OFFICIAL Facebook IPO Thread

Will you be purchasing Facebook stock?

  • Total voters
    124
  • Poll closed .


erifdekciw said:
Also im not a big stock guy and I was reading an article saying that facebook was keeping the stock at 38$ with underwriters? Does this mean it can't drop below $38?
Click to expand...

I don't know much about it either, but I think the banks/underwriters that bring the company public have an interest to keep the stock from nose diving on day one. So they basically will buy the stock back to keep it from going below the IPO price. But they can't do that forever... If there is too much selling pressure, then they would lose a ton of money buying back loads of the stock at $38.

I think they messed up by selling too many shares (too much supply).
 
r3p1v said:
I don't know much about it either, but I think the banks/underwriters that bring the company public have an interest to keep the stock from nose diving on day one. So they basically will buy the stock back to keep it from going below the IPO price. But they can't do that forever... If there is too much selling pressure, then they would lose a ton of money buying back loads of the stock at $38.

I think they messed up by selling too many shares (too much supply).
Click to expand...

The reason the banks/underwriters did this was because it was the first day of trading. It would have been disasterous to the future business and future IPO, since they charged Facebook below the average. So if Facebook's stock tanked... Pretty much every major and minor IPO would want to get reduced rates. They didn't want egg on their faces, and can't afford it.

Some people could say it was stock manipulation to a degree, me... Meh, I see 90 P/E and think it doesn't make sense. Facebook needs to generate more revenue, and figure out a way fast.

Now, if someone from Wickedfire, would come up the a game changing solution for mobile advertising, and launch an company, Facebook would buy it up rather quickly, so they can actually have a viable business model. They are going to have to compete with Google Adsense with off-site advertisement to get anywhere, cause that stock is going to drop when the banks stop supporting it.
 
This will end up like Groupon. Let it drop to what people are really willing to pay for it in a week or two.
 
dchuk said:
Their P/E ratio is 95 right now. Google is 18. Google profits 3 times as much per quarter as Facebook makes gross per year.

They aren't worth what they're valued at.
Click to expand...

^^^ This.

Here's a good read:

Facebook Inc (FB) IPO: Case of Insane Valuation | ValueWalk

I was recently on CNBC discussing the Facebook Inc (NASDAQ:FB) valuation, which I believe is priced for out-of-this-world perfection. The easiest way to assess the insanity of Facebook’s valuation is by comparing it to Google’s. Facebook is set to go public at a sweet valuation of $100 billion, and it has estimated revenue for 2012 of about $4 billion.

However, investors are not buying Facebook Inc (NASDAQ:FB) today because they believe it is fairly valued, so what is the point of the comparison? Bear with me for a moment. Let’s say Facebook investors want to receive 15 percent a year over the next five years. In that case, Facebook’s market capitalization has to double in five years, to $200 billion. Conveniently, $200 billion happens to be Google Inc (NASDAQ:GOOG)’s valuation today. Since both companies are in the advertising business and have very similar cost structures, all Facebook has to do over the next five years is achieve Google’s current sales level, which is a meager $40 billion (for purposes of this discussion, we’ll ignore Google’s $40 billion pile of cash, or about $100 a share, compared with Facebook’s few billion, though that would only further make my point here). For an investor to double his or her money over the next five years, all Facebook has to do is increase its revenues tenfold.

That sounds doable at first glance. When your name defines what social networking means, and when you have 900 million users, nothing seems unconquerable. Still, increasing revenues tenfold may become a difficult undertaking for Facebook. First of all, there is a user fatigue. I find that as the novelty of Facebook wears off, I spend less and less time logged in to my page. (Interestingly, I find that I use Twitter more and more every day, because I strictly use it as part of my research process). One can argue that it may just be me, but a study undertaken by a web research company last fall shows that users are indeed getting Facebook fatigue. In addition, Facebook is a productivity drain, and employers will likely start blocking employee access to Facebook during businesses hours, which will further decrease the time spent on it.

In theory, Facebook is an advertiser’s dream. Since we openly share our age, sex, education, employment, travels, likes, etc., for the first time ever, a retailer can market to an incredibly specific demographic: a 38-year-old male, in Denver, married with children, with a graduate degree, who “likes” Ayn Rand. The precision of target marketing offered by Facebook is simply incredible. But while you can charge a lot more money for delivering a display ad with sniper-rifle precision, this money will be wasted if your precisely selected audience simply ignores your ads. It doesn’t matter whether you deliver ads with a sniper rifle or a 12-gauge shotgun, if users don’t notice them, precision carries little value. It seems our brains have gradually adapted to ignoring display ads — I personally cannot recall a single display ad from Facebook.

By now, you may have heard that GM has pulled its advertising from Facebook because it did not see much benefit to it, while Ford is sticking with it.

To make things worse, there are only so many ads Facebook can deliver per page without trashing the user experience.

Finally, it is hard to maintain your competitive advantages when you don’t know who your competition is. Facebook competition is likely to be nonlinear (e.g., not Google+ or Myspace-like networks). Instead, it will probably be another activity that competes our time away from Facebook. I have no idea what it will be — maybe it’s not even born yet.

Of course, in the short term, it doesn’t really matter what Facebook revenue or cash flows are. Investors are ignoring them. Facebook stock can probably double in the first five trading days, rather than five years. After the company goes public, its shares will trade for a while like a beachfront property that was frequented by Elvis, and little details like cash flow won’t matter. But the honeymoon will eventually end. It always does, and Facebook will then start trading like an unsexy apartment building — based on cash flows. That is when reality will set in and the stock will come down to earth, hard.
Click to expand...


The stock is worth what people are willing to pay but there are plenty of buyers who are in on the stock not because they think it is a good value but because they believe enough other people will think the price is a good value and the increase in stock price will allow them to make a quick and tidy profit...
 
MediaBuysEyez said:
The stock is worth what people are willing to pay
Click to expand...
Thank you.

This is actually how the price mechanism works. What people pay, is the price.

MediaBuysEyez said:
but there are plenty of buyers who are in on the stock not because they think it is a good value but because they believe enough other people will think the price is a good value and the increase in stock price will allow them to make a quick and tidy profit...
Click to expand...
You guys are free to guess what other people are thinking, what their motivations are, etc etc. It's irrelevant to me. The price is what it is. It will change to what people want it to be. That is what I find important to follow. YMMV.
 
guerilla said:
But they are because that is what people are paying.

It's really basic logic amigo.
Click to expand...

They aren't worth what people are willing to pay on the most anticipated, hyped up day in IPO history. People have been waiting for arguably the most recognizable website in the world to go public for years.

Do you really think everyone who bought Facebook shares today bought it because they looked at all the fundamentals and determined that it was a good long term investment that is sure to do well into the future?

Just because I can sell a loaf of bread to a sucker for $100 doesn't mean that bread was worth $100. It means I found a sucker.
 
dchuk said:
They aren't worth what people are willing to pay on the most anticipated, hyped up day in IPO history. People have been waiting for arguably the most recognizable website in the world to go public for years.

Do you really think everyone who bought Facebook shares today bought it because they looked at all the fundamentals and determined that it was a good long term investment that is sure to do well into the future?

Just because I can sell a loaf of bread to a sucker for $100 doesn't mean that bread was worth $100. It means I found a sucker.
Click to expand...

I dunno bro. You got $100 for it.
 
dchuk said:
Just because I can sell a loaf of bread to a sucker for $100 doesn't mean that bread was worth $100. It means I found a sucker.
Click to expand...

Are you suggesting that commodities have an intrinsic value that is somehow independent of the market?

What if it's the only loaf of bread left in San Diego?
 
People used to pay 2 grand apiece for fucking Beanie Babies. How much are they worth now?
 
You must log in or register to reply here.
Top Bottom