OFFICIAL Facebook IPO Thread
- Thread starter guerilla
- Start date
When AMZN was trading at $100 in 2000, yes... when it was trading in the $7 range 2yrs later, no.
Basic fundamental valuation methods will always come back into play whether it be stocks or real estate. Yes, bubbles will occur but they never last.
I am suprised that some people here thought FB might be a good buy. FB was made by young people using it - mainly college kids. FB is no longer cool and young people will switch to the newest coolest thing.
It was like a 2 year old who watched Barney but when they become 4 years old they were embarrassed they ever watched Barney.
How many people, especially young people, are still using MySpace? like zero?
Facebook is old news. People are on to Pinterest, Twitter, Tumblr and others. Only dorks and old people still use FB. :banana_sml::2gunsfiring_v1::ak::music06:
It was like a 2 year old who watched Barney but when they become 4 years old they were embarrassed they ever watched Barney.
How many people, especially young people, are still using MySpace? like zero?
Facebook is old news. People are on to Pinterest, Twitter, Tumblr and others. Only dorks and old people still use FB. :banana_sml::2gunsfiring_v1::ak::music06:
Show me a trading algo which is 100% right doing technical analysis then.
The subjectivity of value isn't industry dependent.
You have a real problem with people doing things you don't agree with or don't approve of. Tolerance is your word for today.
The problem is, a lot of people are stupid and take positions where they claim to be smarter than everyone else. Not have better facts, which is possible, but have better opinions, which is impossible.
But, that's humans. Arrogant, dangerous shaved monkeys. All we can do is wait for our alien overlords to return and extinguish or liberate us.
Dorks and old people have more purchasing power than young people chasing trends.
Yeah, but the flaw was, they forgot to pump... lol. Or at least, thought we would pump, and they would dump...
so what accounts for the 11% drop in value of Facebook in the last 4 days? What actions did the company take that caused their value to drop 11%? How is that drop a reflection of the actual health of the company? Did revenue drop? Site go down? New competitor emerge?
The price of the stock dropping is in no way connected with the actions the company itself is taking. It has fluctuating valuation if you follow that school of thought for valuation.
If a company's financials don't change, yet the value of it is going up and down because of stock pricng, what can actually be trusted at that point? Before Facebook went public, was their private value also fluctuating wildly?
how is the price of a company's stock dropping 11% in its first two days of public trading ever something you can firmly stand by as proof that the stock market is what determines the value of a company and the company's actual financial reports have no bearing on that?
Why not? They increased the size of the IPO and the price leading up to the IPO. They overestimated the demand for the stock, so the stock price sank appropriately.
facebook is a joke i cant believe they made an entire extremely gay movie about it and in it the starters of it thought they had groupies because their ugly chinese girlfreind touched their butt in the bathroom. just look a the graph above it went down over $5 in just a couple days it will be 0.01 cents in < 1 year gauranteed. next someone is going to start an ipo for their geocities homepage and then think they have a follwing of groupies because htey fapped to a redtube video
Read this -- one of the best in-depth articles on Facebook's valuation.
What Is Facebook Worth? - Business Insider
Alright, I think I've finally formulated a concise way to present my argument regarding what Facebook is really worth:
The value of a company or product is determined by its customers. I can build some random website that does something for $10,000 per use, sure, but if no one buys it at that price, the value is not that. It's whatever someone will pay for it. We've discussed this with the fervor of a dead horse beating in this thread already, so I won't continue on it.
The people investing in Facebook since their IPO are not their customers. They are investors, they are now co-owners of the company. They do not determine the value of Facebook. Facebook's customers do. By buying Facebook stock at the inflated price they did on IPO day, they're doing the functional equivalent of me trying to sell a $10,000 widget no one will buy.
So who are Facebook's customers then? Advertisers. And advertisers on the Facebook PPC platform have spent enough money to put Facebook at about a $1bn/year profit run. The customers have spoken with their check books, and that determines the true value of the product (Facebook) to its customers (advertisers).
Google is a more valuable product to its customers (advertisers) as we can objectively compare both company's balance sheets and see that Google profits about 10-15x more than Facebook does. So you could logically conclude that Google is worth about 10-15x more, as again, the customers (advertisers) have spoken with their checkbooks.
Using traditional acquisition valuation methods, you can estimate Facebook's value to be about $5-10 billion as of right now. As in, if Google wanted to buy Facebook right now, that's probably about as much as they should reasonably pay given Facebook's ability to sell their product (ads) to their customers (advertisers) over the last few years.
The value of a company or product is determined by its customers. I can build some random website that does something for $10,000 per use, sure, but if no one buys it at that price, the value is not that. It's whatever someone will pay for it. We've discussed this with the fervor of a dead horse beating in this thread already, so I won't continue on it.
The people investing in Facebook since their IPO are not their customers. They are investors, they are now co-owners of the company. They do not determine the value of Facebook. Facebook's customers do. By buying Facebook stock at the inflated price they did on IPO day, they're doing the functional equivalent of me trying to sell a $10,000 widget no one will buy.
So who are Facebook's customers then? Advertisers. And advertisers on the Facebook PPC platform have spent enough money to put Facebook at about a $1bn/year profit run. The customers have spoken with their check books, and that determines the true value of the product (Facebook) to its customers (advertisers).
Google is a more valuable product to its customers (advertisers) as we can objectively compare both company's balance sheets and see that Google profits about 10-15x more than Facebook does. So you could logically conclude that Google is worth about 10-15x more, as again, the customers (advertisers) have spoken with their checkbooks.
Using traditional acquisition valuation methods, you can estimate Facebook's value to be about $5-10 billion as of right now. As in, if Google wanted to buy Facebook right now, that's probably about as much as they should reasonably pay given Facebook's ability to sell their product (ads) to their customers (advertisers) over the last few years.
I rarely play the funnymentals alone. It's a tool, a guide, an indicator, but thats it. I don't recommend arguing with the market, you will always lose. Like I said before, the market can remain irrational much longer than you can remain solvent.
The other reason to be extremely wary of funnymentals is the information gap. We will never have access to the same information that GS and the crooks on wall street do. They can lie, and hide the truth, but it's much harder to hide a huge volume of sell orders or buy orders. Their actions give them away, not their words, or the news releases. When the big boys are buying, the price will go up, when they are selling it will go down, and the volume on these moves combined with the price action tells the whole story.
We can argue all we want that the price isn't right but the market doesn't care what we think. We are baby minnows in the vast ocean. To think we know more than the big banks is insanity. Especially since we are not privy to the same information they have.
The argument is on the definition of 'value'. Guerrilla defines 'value' as simply whatever people will pay for something else at a given time. I'm sure he stands by this definition even if the company withholds major information from their stockholders that would devalue the stock if it were known.
I think the definition you're looking for is something more solid and less subjective - it's 'true' value or value range. The only 'value' that's not subjective would be it's value if it liquidated all of it's assets and paid all its liabilities. But that's not how stocks are valued obviously because people's predictions of a companies performance enter into the stock valuation and the future is unknown. It's also impossible to predict the emotions and actions of 7+ billion people on earth who can all effect the price of that stock. It's all speculation. It's gambling.
This is incorrect.
Value is intrapersonal, price is interpersonal. Prices are facts, values are opinions.
Also, this is a pretty standard understanding of value in classical, austrian and chicago school economics.
This may make people feel good, but it's a canard.
You can check out a timeline of facebook trading and price action before it's IPO at SecondMarket.com where it traded for years.
https://www.secondmarket.com/facebook-on-secondmarket/
https://www.secondmarket.com/facebook-on-secondmarket/
Guerilla is arguing that the value of a company is derived from whatever people will pay for its stock at a given time.
I'm arguing that the value of a company is a product of its balance sheet and financials, or as I said up top a few posts ago, that the value of a company can be derived from what its customers (advertisers) are willing to pay for its product (ads).
I don't understand why everyone keeps bringing up Myspace.
Completely different. Facebook is many times bigger than Myspace, and has far greater engagement across a much larger demographic than Myspace ever did. It's like comparing Bing with Google.
Almost everyone I know uses Facebook, that's the only constant social network across them. A tiny proportion of those use other social networks too. (With the exception of LinkedIn, which is big in business)
Pinterest is arty people/hipsters and the like + people promoting cakes and event companies.
Twitter is for people hopelessly trying to communicate with celebrities 90% of the time in the case of the morons in my social network I see using it.
Tumblr is a blog, entirely different to FB.