Bottom Line:
If Facebook traded at Apple and Google's valuation based on Wall Street's current estimate for Facebook's 2013 earnings ($0.60), for example, it would trade at $6-$7.
Posted on 05/21/2012 3:02:07 PM PDT by SeekAndFind
Thank goodness that's over.
The Facebook IPO could have been a major disaster for millions of individual investors.
If the stock had "popped" to a truly ludicrous level on IPO day, millions of investors would likely have piled into it, hoping for further gains.
And then, eventually, the hype would have faded, and these investors would have gotten creamed as the stock fell back to a more reasonable price.
As it was, Facebook's IPO price was not truly ludicrous--it was just extremely expensive. The "extremely expensive" part was why I called Facebook "muppet bait." And it was why I kept asking giddy IPO buyers what they were seeing that I wasn't. The answer, everyone said, was "Facebook's future potential," a.k.a., "option value."
But the trouble with buying and valuing stocks based on "option value" is that this measure is extraordinarily subjective. Depending on the market's mood, "option value" can be huge... or tiny.
Apple, for example, has enormous potential "option value"... but the market is valuing Apple at only 10X 2013 estimated earnings per share. Meanwhile, at the IPO price, the market valued Facebook at about 65X consensus 2013 estimated earnings per share.
That is extremely expensive.
And now, as many Facebook IPO buyers finally wake up to that fact, the stock is falling.
So, at what level is Facebook a "buy?" When does the company's "option value" actually offset the risk that shareholders will get clobbered if the market's mood changes?
What is Facebook actually worth?
Let's think about that...
(Excerpt) Read more at businessinsider.com ...
My prediction: $10 in 6 months.
They may have “revenue” but it is illusory.
There is no profit model and the institutional investors, most of which are on the sidelines, will short it accordingly.
Apple has real products. Google has real adevrtising potential.
Facebook is air. Nothing real. Sure - 900,000,000 users. All 'free' users. You can't make money on free.
I don’t think it will go that low that fast. But what I would be concerned with is ... with 900 Million (or whatever) members, what is the growth potential?
One of my favorite political and social commentators, David Goldman, aka “spengler” - has written about this Facebook IPO, which sums up everything nicely
http://atimes.com/atimes/Global_Economy/NE22Dj03.html
Well, to me, personally, not a damned penny.
Biggest waste of time and bandwidth on the internet.
It beats me as to why grown persons would post every single aspect and incident of their pitiful lives for the whole world to see and laugh over.
Stupid.
But, that's just my humble opinion.Your opinion may differ.
The article values the company at $6-$7, under normal circumstances.
Earlier today I said $6.
I do not see the enormous growth potential that others do....so I would value it like a ‘normal’ company.
A value of 65 x earnings essentially means you max annual return is expected to be 1.5%. I can do better (and safer) with a money market at my local bank. Or, I could buy a variety of mutual funds and do better. Heck, I could buy Google stock and do better.
Its makes absolutely no sense, unless you believe Facebook will magically start making more money - alot more money.
Just curious, what was FB going to do with all the money they thought they were going to raise?
Also remembering back to the dot com frenzy of 1990's IPOs, they hit the market at whatever price; say $20 and are gobbled up in big lots by institutional buyers where they stock bundles are attached to mutual funds or spun to favored clients. They sell huge volumes at slight margins, say $22 - $24 and then get out. In a short time the stock settles at about half of where it was publicized. It was consistently this way when I followed IPOs with interested associates in the past.
I expect Facebook to level around $18 by mid June.
Did you mean what IS FB going to do with all the money they raised?
For FB the IPO was a tremendous success.
Hookers and blow in Vegas.
BARRY SOETORO/ BARACK OBAMA's FOREIGN STUDENT CARD Posted on Facebook....
http://maoliworld.ning.com/forum/topics/barry-soetoro-barack-obama-s-foreign-student-card-posted-on
Idiots all. Fakebook has no real value.
The article does a good job of articulating what I have believed for a long time:
Google really KNOWS us...our search history reveals all our dirty secrets. We forget we are being watched, and let it all hang out....and Google will send targeted ads, matching our proclivities.
Facebook, however, only knows the ‘dating website’ plastic banana version of us. We only reveal what we want to...and the targeted advertising hits precisely in the wrong place.
I expect they should be able to quadruple that number in ten years if the fad holds up.
I am thinking this is a great SHORT buy
I think the real problems will start for Facebook when advertisers figure out Google gives them much more bang for their buck.
I don’t see how it’s worth anything.
It produces no product and has no significant holdings that I’m aware of.
The people who invested in Facebook will experience what BHO experienced with his “investments” in alternative energy. The difference will be that the people who bought Facebook stock will lose their OWN money.
GM announced before the IPO they were pulling their fb ads because they didn’t bring in any business for them. That’s about all fb has to offer in the way of revenue, advertising, isn’t it?
Worth a few hundred millions at best...possible ad revenue, selling personal data, etc.
It reminds of pre-Internet-.com-bubble stocks...buy buy buy then the pump & dump brokers short the crap out of it, forcing the dumb money (us) to run and either they buy very low, sell a little higher and make the last few millions before the status of dead-money-stock is reached.
That’s the story of the late 90s garbage redux in Internet crappy and hyped IPOs.
Anyone who thinks this is the next Apple is sadly mistaken.
IMO, of course.
Look up the term “Google slap” and then decide how much “bang for the buck” Google provides. Their content network is a joke as well. Advertisers are really a little tired of Google and their strong-arm tactics with Adwords. I’m not going to predict Facebooks stock value, but there is plenty of opportunity for them to expand their advertising revenue.
Different subject but has to do with fB. I found this interesting that FB banned mother of the child with disabilities while FB inventor or whatever he is just married a pediatrician.
Different subject but has to do with fB. I found this interesting that FB banned mother of the child with disabilities while FB inventor or whatever he is just married a pediatrician.
I have no idea why anyone would buy a single share of Facebook stock. People don’t go to Facebook to see ads.
Indeed, and FB made an IPO because they knew it was worthless. They would not sell low, would they? Ad revenues are then slated to go down too. That means the economy is going to go to the crapper.
Once it does, then people, unemployed, might do more facebook time and the revenues might go up.
Facebook is overall too complicated and any new features added to it will tank it for good.
The Freerepublic model is much more user friendly and quicker, imo, because it keeps the old true and tried robust posting methods.
My business’s website received over a million and a half impressions (and about a 2.5% ctr) in the first quarter 2012 on a $45/day adword budget. This in a very competitive market.
I hate google as much as anyone, but there has never been an easier, cheaper, more effective way of reaching customers.
Without them, I’d be out of business.
Is there some reason everyone (or seemingly everyone) is obsessed with FB? Seems like the promoters and detractors can’t speak of anything else.
Play Mafia Farms (or whatever they play over there). :-)
CA Governor Jerry Brown was hoping the new FB Millionaires and Billionaires would pay off the $16 Billion Dollar Deficit and throw in a few extra bucks for High Speed Rail.
Obama just wants the money for his Reelection.
I'll bet most if not all of any money “donated” will go to Pharaoh Obama. Jerry Brown won't get a dime except for some Capital Gains Taxes. It won't change a thing. If Democrats have money, they spend every last dime and beg for more. It's their nature.
10 billion 'free' users will not make a profit.
I’d run from this one. Way overpriced IMO. I think they (FB management) recognized the fad was ending and cashed out. I believe it is in a fast fade. Be lucky to be $10 by end of 2012.
They can’t push ads to mobile yet and plugins like Adblock effectively block adds in browsers (although the impression may still count.) They also face tremendous infrastructure challenges.
Depends on what they buy with their money. The Facebook franchise by itself ought to be worth about as much as AOL by itself.
OMG — that is so perfect!!
“Is everyone in your time retarded?”
YES!
The web site is free to the users, but advertisers pay money to have their ads seen on users' FB pages.
Some companies make millions of dollars a month on such ad revenue. Even pay their employees quarterly bonuses.
Don't kid yourself. 'Free' web sites do big business and make lots of money.
All I know is I get a lot of bang for my buck for my law office.
They do. Impression revenue is earned when the page is served, whether it's displayed or not.
Tech IPO's are always "overpriced." It's almost tautoligical.
Does anyone know what this company is worth? It seems to be nearly entirely potential; and nobody knows what the upside is -- it's practically incalculable; but so are the contingencies.
How long does the average user sit in front of a Facebook page? How many man hours are spent viewing facebook pages each day globally? What is buying time in front of that captive audience worth? Somebody run the numbers. I'm sure it's huge.
The problem is that with a half billion shares out, it's no slam-dunk bargain.
FB can't bring in ad revenue because most users use cell-phones to access, and they don't display ads. Worse, most users via the net won't click on an ad, or buy via one.
JMHO, FB isn't worth a fraction of it's current 'value' and it's stock price will shrink rapidly. Look at Facebook partner Zynga. Trading was stopped twice on Friday due to plunging value - closed at an all-time low.
My bet, trading on both Zynga and FB will be a wild ride to major losses.
really!?!?
Elite HS in Hawaii to that?
He was a foreign student like elizabeth warren is a cherokee.
AA quota hogs.
Can someone scan the bar code?
personally I would not give $.02 for facebook stocks.
Approximately a 0.30 CPC which isnt’ too bad. I would assume by these numbers you probably get an EPC of $10 or so? Don’t forget that you’re now beholden to Google. They have a bad habit of “slapping” sites for no apparent reason. If that happens, you’re going to see that CPC double or, more likely, triple.
And there have been plenty of easier and cheaper ways to reach customers. Google isn’t the first PPC company to come along but they are definitely the most expensive. Plus, there are too many old and easy SEO tactics for various search engines that you could rank a site for and rank in the money. Google is currently winning the adverting war, however, and marketers are stuck with them.
Apple, for example, has enormous potential "option value"... but the market is valuing Apple at only 10X 2013 estimated earnings per share. Meanwhile, at the IPO price, the market valued Facebook at about 65X consensus 2013 estimated earnings per share. That is extremely expensive.
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