Face Book IPO

[IAAM Radio]

This will be an interesting equity launch indeed. Getting in on the IPO is pretty tough, the IPO may be in the $90s to a $100 but once it opens to the public trade system it could jump up as did Google of which was IPO'd at $85 and within 10 min of open trading was over $125...

I will be watching this, may do a very limited trade and short hold for the fast money. Those of you who are old enough to have stock accounts, any of you looking at this IPO? If you are fortunate to get in on the IPO, you will have to hold those shares for a few months before you can sell them, that is the risk were some IPOs were over priced and the market set the value below and you can get stuck. Not likely the case with FB.


http://blogs.wsj.com/marketbeat/2012/02/01/facebook-ipo-should-you-invest-in-it/

We’re eagerly awaiting Facebook’s IPO papers, which are expected sometime this week. Everyone wants to know exactly how profitable the social network is, how fast revenues are growing and what the company’s valuation will be.

All this begs the question: should the general, mom-and-pop investor consider when it eventually begins trading? Buying an IPO can be a dicey prospect for the retail investor. Case in point is LinkedIn. The company’s stock soared as high as $122.70 on its first trading day, but hasn’t sniffed that level since.

This suggests many folks who bought the stock during the first few days of trading were buying high and then watched the losses pile up.

The buying and selling frenzy that occurs once high-profile companies go public can make or break investors. According to data compiled by SigFig, a portfolio management tracking service, more than 1/5 of people who bought Groupon on the day it went public ended up dumping the stock on the same day. The percentage is more pronounced for companies like Pandora and Zynga.

The lesson is tread carefully when considering these high-profile names.

Many market observers have said Facebook could experience the same success Google achieved when it went public in 2004. MarketWatch columnist Mark Hulburt isn’t so sure.

At its anticipated IPO later this year, Facebook will be three times more expensive than Google was at its IPO— and nearly 40 times more expensive than the average large IPO of the last four decades…

The bottom line? To produce a profit stream that is great enough to support a prayer of its stock doing even close to as well as Google’s did in its first few years of life, Facebook’s revenue growth will have to be several orders of magnitude greater, or have a profit margin that is several times greater — or both.

Those are not impossible goals to achieve, but they certainly look like long shots. Is that really how you want to bet with a big chunk of your money?

The bottom line? It’s difficult to avoid the overwhelming conclusion that Facebook, at its IPO, will be way overpriced.

An overvalued tech IPO? Gee, it’s not like we haven’t heard that one before.

The IPO craze of 2011, which included LinkedIn, Pandora, Groupon and Zynga, among others, has prompted many valuation questions as several of these stocks trade at expensive multiples.

For the retail investor, Big Picture blogger Barry Ritholtz lays out several questions that need to be asked before anyone seriously considers investing in Facebook.

 

[The Elite]

Definitely overpriced IMHO. I'm not an investor or anything, so I'm looking at this from the point of view of a webmaster. If anything is wrong, feel free to tell me, remember this is all estimation.

Approximately 2B people use the internet, and you can say about 1B use it daily. If FB holds around 850M active accounts /mo, it poses the question of how FB's revenue will increase. FB makes money from ads, simple, any company that advertises already advertises of Google, and with the current global economy businesses are more weary to fork out hundreds of thousands of dollars into advertising. So we can assume most businesses who advertise with FB is constant with minimal flunctuations, and anyone who isn't advertising with FB now may or may not advertise, either way, if they were to already advertise they would have been now.

It's just like Google's shares, Google doesn't get extreme bursts of traffic daily, since almost everyone knows about it, meaning that it's traffic is constant - and those who don't use it are already aware of it. This means Google's revenue is consistent on a month-to-month basis give or take a few thousand dollars here and there, not to mention they lost 8% in the last financial year.

This in total leads me to believe that FB has maximised their daily profit, sure they will have fluctuations on a monthly basis and some growth, but anyone with access to the internet has heard of FB, which means most people have registered, 850M active users is almost everyone online, since many would be inactive.

IMO, investing in FB may lead to some profit, but nothing so drastic where you make millions. FB's ad click rate has been like this for the past 3/4 years - LOW. You go on FB for your friends, pictures, people don't even notice the ads.

That's about it, that's my 2 cents.

 

[IAAM Radio]

Making millions is relative, a $10,000 investment in the IPO could double your money in the short run as it did with Google, what you have to be cautious of is if you get in on the IPO of which most will not, recall you have have to have a set amount of cash or holding with a firm to even be offered a taste and even then if you are not one of the bigger clients you may not get any. Say you did, you have to hold the IPO from 90 to 180 days so if there is re-valuation as set by the open market that is less than the IPO, then you are correct.

My bet is the fast money is there and so is the mid term. Your comment about ad clicks, you may not click but FB makes most of its revenue from those ads so many are clicking. This said, I always have to ask, why go public, if you are doing well why even offer an IPO? In most cases, there is a need for more cash to expand...

Will be very interesting, as stated, I may grab a little and make the 5 to 10 point gain and sell. 500 shares and 5 points is a $2,500 profit my bet is that will be well within a week's time $10 is my greed factory, yes $25 points could be made or oven $50 within a month and that is where your valuation comments weigh in. I see the fast jump early then a settling of a more realistic valuation within 90 days, hence I will take my shares in the open market vice the taste in the IPO this go around.

 

[Guardian]

I'm not touching it. I don't see it sustaining those levels. Just like with anything it will be replaced by another competitor. Who? Who knows for now but I do think that the initial offering is way overpriced.

 

[The Elite]

Making millions is relative, a $10,000 investment in the IPO could double your money in the short run as it did with Google, what you have to be cautious of is if you get in on the IPO of which most will not, recall you have have to have a set amount of cash or holding with a firm to even be offered a taste and even then if you are not one of the bigger clients you may not get any. Say you did, you have to hold the IPO from 90 to 180 days so if there is re-valuation as set by the open market that is less than the IPO, then you are correct.

To double a $10k investment with FB, they must double their revenue from $12m/day to $24m/day, which for the past year and a half hasn't occurred. Heck, they've been blasting out updates such as video calls, etc etc which haven't resulted in increased revenue, but maybe they were attempting to keep revenue steady and from decline, we do not know.

My bet is the fast money is there and so is the mid term. Your comment about ad clicks, you may not click but FB makes most of its revenue from those ads so many are clicking. This said, I always have to ask, why go public, if you are doing well why even offer an IPO? In most cases, there is a need for more cash to expand...

According to FB, 400M+ people use it daily and are only profitting $12m/day. At this rate, say each ad click averages at $0.10/click, that means 120M out of the 400M+ /day are clicking, and remember, ads on FB are no where near $0.10c/click, they usually fall just beneath $0.80c/click IF reaching a big market, and those who pump a ton of money into advertising with FB always purchase ads to meet a big market.

Will be very interesting, as stated, I may grab a little and make the 5 to 10 point gain and sell. 500 shares and 5 points is a $2,500 profit my bet is that will be well within a week's time $10 is my greed factory, yes $25 points could be made or oven $50 within a month and that is where your valuation comments weigh in. I see the fast jump early then a settling of a more realistic valuation within 90 days, hence I will take my shares in the open market vice the taste in the IPO this go around.

Don't get me wrong, many people MAY make money with FB, but I have no idea how this social network was valued at 100B, maybe 70-80B, but no where near 100B. Their yearly revenue falls short of $4.5B, all the while Apple is raking up $6B+/quaterly and $25B+/year. Apple's valued at $400B+, which is 16x their yearly profit, whereas 100B for FB is 22x their yearly profit - not to mention, Apple's profit margins are rising dramatically each year.