OFFICIAL Facebook IPO Thread

[r3p1v]

If Facebook makes about 1 billion per year in profit which is about what I can figure out they make based on Q1 2012 net income of 200ish million, then wouldn't a fair price for the stock be based on 5-10x yearly earnings? That would value the company at 5-10 billion. SInce there are 2.74billion shares out there wouldn't a fair stock price be $2-$4?

Im no stock expert, just trying to make sense of it all.

Idk what kind of models wall street uses, but they are currently valuing fb at $34 and it's pretty stable there for right now. If everybody thought it was worth $2 then it would be trading at $2.

Wall street really really likes growth and FB is growing very fast, so they are willing to pay many times their earnings.

 

[AdHustler]

Not going to get into it,but they basically are making it out like each real person on fb has a HUGE amount of potential far greater than the fiscal profits they actually make per person per year. :ticking:

exactly so the valuation is based on nothing....

 

[rusvik]

Not going to get into it,but they basically are making it out like each real person on fb has a HUGE amount of potential far greater than the fiscal profits they actually make per person per year. :ticking:

Maybe they are calculating all the 'social media consulting' i.e. how to make a facebook page for $150 an hour into it.

 

[CCarter]

exactly so the valuation is based on nothing....

There was just a 6 page debate the word "value" in this thread, so you are stirring the pot.

Some investors look at the P/E ratio and invest, those traditionally want a lower P/E then Facebook value at 100 times what it's earning.

Some investors are in it for the quick buck, pump and dumb.

Other investors are going to short it, to make their monies.

Everyone has a difference philosophy on the "value" of the company. That's the point of the stock market, to trade according to the "value" they perceive of the company, whether it is current or future. Looks like current value is winning, that would be the reason for the drop. Facebook was betting people would value them for the "future" value, which is why, IN MY OPINION, they came in at 100 times earnings.

I just have to think about it from a simple guy selling apples. A guy is selling apples at $1 each, and people are willing to pay $1 for the apple. But Facebook, is saying, that eventually people will be paying $100 for that apple, or that apple will in the future be worth $100. Maybe, maybe not. I don't know what the future holds, maybe there could be a huge drop in apple supply, like a drought that wipes out apple farms. Then the apple will be worth $100, or even $200. I don't know, but I know, right now, Apples are selling for $1. If someone wants to pay $2 per apple, and then the seller will sell it to them at $2, but if no one else wants to buy it, the it will drop back to $1. If everyone is only buying apples at $0.50, and the seller won't budge, then his apples will go rotten, and be worthless. Either way, I like oranges.

 

[erifdekciw]

Not going to get into it,but they basically are making it out like each real person on fb has a HUGE amount of potential far greater than the fiscal profits they actually make per person per year. :ticking:

Well there is a HUGE amount of potential, But facebook hasn't shown anyone how they are going to tap into it yet. Facebook is a huge gold mine, but right now their methods of extracting that gold isn't good enough just yet to make investors shell out the current price.

I think if it drops low enough it wouldn't be a bad investment for the long term. They have over a billion users and they have more info on those people than any business could wish to have. People know that is the real value in facebook. Facebook just needs to stop being a bitch and start milking that cow.

 

[Falian]

How are the other tech stocks doing? I would love to get my hands on some discounted amazon/google stocks.

 

[Pb.com]

How are the other tech stocks doing? I would love to get my hands on some discounted amazon/google stocks.

most of them trade at their current value. dur dur. You aren't going to find a 10% off coupon. Anything on sale, you don't want lol.


Can they meet their $34 stock value? Fuck yea. It's also theoretically possible for them to reach $100 stock value. Think about a 50% share in the ads biz :338:

Not saying it's going to happen, but I assume that is what the investors are expecting. Anyone buying stocks now won't find out until the press releases :moon:

 

[WhatupG]

How are the other tech stocks doing? I would love to get my hands on some discounted amazon/google stocks.

Equities are strong today, but I wouldn't recommend going long at this time. The dollar has been too strong lately. I would wait until we see a solid turn around and follow through.

I'm personally long the Eur/USD right now, but it's just a day trade as the dollar takes a breather.

 

[r3p1v]

Google and Amazon weren't really effected by the FB weakness. Recent tech IPOs (zynga, groupon, linkedin, yelp) were hit pretty hard.

 

[guerilla]

How The Media (Including TechCrunch) Is Wrong About Facebook

(While there’s lots of talk of sad bankers having to prop up the stock, don’t feel bad for them; bankers are good at making money. They’re just making use of the greenshoe, a complex mechanism that allows them to buy up the issuer’s stock on the public market without taking any price risk, thereby creating more demand. This means they can prop up the stock without having to spend any money. Rest assured, that support will go away the minute it becomes unprofitable for the banks. In the meantime, they get their $176 million deal fee, not to mention all the commissions they get on stock trades. One analyst estimated that the banks made $8 million in trading fees on Friday alone!)

 

[Pb.com]

Google and Amazon weren't really effected by the FB weakness. Recent tech IPOs (zynga, groupon, linkedin, yelp) were hit pretty hard.

Groupon can suck a cock. So can Zynga. Yelp is meh. Linkedin is pretty good.

I wonder when Ren Ren will really try to go global. Maybe I should buy some stocks

 

[tencentpiece]

If Facebook makes about 1 billion per year in profit which is about what I can figure out they make based on Q1 2012 net income of 200ish million, then wouldn't a fair price for the stock be based on 5-10x yearly earnings? That would value the company at 5-10 billion. SInce there are 2.74billion shares out there wouldn't a fair stock price be $2-$4?

Im no stock expert, just trying to make sense of it all.

Facebooks current valuation is based off speculation. At the moment they aren't fully monetized (think about all the data they have that isn't being used) and their growth is insane. Look at amazon and the like for reference.

 

[dchuk]

If Facebook makes about 1 billion per year in profit which is about what I can figure out they make based on Q1 2012 net income of 200ish million, then wouldn't a fair price for the stock be based on 5-10x yearly earnings? That would value the company at 5-10 billion. SInce there are 2.74billion shares out there wouldn't a fair stock price be $2-$4?

Im no stock expert, just trying to make sense of it all.

stop using appropriate methods to valuate a company please, the value of a company can only be derived from the instantaneous price of its stock, it has nothing to do with its fundamental accounting numbers. Or something like that.

In other news:

 

[dchuk]

Facebooks current valuation is based off speculation. At the moment they aren't fully monetized (think about all the data they have that isn't being used) and their growth is insane. Look at amazon and the like for reference.

the core action for amazon is sales, they are the largest ecommerce backbone in the world. They have nearly an exact opposite business model as Facebook.

 

[guerilla]

stop using appropriate methods to valuate a company please

What's appropriate is subjective.

 

[guerilla]

the core action for amazon is sales, they are the largest ecommerce backbone in the world. They have nearly an exact opposite business model as Facebook.

In hindsight, Amazon was a great play.

Amazon started off with long strings of losses. 12 years ago, you guys would have been screaming from the rooftops to kill Amazon investors.

That's the nature of speculation. It is the intersection of many time horizons and different valuations to create a market and a market price.

A price is a fact created by two parties exchanging. It is not an opinion and it cannot be calculated mathematically.

 

[Pb.com]

A price is a fact created by two parties exchanging. It is not an opinion and it cannot be calculated mathematically.

Many, many trading algorithms would disagree with you.

 

[r3p1v]

What's appropriate is subjective.

 

[dchuk]

What's appropriate is subjective.

valuating a company you plan to acquire by looking at its assets and a multiple of its yearly revenue is the most common process for valuating a company outside of the tech world. Why tech companies get to write their own rules in terms of valuation is what I'm concerned about.

 

[WhatupG]

Nah, guerilla is right.

People like to use logic and math to come up with what something is "suppose" to be worth. The markets don't give shit, they follow their own method of madness. The ticker and the chart will tell you what something is worth. When we get arrogant and think we are smarter than the market is when trading accounts get blown up.

My Euro long is doing nicely today, just popped another 15 pips. Greece still blows. Spain still sucks. The Euro is not "suppose" to go up, but time and time again you can see how the funnymentals will lead you astray.

The markets are about trading hope and fear, human emotions, not some definable nor rational mathematical constant. The most famous trading quote of all time:

"The markets can stay irrational much longer than you can remain solvent."