to pay you more than what you paid for it. Its gambling as shares with no dividends are useless pieces of paper.
The goal of a company is always to raise the stock price. Not make a profit for this reason.
Now if you pay dividends then its actually worth something.
http://saveie6.com/
except for old people a lot of people will talk over facebook
my mom still emails me nonsense like people used to do 10 years ago, but for most of us this has been replaced by sharing nonsense to facebook
birthdays? you write on someone's FB wall to wish them a happy birthday
+1.18 / +3.10%
If they close in the red there first day of trading, what will it mean to investors and facebook?
Brought to you by Carl's Junior.
It's targetted marketting - Mine is about military stuff and motorcycles. It sounds like we know what you gravitate towards.
-- This space for lease, low setup fee, inquire within!
If it sinks, you can always get your certificate framed alongside a burst balloon and mount it proudly on your wall as a statement and talking piece. It'd make a good companion to a share of SCOX carefully mounted with an almost depleted toilet roll too - I'd suggest using an Andrex because, like the court case, it's very, very long... :)
UNIX? They're not even circumcised! Savages!
And then there are the people who hate him because he really is a shitty human being long before the social network was made.
.
I wonder if Mr. Zuckerberg knows that the Internet has beat him to it.
Congratulations on missing the point.
Google and Facebook are hitting the Holy Grail of marketing. They do not advertise to generic demographics. Instead they are able to market to the individual.
Advertising is still only worth anything if the people seeing the ads actually buy stuff.
Just this week, GM pulled out of Facebook advertising, representing a loss of millions of dollars to Facebook. Here's the money quote, in every sense, from that link:
GM dropped its Facebook ads because they were less effective than other options such as Google's AdSense, the sources said. Facebook's ads garner about half the clicks per page view, a measure of effectiveness, compared with the average website.
It turns out that focussed advertising is much more valuable when it's related to something that someone is searching for or reading about right now, and people who use Facebook a lot are (shock!) not doing it because they enjoy the ads. IIRC, there was another survey reported this week, in which about half of the Facebook users questioned said they would never click a Facebook ad.
The more effective the advertising, the more money they can charge.
Exactly. And Facebook aren't doing very well on that score.
What's more, the growth in their user base so far has been based on social pressure and reaching a critical mass of users who bring their friends along with them through networking effects. There simply aren't enough people in the world for them to carry on doing that at the same rate.
Surprising, I know, but I'm in the "Are you kidding?!" camp on this one.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
And that is exactly the point. right now, Facebook has been run by a kid who just wants to build the biggest social network. If Facebook can succeed in learning how to make moeny, they will go from their paltry $1 Billion earnings to a really big number :)
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN, to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
Your link doesn't support your statement at all. Do you have any actual proof of your claim?
As of this moment, FB shares are trading at 38.58 and falling Open at 42, down to 38 ... That's twice it has dropped to 38 ... and I'm wondering if this time there will be no rescue.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
. this is the rough equivalent of having a public stock offering of an actual video game, and I'm not talking about the company that makes the video game (ie. which is something salable), I'm talking about the video game itself.
Zuck has ... made it very clear he still doesn't give a crap about making money (and probably never will).
For himself or others? Because it's pretty clear that he is making/will make a boatload of money.
It must have been something you assimilated. . . .
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.
There is a significant difference tho; with google there is actually a fair chance that the searcher is looking for a product related to the actual search at hand, while with facebook you're basically trying to surreptitiously slip sales in to a largely unrelated activity.
Targetted advertising simply isn't that worthwhile if you cant target it temporally. You may know my interest intimately, but you're not going to sell me anything unless I'm actually in the market for that specific thing at that specific time. At best you can build brand awareness, but there are many ways to do that that are at least as good or better by simply targetting specific venues, mags, etc.
I'm no expert but if the shares don't go up much doesn't that mean they were valued correctly from FB's point of view? Whereas if they were valued low and shot up, FB doesn't benefit as much. It just benefits those who bought/got the stock at the start.
http://www.nytimes.com/2011/05/21/opinion/21nocera.html
A huge opening-day pop is not a sign of a successful I.P.O., but rather a massively mispriced one. Bankers are rewarding their friends and themselves instead of doing their fiduciary duty to their clients.
Good had the revenue to back it up their (much much lower) IPO valuation.
Google is hugely profitable. Facebook, less so.
opening.
1) They have all the users there going to get. So not a whole lot of user growth potential
2) Total add earning about 3 billion
3) The seemed to undermine the emotional buying frenzy by starting at 38.
The Kruger Dunning explains most post on
Yep, a lot of people I know avoid Facebook because of the privacy issues, because its easy to say the wrong thing, because of the shitty ads, because for the 5000th fucking time NO they don't want to play Farmville or meet singletons in their area now. They also don't like how much time is chewed up with nonsense postings ("Lol, here's me drunk! Hehe!") or the creepy integration with every damn website out there. Or the even creepier image recognition tagging.
The people I know who religiously use Facebook tend to be slightly dim girls who feel the need to share their entire lives with everybody.
Anecdote, yes. Worthless? We'll see in a few years. I'm sure Marky Mark is quite bright and will try to push into areas such as search or a Friendface phone but there's really not much higher to go and probably a lot further to drop.
We saw all this before in the UK (albeit on a smaller scale) with Friends Reunited. Epic levels of hype, much cash changing hands, site slowly collapses to a fraction of its original size. Ten years ago almost everybody here with an Internet connection was on FR & every day there were stories in the paper about it. Unlike Myspace Friends Reunited was as successful here at gaining a multi-age demographic as FB is now. Still didn't save it.
wrong
facebook has a business oriented COO and other business people they stole from google after their IPO
Sure, which is why a lot of the pundits were predicting before the markets opened this morning that at the end of day one the shares would close at roughly double the opening price. Quite a few people are eating their words with a side order of humble pie tonight.
I suspect Facebook is in significant trouble now. Today should have been a spectacular confidence booster that set the tone for future offerings and investment. In reality, it's been a damp squib, and that's going to make a lot of people think twice about investing.
You can never tell with these things, because what happens over the next few weeks will be based far more on market sentiment than any fundamentals, but I wouldn't be surprised to see the stock price trickle away over the next few weeks with very few winners. Even Zuckerberg's position won't be safe if that happens, because he's responsible to investors now, and they won't be happy if that's the direction things go in.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
Whooooooosh
If it stays at what it was priced. Frankly I think the price is high but the market says I'm wrong. I'm not sure why folks thought it would double.
Targeted adds are what already generate their funds. Scanning your profile for things like age and marital status. Change your marital status and watch what happens. If you are single and go to married, you will get vacation adds most likely. If you are divorced, lots of singles adds. If you work in a tech site it's HP, Dell, IBM adds. And if you log in to Facebook rarely, you will get lots of adds for "lonely?".
Some claim that this is already done, I don't use the site enough to know any better, but.. What if they scanned your text to know what to advertise? Post "Great workout today" and suddenly you get adds for "Shake Weight" and GNC. You would be more apt to purchase those products, just maybe not from within Facebook.
Point is, targeted adds to work. Maybe not on you, and maybe not in the way most people think. But media has proven over and over again that advertisements work very very well. The more someone looks at your logo the more apt they will be to buy from you.
And lets face it, those targeted advertisements are the same thing as Google does. Their methods for getting information to give you ads with may be a bit different, but it's still tracking and targeting.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Not to be bitchy, but people using the word "meme" - as well as the phrase "the cloud" - should be dragged out back and beaten. Stop it.
It must have been something you assimilated. . . .
I've seen a few comments suggesting that the failure for the stock to rise above the IPO price is a sign that the stock was right priced at the opening.
I don't understand this statement. Is it possibe for the stock to go significantly below the IPO price at this point? I'm sure that the employees with stock options are locked in, and unable to share. Not sure if similar agreements exist with the early investors, but I suspect they do.
How is this right pricing? Seems like the stock really can't go any lower.
Actually.. oddly enough that would mean that facebook priced its IPO perfectly. Ideally an IPO comes out at near or at the price the market will pay for the stock -- that is -- maximizes the value to the company for selling its shares. If the stock price had doubled today that would be good for investors that bought into the initial subscription to the IPO, but BAD for Facebook, and bad for Facebook's owners that sold off in the intial round of sales.
What makes media happy and what makes the company successful are not always the same thing.
-GiH
We will have to compare notes in five years :)
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
Paying Dividends also lowers working capital that is useful for growing a company. The issue is more complex than you think. The goal of stock is to grow Wealth, which includes Stock Price and Dividends.
Besides lowering working capital, there is another really good reason to NOT pay dividends, namely TAXES. By holding onto the wealth generated, and not paying the wealth out to shareholders, you reduce the tax liability for your shareholders, often for years and years. Now you may want to pay taxes on your dividends, but me, I'd much rather not pay taxes as my wealth accumulates until such time as I need the income and the wealth is taxed at the lower "capital gains" rate and not at the higher "Marginal Tax" rates.
But hey, if you think you are better off paying your wealth to the government, by all means invest in only dividend paying stocks.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Technically, Apple paid dividend. (singular). Time will tell if your statement becomes true later on.
You are an investor who made a profit and you can do two things: invest more in the stuff you have or take the cash. A dividend is the "take the cash" option while investing is not paying a dividend. When a firm things it has good places to put the money, they don't pay a dividend. Examples might be more stores (Wal-Mart), or research (Apple / Google). When the investment opportunities run dry, you enter a "cash cow" phase where the firm has a huge profit base and milks it. Then they pay a dividend.
>cough I get ads for continue legal education, wine, cigars and liquor. I think they give you what you tell them you like.
I'm sorry for your loss ... ;)
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
That's not true. This information is all public and easy to look up...
Google had $3.2B in revenue in 2004, and their IPO made them worth about $24B. Their net income the quarter preceding the IPO was $80M, and diluted EPS was $0.30.
Facebook had $3.7B in revenue in 2011, and their IPO made them worth over $100B. Net income last quarter was $137M, and EPS was $0.09.
Revenue and income are clearly in the same ballpark, but valuation and EPS sure aren't. Seems to me FB is in fact way overvalued right now...
And even more interesting to note is Google's revenue and income took off like a hockey stick in the quarters following their IPO (and thus so did the stock). I just don't see Facebook's revenue doing the same. There may soon be a lot of disappointed investors who naively assumed FB stock would be going the same route as GOOG just because it's a "trendy company" rather than actually looking at the financials...
LOL, yeah so far not looking good. I've done pharmaceuticals, so I have stomach for a measly 5% loss :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
It's so much more suited to this purpose, than are words like "trope", "cliche" or "platitude".
And really, no one understands "snowclone".
"Flyin' in just a sweet place,
Never been known to fail..."
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.
IPOs are often intentionally undervalued because that is how the people who invested before the IPO (i.e. the people whose investment helped make the company successful in the first place) make money.
I am TheRaven on Soylent News
most legit websites with a login will let you use your Facebook account
And since most hack sites vacuum up thousands of passwords a day this way many people stay away from anything with a Facebook log in box. Sure, it's not a "Facebook" isolated problem. It is however a horrible example and not something I would add to their bragging list. It's surely not poised as the wave of the future.
Easy for people to do? Sure. But lets not forget how quickly security problems can put someone completely out of business.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
You're making the parent's point for them.
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
for the 5000th fucking time NO they don't want to play Farmville or meet singletons in their area now.
Tell me about it. I tried to meet singletons in my area, but they kept giving me the same one over and over again no matter how many times I asked for a new one.
https://www.eff.org/https-everywhere
Adwords was started back in 2000, 4 years before the IPO. By 2003 they were making a significant amount of money from it. The also had a long term plan to improve the product and grow the company beyond basic search. Dollar for dollar Google was a much better investment when they went public than Facebook currently is.
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN, to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
As far as market manipulations go this IPO may have been cleaner than others. There does not seem to have been an artificial shortage of stock designed to inflate the price. So far it looks like there was plenty of stock made available and that the opening price is matching the markets willingness to pay. Keep in mind that this has been a pretty bad week for the market and much of a stocks price reflects market risk and industry risk, it is not all about the company risk.
Whether an IPO is successful or not should not be judged by whether a day 1 speculator may a killing. Where the price goes in the coming months will define whether or not the IPO was successful.
You make a good point. I'm in at $40 - let's see how the rest of the day goes :)
You are in luck. It looks like the Market Movers aren't going to let FB fall below $38 for the day.
Very true. However, the hype was like nothing Ive ever seen for an IPO. That means that it is likely overvalued. But yes, Facebook played it nicely. The investors are the ones that will get screwed.
I think investing in Facebook does not make any sense. I am the only one? For what I can tell they do not have a clear way of making money other than getting $ from people interested on speculating about their future (all I have hear so far about how they will make money is completely unsupported by any reality check), and it will be increasingly difficult for them to grow their user base or to get money from their current user base. Since their business model is not clear, as it is not clear why do they need the money now, the only reason I can see they did an IPO is to cash out. My guess is that the money to be made by FB has already been made by the original owners, and it will be loss for investors from here on. I would not touch their stock with a stick.
The article linked to does not support your assertion, says nothing about underwriters stepping in, nothing about freefall, nothing about decline, nothing about manipulation.
Why is that?
"better ways of doing things eventually just replace the inferior things" - Linus Torvalds 09-08-07
Facebook is in the search engine business, just from the other direction. Facebook is for companies to search for people to whom they can market their products.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
Google serving ads is different. For anyone seaching for a product they can throw sponsored links at the top of the search results page and they are often relevant to the person searching. This particular advertising mechanism actually makes sense and is probably one of the most effective around. Not that everyone is doing a search where ads are welcome, but that nobody goes looking for products or services on Facebook ads there are never relevant to what people are doing. I suspect FB click-through rate is much lower than Googles. OTOH, FB ads have images and reflect your "likes" even if they are not related to what you're doing at the moment. I suppose the jury is still out on this.
Uhm ... no. That depends entirely on how the sale is structured.
Insiders aren't even allowed to sell (usually) on IPO day unless their sale was worked into the subscription. Even long after they have to announce their sale a few weeks ahead of time before being allowed to sell. (VC guys would be the definition of insiders).
Ultimately, the only people that make money on a baddly priced IPO are the folks that get in on the initial IPO subscription (outside buyers). That's not good for the company, and it dose nothing for the owners and initial capital investors.
Yeah, if you're not interested in money you don't go public. He's clearly interested in making money.
This is one of those rare times in life where you should know exactly what you're buying. An overpriced ticket to ride on Mark Zuckerberg's crazy train. GL.
He's not right. There are lots of ways to profit from investing, besides just selling it off on the market for a higher price. The first method that comes to my mind is shorting, where an investor sells stocks borrowed from someone else with the promise of buying them back later to return them. If, at any time during the loan, the price drops below what the borrower sold the stock for, the borrower can buy back the necessary stocks to return the loan, and have made a hefty profit. Of course, the lender is now left with shares that are worth less, but that's always a risk of investing.
Apart from the straightforward sale of stock, there are other ways to make money. There are of course dividends, which Facebook may offer later as a means to increase its stock's demand. There are also repurchases, where the company could buy back its own stock, for whatever price the company values it at (which is separate from the market price). Then, of course, there are benefits to simply owning interest in a company, like the ability to vote on certain decisions and to meet influential people in the company.
You do not have a moral or legal right to do absolutely anything you want.
*ah hem* google. Freudian slip there.
No I block cookies and avoid linked accounts that pass my browsing habits back to Facebook. Since they can only base ad targeting on my Facebook profile it sees single male and that ranks highest.
Nice spin, but they're poised to close even, or maybe 1c above offering. The only reason it hasn't gone through the floor yet is likely because there is a large volume of limit buys and sells at $38.00 -- people who want to get out if the price hits offering, and people who will only buy at the offering price.
https://www.eff.org/https-everywhere
Once upon a time, a large portion of web sites had Geocities buttons on them, and forums listed AIM names.
You do not have a moral or legal right to do absolutely anything you want.
Mine are even better. I've gotten ads for "Bad Girls" (I'm on Slashdot, so I think you can do the math) and local Christian singles (my profile lists my religion as something other than Christian). I've had a few pretty epic failures on Facebook's targeted advertising.
No, the people who invested before the IPO are making money by selling shares in something that was privately held before. If you mean they undervalued it deliberately so people who "got in on the IPO" can make a quick buck (those are premium clients) then that may not be in the best interest of the company that's going public.
Yes, but the potential to pay dividends is still relevant to the stock price. Once you completely decouple these you are playing a greater-fool game by trying to convince someone else that the stock is worth more than you paid. Point is the P/E ratio or rather it's inverse E/P determines that maximum possible dividend (annual return) one could expect to make should they go that route.
For a company that doesn't pay a dividend, the only investment value is the valuation of the sale of that company. That sale value of the company depends on its equity, which includes the money that didn't get paid in dividends. However, if the company is never sold, there is no realized value of the company and so you are playing with paper...which is valued at a price around where people feel the company should be sold.
I agree. The bet investors are making is that FB will figure out how to mitigate those issues or find creative new routes to make money. It will be interesting to see if they do.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
Google was the odd man out of the thousands of dot-com IPOs that fizzled, if not crashed and burned. One success story and all the toilet paper stocks are forgotten...
How long have you been working on wall street? Just asking...
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
meme has a specific definition, so why would you have a problem with it?
Fortunatly, you are an insignificant spec, so the English language doesn't really care about your input.
The Kruger Dunning explains most post on
What I'd like to know is why should I invest in this stock. I mean sure it's hot now, but what about when the next big social networking site pops up and everyone jumps ship to the new one. Remember Friendster? How about MySpace? Giving the internets short attention span when it comes to social networking sites I see no real future in investing my money to buy any shares.
I am Bennett Haselton! I am Bennett Haselton!
Actually.. oddly enough that would mean that facebook priced its IPO perfectly.
From the news I heard, the underwriters had to step in today to assure the stock didn't go below the IPO price. The pricing of the IPO was not as "perfect" as you assert.
How did this score -1? Seriously, I think it's a very valid point. Now if the ad in question was for say Jose Quervo I could see that.
I am Bennett Haselton! I am Bennett Haselton!
It's no different than selling you car (har har). If you sell it on craigslist and the buyer re-lists and sells the next day for twice the price, would you feel you had done well for yourself?
Im no stock genius..far from it.. but to me (puts straw in corner of mouth and starts to chew) seems like a big game of duck duck goose when you produce no tangible, as in I can touch it, product. So I buy it, you buy it, he buys it, she buys it and last one to sell.. well.. theres your goose.
As far as FB goes.. I have to say Im surprised theres not more ducks lining up to play the game, but then again, the CDO's pretty much knee-capped all the big money and I suspect they are still licking their wounds.. (spits out straw)
Hold on... you just used them both!
Visit the Arcade Restoration Workshop @ http://www.arcaderestoration.com
Except you can't count on Dividends always existing. Plenty of stock used to pay dividends and is no longer even around, mainly because they kept paying dividends even when they were losing money, causing a double decline of working capital, hastening their death.
P/E ratio is a good first indicator of real value. Most stocks trade in the 10 to 25 PE ratio. Followed by Growth indicators. In almost all cases, valuation of stock prices is has very little influence based on historical Dividend payouts, because of the nature of those payouts, the rare exception are public utilities that have other problems regarding P/E ratios, heavy government regulations and and lack of long term growth opportunities.
Basically most modern investors think Dividends are an opportunity cost, and not a benefit.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Advertising is still only worth anything if the people seeing the ads actually buy stuff
Now let's chew on that a bit more. They can target the ads precisely. In theory they can determine whether or not you actually buy the good or service in question. Then, they can correlate the advertising with the purchase.
I doubt anybody knows the answer yet; but we soon will. Like searching for ET, the implications are staggering regardless of the answer.
If advertising is worthwhile, then you will see ads increasingly honed to match you perfectly, based on everything they know about you.
The other alternative that should scare the bejezus out of advertising agencies, is that we only need to know about a product once or twice a year. Perhaps we only need to know about a category of product, and don't care about branding for certain things. Perhaps the consumer trend is towards actually evaluating product and not caring very much about brand. Perhaps the pool of people who persist in caring about brand is diminishing, strapped with student debt, and not worth marketing to.
In other words, the data miners might tell us that most marketing just isn't worth it and from the PoV of people in that business, it would be like finding hostile aliens with death rays on the nearest star, and seeing their ships 1 light month away in a telescope.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Lots of Slashdotters think branding is a number's formula. It's not.
It's an art.
I'd love to see them try and quantify Kate Moss. It's why Vogue charges $150 CPM, and Facebook $0.01 CPM.
Conde Nast gets $4 billion/yr from about 5 million readers. Facebook needs 800 million people to get that much.
Social media really is useless as an advertising medium. Tech nerds should stay FAR away from the media world. Don't get into the art world if you don't understand art.
I find the singleton scene in my area to quite static for some reason.
Paid to post.
+5
Look at the FP's posting history. Brand new account. 100% pro facebook IPO posts.
I don't always use unix-like operating systems; but when I do, I prefer FreeBSD.
If it weren't for the fact that the underwriters had to artificially prop it up by putting millions of buy orders in at 38.00.... If it weren't for that, it would've gone significantly lower.
There may soon be a lot of disappointed investors who naively assumed FB stock would be going the same route as GOOG just because it's a "trendy company" rather than actually looking at the financials...
Those aren't investors, those are gamblers. A fool and his money...
That's the bet alright. Facebook has mountains of data, no denying that. The gamble is, can they extract some kind of meaning from it that enables them to make money, whether that is through adverts (which looks like a shaky proposition, based on data so far) or some other means; pay-for widgets, games, page promotions, buying Zynga, or whatever, being largely immaterial. If the market thinks they can, and do so big time, then their stock price should have gone up. If the market thinks it can't, then the stock price should have gone down.
What's happened is that it's pretty much unchanged which, if anything, is even more interesting. Especially so, given that there are almost cetainly a fair number of initial buyers who were hoping to see an explosive growth and cash out on a high that hasn't happened and who may be making a tough hold/sell decision in the next few days. As I read it, the current situation mean that Facebook's underwriters managed to nail the company's market value to within a couple of percentage points of the actual market value, which is quite an achievement in itself. Or it could indicate any one of a number of theories about what the markets consider Facebook's prospects to be, which will no doubt be speculated on at length and indepth in all of tomorrow's financial news columns and editorials. I said my theory in my post above; it's a long game and a fairly stable stock (for now at least); either Facebook finds a way to extract money from its mountain of data or it slowly slides into mediocrity, and based on the stock price's trajectory, I'd say it's 50:50 which way it all ends up.
UNIX? They're not even circumcised! Savages!
You make a good point. I'm in at $40 - let's see how the rest of the day goes :)
You're lucky you only bought one share of the stock.
9/11 Eyewitnesses to Explosive WTC Demolition 1 of 2
it never went past $43. wouldn't say it raised quite fast either, it kind of burped and then plummeted, then the underwriters stepped in to stabilize the price (twice). it's actually doing very poorly; you can watch all the excitement at; http://www.nasdaq.com/symbol/fb/real-time
It needs to close at around $43 or $44 for the IPO to not be considered a failure.
This link is much better and gets right to the point: http://www.marketwatch.com/story/morgan-stanley-goldman-got-53-of-facebook-shares-2012-05-18
More Twoson than Cupertino
FB has the potential to target ads to a degree that Google can't, it's just a much harder problem to tackle. But with so much more personal information at their disposal, the ceiling is higher. FB might also be able to monetize commercial web presence on their site. Currently, it's free for companies to setup a FB page, but with the value that even small businesses are seeing from that, it would be an easy sell to generate revenue.
If (and it's a huge if) FB can maintain its spot as the dominant social network, it will be very successful financially. But history shows that online communities are incredibly fickle and will jump to a better option when it's presented. AOL, Friendster, MySpace and many others have learned this less the hard way. The danger for FB is that they'll lose their dominant position and, if that happens, the stock will drop to pennies per share. That's why I'd never invest in them...there's definite upside, but the downside is a sheer cliff rather than a steady decline.
Thus begins the pop of Web 2.0, nont with a whimper, but with an IPO.
Python: 'And then suddenly you have a language which says "we're all stuck with whatever the whiniest coder wants".'
If I understand correctly, US law requires companies with more than 500 investors to *publish their finances*, but they don't have to have public shares.
I think after a company had a billion in the bank sitting their, working capital to 'grow' with isn't really an issue, so dividends should be paid.
The Kruger Dunning explains most post on
If someone wants a direct mail list of 30-year-old married liberal women who own cats, the data has been around for decades. No company has ever gotten rich advertising that way.
Well, shit. There goes my plan to retire on the profits from my line of Obama-Biden litter boxes.
"Christian singles' is coed for 'easy'.
Just so you know.
While I can do the math, pretty much any math, I'm not sure of the link between Bad Girls and slashdot.
Yuo're not implying the tired incorrect but often repeating idea that nerds don't get laid are you?
Cause I am a nerd..no I am a Nerd. I've been getting laid since I was 15^H^H 18, I was 18. Kids, the 70's where a different time. As in, you couldn't catch anything permanent or deadly. And disco was a small price to pay to have casual sex and what ever age I adjusted it to.
If I was single today, I have no idea what I would do. Pleasure a lot of socks, I suppose.
The Kruger Dunning explains most post on
I think I smell another Fed Reserve - Wall Street bubble blowing, monetizing the thetans.
FB has strong momentum in demographics that don't usually change.
People over 35, and people who relate it to the 'golden days of college' Unlike every other site that has died.
The Kruger Dunning explains most post on
Ad what point will you stop policing spelling?
The moment they change things in a way to monetize the system is the day users leave in droves to an alternative. They put those ad's front and center, or make you start watching video's to access your wall or any other of a million things that could make them more money and they are going to drive people away.
Maybe they will develop some new neat AI that can figure out when people are about to be in the market for a product and sell advertising to companies that sell that product but I wouldn't bet $1 on that. I'd wager significant money that they have maximized their revenue generation at this point and any attempt to increase it is only going to drive users to alternative platforms.
There is value in the number of people on the platform but it's not difficult to create these communities, the sheer number of them that we've been through at this point is evidence of that. FB has been remarkably deft at advancing features enough to stay at the top but the minute they start annoying users with advertising is the minute people create google plus accounts and start using them. All the evidence indicates FB ads are far less effective than other souces, and that's not a good sign for the future of this company.
Merril Edge, for me. Cost me $6.95 in commission. No periodic/maintenance fees and there was no minimum deposit required to open the account.
If you somehow have more than $250k assets under them, you get 30 or so trades per month with no commission. I don't see myself getting there for a VERY long time, TBH. It was the reasonable per-trade cost and no minimum that "sold" me into them. Everyone else wants me to deposit between $500 and $2000 to even get started (fuck that!)
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
That's an unfair comparison. People could see how Google would make money from day one - me included. There is so much uncertainty around Facebook that its a different ball-game. Here are a few obvious issues around Facebook
- Untested and very young CEO with questionable integrity
- Poor privacy record
- Pays a PR company to discredit competition (highly unethical)
- Product of questionable origins (highly suspect)
Everything about Facebook smells bad from day one. The obvious way up from here is to intrude on people's privacy even more - ie. to sell its loyal customer data to the highest bidder with even more sensitive information.
If you want to put your money into Facebook, go ahead. If it makes you a lot of money, then congratulations - but don't mortgage your house on it ... because its unfair for others to pay for your welfare... GM made the right move by pulling the plug on this crowd, I would too.
AC
Wrong demographic. You want conservative cat owners for that one.
"Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery?" - Patrick Henry
Sadly this is not a meme, it's a neologism. Basically, something that children do all the time: make up word that mean whatever they want them to mean...
A meme is a reduction of a cultural phenoma into a catch phrase, where culture (in this context) requires as a group much larger than 1 person.
It's inherently an interaction between individual parties. Services that provide social interaction are doing what could otherwise be done with protocols and local servers if not merely clients. Advances in software will burst this bubble.
Indeed, no one company should control all the information, and we well recognize that privacy is a major concern, so we have forces that will push us in the direction of developing the protocols and software.
Or so I think. How are things coming along?
What is also interesting is that Zynga's stock dropped 23% during the day, and ended the day at -13%. Nasdaq actually had to stop trading on Zynga twice to keep the stock from dropping even further. And they bring in a lot of money for Facebook. So obviously Facebook's performance in the IPO has shaken a lot of people even in regards to one of their largest business partners.
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
Oh and to add to your (2):
The majority of heavy Facebook users use the mobile apps and don't even see the ads.
It sucks to be a part of the Suckerborg collective...
I'm glad my friends in Zynga got out.
"Flyin' in just a sweet place,
Never been known to fail..."
He's not right. There are lots of ways to profit from investing, besides just selling it off on the market for a higher price. The first method that comes to my mind is shorting, where an investor sells stocks borrowed from someone else with the promise of buying them back later to return them. If, at any time during the loan, the price drops below what the borrower sold the stock for, the borrower can buy back the necessary stocks to return the loan, and have made a hefty profit. Of course, the lender is now left with shares that are worth less, but that's always a risk of investing.
It all ultimately amounts to the same thing - you make money by convincing someone else to give them to you in exchange for the stock. In that model, the sole value of the stock is in the potential to convince another person to part with more money - if you're the last guy in the chain, all you have is a worthless piece of paper. Yes, in theory it gives you some voting rights, but those are meaningless in practice for vast majority of publicly trading companies.
Companies that pay dividends cannot play fancy accounting games to make themselves look profitable when they are losing money (e.g. Enron). Basically what this means is that if a company does not pay dividends you do not know if it is truly profitable unless you are one of the big-time investors
The truth is that all men having power ought to be mistrusted. James Madison
Plenty of stock used to pay dividends and is no longer even around, mainly because they kept paying dividends even when they were losing money, ...
And even more stock that never paid dividends is no longer around because the company never actually made any money, it just cooked its books to look like it was (or like it at least might).
The truth is that all men having power ought to be mistrusted. James Madison
People still print ads? On paper?
It's that stuff you see outside, under the daystar.
What is "outside"? Do you mean the unwalled green and blue room?
Ceci n'est pas un sig.
I'm prepared to forgo any further interaction with humanity if signing up for Facebook is the price.
"Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery?" - Patrick Henry
er, call me crazy but isn't that what the UNDERWRITERS are actually for?
ie to write-UNDER the stock price a line labelled "you shall not pass".
Visit CryptoGnome in his home.
And we have absolutely no proof that they ever will be able to effectively monetise Facebook or that it is even possible to the extent that all of these optimists believe that it will be.
Actually I think that from the perspective of the major shareholders (the founders and early employees) they JUST DID MONETIZE it. If I was MZ with $20b in my bank account, I wouldn't give a shit if FB ever was successful.
-- QED
Actually, aren't those epic successes? They're both attempting to sell you something someone else thinks you lack and need. I can easily imagine someone deciding to target pornography for nerds, and certain Christian sects are quite infamous for pathetic conversion attempts.
This, of course, assumes that Facebook was given the desired target demographics for the ads, not just the ads and instructions to show it to the "best candidates, whoever those might be".
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
They are going to have to man-handle users to make money. Good luck.
I object to power without constructive purpose. --Spock
"Zuck has insisted on doing it himself and made it very clear he still doesn't give a crap about making money (and probably never will)."
you need to make a lot of money to be able to make that statement
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
True, but I think your timeline is too short.
People buy stock generally to make money. There are some activist investors, but they'd buy to make a point, so they're not that price sensitive. So what's the path to make money?
They still teach you in some finance courses that you should price a stock based on the Net Present Value of what you think the dividends are going to be. This is also irrelevant, partly because hot tech stocks don't do dividends much (look at Apple) partly because investors don't think this way, and you'd be way out of sync with the market.
So, the thing people think about is, i'm going to sell this down the road for a huge hunk of cash. Why? because people want it. Fundamentals be damned, people want this stock. So.... if the stock doesn't bounce high on day 1, then you seriously dent the expectations I can sell for a huge chunk of cash later. You damper enthusiasm, which is a feedback loop for your stock value (we already know we're well beyond fundamentals with Facebook stock by this point). Your stock value will suffer. I understand your point (supply meeting demand, no consumer surplus and all that) but i'm sure there are facebook folks worried about this.
Google serving ads is different. For anyone seaching for a product they can throw sponsored links at the top of the search results page and they are often relevant to the person searching. This particular advertising mechanism actually makes sense and is probably one of the most effective around. Not that everyone is doing a search where ads are welcome, but that nobody goes looking for products or services on Facebook ads there are never relevant to what people are doing. I suspect FB click-through rate is much lower than Googles. OTOH, FB ads have images and reflect your "likes" even if they are not related to what you're doing at the moment. I suppose the jury is still out on this.
That is true of the search network - but not so much the display network, which Google also aggressively push.
We are running a campaign for our software/web development company as an experiment at the moment. After reviewing the data I was surprised to see we only had a handful of clicks coming through from the 'Search' part of it - the vast majority came from the Display Network (i.e, sites/blogs/etc running Google AdSense to make money). In our first few days it was about a 70:3 ratio.
We decided to run it like that for 2 weeks and then turn off Display and see how it goes (this happened yesterday so no real data yet).
When I started looking for what people thought was the best strategy, I found (as you might expect) a lot of mixed opinions. I did find a Google whitepaper that suggested that using the Display network will result in a better net result, but I haven't read it closely yet.
We - like I imagine most businesses - are not just interested in clicks, we're interested in 'leads'. My data is obviously from a very small period of running ads, but so far it seems that the bulk of the traffic coming from the Display network is "unqualified" and will have a lower overall "yield" when compared to the Search traffic - people actively seeking stuff.
It is pretty interesting stuff to play with though, especially for me - I have no marketing/sales background; I know a lot of this stuff is old hat to people that have been doing it for a while but it's fascinating to see the differences in how people click and what they do in this sort of way.
I'm inclined to agree with you, and am equally concerned that google itself will hit the skids when everybody eventually finds out how negative the ROI is on advertising. Remember, the people who are telling you that marketing works great are all in marketing.
If you are not allowed to question your government then the government has answered your question.
Besides lowering working capital, there is another really good reason to NOT pay dividends, namely TAXES. By holding onto the wealth generated, and not paying the wealth out to shareholders, you reduce the tax liability for your shareholders, often for years and years. Now you may want to pay taxes on your dividends, but me, I'd much rather not pay taxes as my wealth accumulates until such time as I need the income and the wealth is taxed at the lower "capital gains" rate and not at the higher "Marginal Tax" rates.
I don't need the company to make that decision for me. If I need to defer taxes, I put the investment in a 401k.
If you are not allowed to question your government then the government has answered your question.
A year from now, this bubble will have burst. Not a moment too soon either.
"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand". -Milton F.
I only know a handful of people who don't use e-mail. In most cases, it is not because of facebook, but because they are computer illiterate. About half the people I know use facebook, the other half rabidly don't use it.
If you are not allowed to question your government then the government has answered your question.
By holding onto the wealth generated, and not paying the wealth out to shareholders, you reduce the tax liability for your shareholders, often for years and years.
While it can reduce tax liability, not paying a dividend does not necessarily result in the best return to investors. (you sort of mention this) Retaining the cash only makes sense if the company can generate a better return on the cash than the investor can themselves. You are quite correct that it does avoid taxes but the goal is not to avoid taxes but to maximize return on investment. If the stock price stagnates for a sufficient period of time, the investor could do better even with low risk treasury bonds eventually even accounting for taxes. You are taking a risk either way.
I'd much rather not pay taxes as my wealth accumulates until such time as I need the income and the wealth is taxed at the lower "capital gains" rate and not at the higher "Marginal Tax" rates.
You are assuming the stock will appreciate sufficiently for the capital gains rate to matter. That is not even remotely a certainty, particularly when talking about stocks like Facebook.
FB knows your stated desires. GOOG knows you're hidden desires.
Between the two of them, they could create one heck of a phone sex operation.
Yeah, but "FaceGOOG"? I wouldn't go for it. :-P
"What in the name of Fats Waller is that?"
"A four-foot prune."
It doesn't lower working capital if you make so much income the dividends are only a portion of it. In that case it just slows the increase of working capital. And with $100B in the bank, Apple really doesn't have to worry about having sufficient cash for growth.
And dividends are currently taxed at the same rate as long term capital gains, so it's a perfectly good investment strategy for conservative investors who want to buy large, profitable companies with reasonably small growth. If you had bought AT&T or Wal-Mart stock 5 years ago you'd have made almost 0% profit selling it now if they didn't pay dividends. But since they do, you would have instead *annually* made about 3% on Wal-Mart and 6% on AT&T (ie. 15-30% over the whole period). That's a hell of a lot better than many investments have made in the last 5 years...
What's more significant is that Zynga crashed - down 17% and trading halted for almost an hour. If FB were so great, why did their BFF take a nasty shot to the head?
Let's call it what it is, Anti-Social Media.
I'd love to see them try and quantify Kate Moss.
We all know she's thin, but I'm pretty sure a set of bathroom scales would still work.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Actually.. oddly enough that would mean that facebook priced its IPO perfectly. Ideally an IPO comes out at near or at the price the market will pay for the stock -- that is -- maximizes the value to the company for selling its shares.
In some weird hypothetical situation, this could be true, if the entire company was sold in one day, and then entirely removed from the market.
But that's not how it works.
They floated about 15% of the shares. Bear in mind, this IPO was for the founders & early investors, not for Facebook Inc. I'm constantly amazed how many people don't understand the difference between a corporation and its shareholders.
Anyway, that left about 85% of the shares unsold. In theory, the shareholders want to sell those shares at the highest price possible. But to do that, you have to generate market momentum. Underprice the IPO so the share value starts with an upward curve.
Instead, the founders & early investors OVERpriced the IPO, and in the last few days decided to dump MORE of their shares (which is a galaxy-class warning flag to anyone with half a brain).
This IPO was pure profit taking. The founders & early investors want to get out with what they can, while they still can.
Pity the facebook employees and private-exchange traders who can't sell their stocks during their 6+ month "lockup" periods. By the time they can dump the shares, it will be too late to make much, if anything.
If a company floats and the share price at the end of the day remains at about the launch price, it's successful.
If they'd charged less (resulting in large gains on the day) then the company would not have raised the funds it should have and existing shareholders would not have received a fair price for their holdings. A bunch of speculators making huge returns on day one is *not* a successful IPO.
If they had charged more (resulting in falls on the day) then they may have had problems shifting stock, possible discounting (causes problems) and be stuck with shareholders already annoyed about having lost money.
They nailed it.
Actually it won't. I have my stock certificates here for some stocks that I bought that became penny stocks. I think the 40 shares are worth about $5 all together and it cost me nothing to get them.
A derivative website, riding the crashing wave of hip right on to the volcanic shores of soccer moms and granny pokes, which offers nothing to reality except the callous idea of a digital lifestyle portal and free corporate marketing: yeah that seams worth billions of dollars. Shocker. I like that people are still under this mis-assumption that facebook is / will / could change the world. Can it? Maybe if it had anything to offer other than millions of pages of basic online biographies with a constant input of narcissistic drivel.
Notables:
Set a record number of trades in 1 second: Over 12,000.
Over 1.5 million trades by end of day. SPY - often the most active, rarely breaches 1 million/day.
Nasdaq quotes went radio silent for 2 hours, but traded just fine.
Many other stocks were affected right before and after it finally opened (AAPL, NFLX, INTU for example)
Push "marketing" does unfortunately work, it may not be as effective as targeted "marketing" but they would have given up long ago if it didn't work at all.
:)
Scare quote because the missues has a Phd in marketing and constantly reminds me that this sort of thing is advertising, NOT marketing.To hear her tell it, calling these pepole marketers is like calling a homeopath a doctor. She's been teaching the subject for a couple of decades so I assume she knows what she's talking about. The bits of marketing theory I actually listen to seem like formalised common-sense to me, it's about tailoring your product or service to your target market in such a way that people seek you out amoung the crowd. She's currently interested in the marketing of the Raspberry Pi as a teaching example.
Yesterday I taught her the basics of plate techtonics(sic?), I've mentioned it before but this time I rebranded it as "The ring of fire" and she listened.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Who seriously did not see this coming from 1000 miles away. I would not invest a cent in this IPO, especially when the head of the company spends a billion in aquisition without consulting his board.
Tomorrow is another day...
I don't see it either. Banner Ads as a revenue source? How turn of the century, good luck with that. I've never even noticed an ad on Facebook, much less clicked on one. 100:1 PE ratio? Insane.
Fool.
Money.
Bye-bye.
Never let a lack of data get in the way of a good rant.
Yeah might have to jump ship on this one :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
In that model, the sole value of the stock is in the potential to convince another person to part with more money - if you're the last guy in the chain, all you have is a worthless piece of paper.
If you're the last guy in the chain, you have a portion of interest in the company, which is worth exactly what that portion of the company is worth.
The supposition that a stock is just a piece of paper is as preposterous as the oft-repeated notion that all money is just a piece of paper (or the more modern variant, numbers in a computer). Every company is a group of individuals who have invested their money and/or time into a collective endeavor to meet a common goal. Being publicly traded just means that during the offering, anyone can put their own money into the company and have a proportional amount of control over the collective endeavor. That's it. There is no magic or virtual wealth in the stock market. It's just a big market for trading goods.
It should be noted that all of these profit mechanisms can (and often are) applied to any traded goods. Stock is just very common. If you trade in commodities, you're actually buying and selling commodities. If you trade in stock, you're actually buying and selling your portion of a company.
You do not have a moral or legal right to do absolutely anything you want.
If you're the last guy in the chain, you have a portion of interest in the company, which is worth exactly what that portion of the company is worth.
And what, exactly, is it worth? Or I should perhaps phrase this better - what is its value to you as a share holder?
This whole FB IPO reminds me of the stock scams that were floating around in inboxes a few years ago, where spammers would try and boost a stock price a bit by spamming people saying this and this stock is really great. On a much larger scale of course. They got everybody and their dog hyped on this. I've seen really smart people promoting it on their blogs saying that it was possibly undervalued. Really? They most likely placed their stocks just right in terms of raising as much cash for themselves, but I really doubt it will stay there. A rough estimate is that the stock is probably worth about $12-$15 with good prospects for a steady growth over the next few years, but once the hype has died, I doubt it will be $40 again for a long time.
On Facebook, people actually specify what they're interested in though. Even so much as to say they "Like" Oreo cookies, Dr. Pepper, Vampire Diaries, Exercise, and whatever else. That might be more specific than assuming somebody likes Oreo cookies because they searched for Oreo. They might be searching because they have no idea what it is, or wonder why somebody would call a person that. Also, Google apparently places AdSense advertisements on webpages where people aren't necessarily looking for the product in the advertisement.
If they're smart, FB will use the IPO money to buy businesses that actually have a product. If they do that, they be around in five years. If not, they may go the way of Myspace.
-- Alastair
The problem with Facebook's advertising model is that it relies on what is, essentially, a rather risky business prospect.
Targeted advertising is immensely successful within a very narrow band between the point where the ad becomes relevant to your interests(or more ideally needs) and the point where it feels like a massive privacy intrusion. This is a delicate balance to manage.
If you don't predict an individuals needs well enough the ad isn't effective. GM pulled out in essence because Facebook couldn't work out who could afford a new car and was in the market for a new car better than Google could. This makes sense since Google finds people searching for information on cars and Facebook is stuck working with people who like expensive things and/or cars.
The alternative side is even worse for a company. If you cross a line into what a customer thinks is creepy, then not only do you potentially damage the brand you're advertising, but also the facebook brand and everyone associated with it.
Facebook can almost certainly target ads better than Google can, but there's some serious questions as to how much of that capacity falls in the effective band. No one really minds being shown an ad for a car when they search for "car sales", but they might object to being presented with ads which indicate the advertiser knows a lot of very private things about them. There's also plenty of historical evidence for these kinds of services that they can fall even more quickly than they rose. How far can Facebook monetize its services before people stop using it? To reach market expectations Facebook needs to essentially increase its revenues by a factor of 20 or so and its profits by probably around the same amount within the next year (analysts are looking for a doubling of value within a year and it needs about a factor of 10 increase to be worth what it sold for today). Facebook can't increase its subscriber base by that much(there aren't enough people in the world), so they've got to extract more revenue from what they have. I don't see them being able to do that with the required intensity without destroying the service.
That's a rather impossible question, actually, because there are many different metrics. A large number of people really only care what something can be sold for, so they'll see a company with a low stock price (like, for example, Apple in the late 1990's) as being worth very little. Someone who cares about having control of the company would value that low-priced stock more, because it's easier to gain more control for a lower cost. Someone with a sentimental attachment to the company or an interest in receiving the shareholder updates (which often include first announcements of future plans) could consider the stock worth quite a lot, regardless of the market price.
Perhaps the most common means for establishing the value of the particular portion of a company is its ability to be used as a tool for trade. This depends heavily on the preferences of others who want to have the portion, establishing demand, and those who do not want their portions any more, establishing supply. The demands of other investors can also be used as a factor in evaluating the trade abilities of a particular share of the company, so there's a complex feedback cycle to be considered.
The disparity between market price and actual estimated monetary value is of interest to investors and economists. If a company's market price is significantly higher than what's realistically expected to be returned from the company (if the company were to end its collective endeavor, pay off its debts, sell its assets, and distribute cash to shareholders), that's a sign that the company is part of a bubble, because the shares are being demanded more as tools for trade than other purposes. On the other hand, a lower-than-expected market price can indicate that the company's a good long-term investment, because it may pay out more (through dividends, mostly) in the long run.
You do not have a moral or legal right to do absolutely anything you want.
In the case of an IPO it's even worse, you pay lots of money to someone for their supposed expertise in selling the car at a good price for you. They list it at a low price, their friends buy it and resell it for twice the price.
Gravity is going to hit the stock like a boulder come Monday. A huge percentage of the float was purchased by the underwriting bank to prop the stock above 38, if this would not have been underwritten it would have plunged. Now watch come Monday and next week. News of the lawsuit hits, a contingency for that outcome in a 50% settlement would be 7% in market cap alone, and a lot more if you deduct from earnings considering the insane earnings multiple this thing was priced at. Morgan Stanley going to take a big hit as the underwriter when the thing starts to tank.
Here is an interesting link: http://www.zerohedge.com/news/fadebook
And my favorite quote I saw in the media, "It is like they threw a party and nobody came".
And the irony of the whole thing is that by pricing at the very top of any conceivable valuation and increasing the size of the float in the last days, it would almost appear it was intentional, or were they smoking something?
Zynga halted trading several times yesterday, and closed over 15% down.
Real men don't need signitures!!!
Knowing an interest that someone has specified sound very compelling, but compare it to advertising in i a magazine or on a webpage. If someone is reading a gardening magazine or gardening webpage you can assume they are interested in gardening, and even better they are most likely actively interested in gardening while they are reading. Thus you get better targetting by simply chosing where to advertise than who to advertise to.
Adsense, iirc, builds on that principle and targets the ads based on the contents of the webpage being read, not a profile built on the consumer. The viewer might, of course, not be in the market but they are interested in the subject at hand at the time they are reading the page.
Still, I can think of some fields where the facebook approach would be better and events or other time limited opportunities would be one of them. If you know there is something the consumer has a high interest in but simply will not be able to decide themselves when to purchase then you're better off targetting by interest.
What I don't understand is why they don't spread out the IPO over a week or two, continuously selling at the going rate.
I can understand you became voted as a Troll. 5. Most people would have voted you up with mod points if you did not refer to Zuckerberg as a geek. He is not a geek and never will he nor facebook. It was just and idea between friends which expanded. Since when does that make one a geek? Facebook is like Jamie Dimond of JP Morgan Chase.
I should shut up now before I start going on a corruption rant! :)
All cows eat grass!
Same with a newer Facebook story as well.
Clever signature text goes here.
And how does the stock price increase? Magic?
LET THEM EAT ASTROTURF.
Facebook may yet be overpriced. Morgan Stanley and its fellow underwriters of the IPO undoubtedly spent millions of dollars, maybe hundreds of millions, propping up the stock Friday so it wouldn't fall below the $38 offering price, as that would have been a huge embarrassment. No one knows how long they'd continue to do so.
Additionally, in about a week the shares become eligible for short-selling, which could place more pressure on the price. A few months from now, insiders prohibited from selling their own share will have the green light, and millions more shares will enter the marketplace. The question in coming weeks may no longer be how high Facebook can soar, but how low can it go?
http://www.latimes.com/business/money/la-facebook-fail-20120518,0,5818946.story
"Flyin' in just a sweet place,
Never been known to fail..."
I've been calling him Zuckersperg, although that might be offensive to my friend who are Asspie's...
Jesus was all right but his disciples were thick and ordinary. -John Lennon
If so then I wonder what they are going to do as the click through rate is probably even worse for now but they do have a few more billions to improve some things. I think there is a big difference between a valuable company and valuable stock. No one is going to make much off of this in the long term IMO since the stock was already worth much more than Google when it had it's IPO, but FaceBook is the 800lb.gorilla of social media, but what does that mean as far as profiting from it? They do have a lot of data on a bunch of people. The adds that they have as of now clearly don't work with Chrome or FireFox as those are all blocked by add blockers anyhow. If advertising on their sites are their plan, then I don't see where they are going with that.
When you mix art and business, you have show business which is something Steve Jobs could do pretty well, but he must not have been a nerd, but shouldn't a nerd be smart enough to hire someone in sales that is good at it?
If I'm a company I would rather have the people that want my product search for me instead of the other way around. Let's same I'm a company that makes log homes, then I would just advertise with Google using that keyword as there is no standout brand there. Maybe promoting your brand might work out on FaceBook if you don't already have people that know who you are.
To me FaceBook is a direct competitor to Google if advertising on their pages is the only way they have to make money and don't think they will do well taking them on. Maybe they could make some money in that app space, and with a few extra billions, start making gadgets. I just wonder what the plan is? When Google IPO'd, I had no doubt they would do well.
All I know is, Google gives me much more relevant ads than Facebook ever has. The Facebook ads I get tend to be generic and shady-sounding: dating sites, diet pills, and political propaganda that is the exact opposite of what I'd be interested in. Awesome!
I don't think Facebook has yet become adept at serving relevant, context-sensitive ads. If they can manage that, they might do a lot better. Right now, their ads just seem to be 90% garbage.
Check out my world simulator thingy.
I doubt FB will be knocked off the roost by someone else including Twitter. The problem is, they were already making $1B a year before they IPO'd. I just don't see much growth in their stock unless they use all of that data to branch out into other areas besides "push" advertising. People have too many friends to jump.
Google has done so well by not having the add blockers stop them very often and only show items based on what someone is specifically looking for. Even without the add blockers, no one pays attention to FB adds at all.
Facebook has 800 million users, and doesn't seem poised to grow much beyond that. Their potential user base is saturated. Going forward, they'll be lucky to keep a steady user base, balanced out by people leaving and new folks joining. But there will likely be a tipping point where the influx of new users won't be enough to keep up with people leaving, and they'll become Myspace.
What keeps people on the site, apparently, are all those games. I don't play any of them, but they seem to be insanely popular. I believe they even offer their own currency, which you purchase with real money, to use in Facebook games. They obviously have ideas about how to monetize their platform, but they aren't profiting much from it. Google seems to have a lot more employees (~22,000 vs. Facebook's ~3500) yet is much more profitable. Google also, as far as I know, has a ton more infrastructure to maintain. So, I don't think it's overhead that's hurting Facebook's bottom line, they just have a poor revenue strategy. Given the wealth of information their users freely provide, there is really no excuse for this.
Check out my world simulator thingy.
Often they THINK they're targeted, but they're not. A prime example was when I recently got out of a relationship. And removed it from my Facebook profile. And immediately had all the advertising on Facebook morph into dating services. DATE NOW!!!!
Which simply annoyed me and made me ignore them even more.
You are very right in one sense. Consider, though, with how badly Facebook has done in ths regard that it still has $1B/year in earnings. If the business folks don't screw up FB and figure out how to make ads work, by your admission, there is a lot of room to improve :)
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year