Facebook IPO.....will it be another eircom

Capt'n Midnight

http://www.bbc.co.uk/news/business-18086426

Facebook says it will sell 25% more shares than first planned in its flotation in response to strong demand.

The move comes one day after the social networking giant said it would raise the price of the shares by 21% to between $34-$38 a share.
...
The company could add even more shares to the sale as there are more than 60 million additional shares that could be sold to cover excess demand.

Also

The new shareholders will not have much say in how the business is run.

The shares on offer are "A" shares, which carry one vote per share, as is normal.

But the current owners' shares are "B" shares, which carry 10 votes each.

They will control more than 96% of the votes after the public listing, with founder Mark Zuckerberg holding just under 56% of the voting power of the company.

*gets popcorn*

smash

Sell 100bn worth of shares... still keep 96% control.

Ok then.

Gurgle

Felexicon wrote: »

I still think a wider section of people would take note of ads on facebook.

I would have thought the opposite.
My logic:
Ads are there to help the company get your money. Either
a) money you're planning to spend on a product or service which you're currently looking for or
b) money you didn't plan to spend but may decide to when you learn about the product or service.

If I want to buy something, and I'm looking for it on the internet, I'm not going to Facebook, I'm going to Google.

If I'm just looking for funny pictures on Facebook, I'm not reading the ads.
If something in an add does happen to catch my attention, I'll probably google it .

Based on the results of my test sample of 1, b) makes no money.

seamus

Capt'n Midnight wrote: »

*gets popcorn*

So it's a money-generation exercise and nothing more. Effectively ceding the minimum amount of power over the company possible in return for $18bn.

That actually stinks of desperation to me - what do they need the $18bn for?

RobbieTheRobber

seamus wrote: »

So it's a money-generation exercise and nothing more. Effectively ceding the minimum amount of power over the company possible in return for $18bn.

That actually stinks of desperation to me - what do they need the $18bn for?

Same thing the mods here need money for, Hookers and coke, oh and Bono needs new shades

smash

seamus wrote: »

That actually stinks of desperation to me - what do they need the $18bn for?

There's a few non profit making apps they want to buy.

CruelCoin

The company is currently valued at around $100 for every account.

Complete fantasy that the company can have a worth at anything approaching this.

At the IPO there will be a sudden and sharp rise in share price, followed by the mother of all crashes.

summerskin

CruelCoin wrote: »

The company is currently valued at around $100 for every account.

Complete fantasy that the company can have a worth at anything approaching this.

At the IPO there will be a sudden and sharp rise in share price, followed by the mother of all crashes.

I agree. In fact I just posted on facebook about it.

k.p.h

Buying shares in Facebook is akin to burning money..

Nailz

RobbieTheRobber wrote: »

How much did microsoft spend developing and promoting the zune?

It's irrelevant how much they spent on Zune, two completely different circumstances based on two completely reasons for spending, Zune was a service and software launch by Microsoft which was mainly intended as a directly sourced revenue stream.

Microsoft invested in Facebook, a Web 2.0 social network which was already established and software was already fully functional, anyone who thinks they're going to be involved in software development, or even as capital investors, are kidding themselves. They're there for one reason, one reason only, and that's for the use of Facebook's data. The two cases don't even compare, they can't compare, both are based on two totally different intentions all together.

If Microsoft actually wanted to pull huge capital gains from Facebook and possess a huge share bracket, I'm sure it wouldn't have happened, Facebook's intention was never to sell the organisation, not Zuckerburg anyway - although it may well happen sometime. That's probably why Microsoft had to pay a far higher price-per-share ratio than when Google and Yahoo! attempted to buy it, but Microsoft bought enough to get what they wanted out of it anyway. I'm sure they are happy.

Doom

OSI wrote: »

GM spend $50 Million a year on advertising on Facebook. Only $10 Million of that was for actual paid advertising with Facebook, the rest was spent on generating content that was used on the free pages that companies generate on Facebook. GM have effectively said that they would rather spend 4x's the money on generating content for the free portion of Facebook than spend any more money on paying Facebook to advertise for them. That's a pretty damning indictment that will make any major corporation think twice when advertising on Facebook in the future.

Seriously have you ever clicked on an ad on facebook, I never have and never will...cookies galore....and I think investing in Facebook will be ultimately as bad as investing in a pyramid scheme

twinytwo

Doom wrote: »

I can't see how it can be valued at over £100 billion ( £38 per share) and except to rise so you make a profit , will the share price eventually nose dive and everybody get burnt?
I hope my pension does not get invested here!

People are so sad... facebook is a bubble that will burst (and become worthess over night) once the next, better idea comes along

oppenheimer1

Cork24 wrote: »

Google + shares are starting to rise

That wouldn't be hard tbh.

oppenheimer1

smash wrote: »

Sell 100bn worth of shares... still keep 96% control.

Ok then.

They are not selling €100bn worth of shares, but a fraction of that. What they are selling values the total amount of shares at €100bn.

For example, if I had a company with 1 million shares and I managed to sell one share for €1, it would give my company a theoretical value of €1m.

Doom

So they plan to list 26million shares at £38...nutty

Ghandee

But, but, but I thought Facebook was free

Max_Charger

Around this time 5 years ago, Apple's PE ratio was 35:1 with a stock value of $85. Alot of people didn't invest as a result. Last i heard they are doing alright :pac: I'm not directly comparing the two ,chalk and cheese, but sometimes PE ratio's should be thrown out the window.

MadsL

Ghandee wrote: »

But, but, but I thought Facebook was free

It is, they just sell your profile to advertisers.

aidan24326

Max_Charger wrote: »

Around this time 5 years ago, Apple's PE ratio was 35:1 with a stock value of $85. Alot of people didn't invest as a result. Last i heard they are doing alright :pac: I'm not directly comparing the two ,chalk and cheese, but sometimes PE ratio's should be thrown out the window.

Yeah but Apple have been producing innovative products and will probably continue to do so for the foreseeable future. As others have said Facebook are a bit of a one-trick pony and they could easily be wiped out when the next hot thing comes along. Bebo was the next big thing a few years ago and AOL bought it for a crazy $850M, only to sell it off at a massive loss not too long after when they realised it was never going to make them a dime.

The FB share price could really plummet in a short space of time, it's massively overvalued right now. A few big hitters will probably make a tidy profit by getting in and getting out short-term but anyone thinking this is a wise long-term investment is crazy.

Max_Charger

aidan24326 wrote: »

Yeah but Apple have been producing innovative products and will probably continue to do so for the foreseeable future. As others have said Facebook are a bit of a one-trick pony and they could easily be wiped out when the next hot thing comes along. Bebo was the next big thing a few years ago and AOL bought it for a crazy $850M, only to sell it off at a massive loss not too long after when they realised it was never going to make them a dime.

The FB share price could really plummet in a short space of time, it's massively overvalued right now. A few big hitters will probably make a tidy profit by getting in and getting out short-term but anyone thinking this is a wise long-term investment is crazy.

Facebook have almost 1500 patents,they bought a shed load of them off IBM a few weeks ago, alot of them to do with hardware. What do facebook want with hardware patents? Strong possibly of a facebook phone and possibly even a search engine. Almost everyone here is writing them off, I wouldn't be so quick.

grindle

aidan24326 wrote: »

The FB share price could really plummet in a short space of time, it's massively overvalued right now. A few big hitters will probably make a tidy profit by getting in and getting out short-term but anyone thinking this is a wise long-term investment is crazy.

The big hitters have already invested, either as angels in an investment round, through Goldman-Sachs, or SecondMarket.
This is why Goldman-Sachs and Peter Thiel are the big sellers. The amount of money they're making off of this is incredible.
Thiel invested $500,000, and he's selling $578,000,000 worth on Friday, and that's at the projected "conservative" price.

maninasia

bnt wrote: »

A bit of stock market info that's good to know is called the Price / Earnings (PE) ratio. You get it by dividing the share price by the earnings (per share of stock out there). A value of 15 is typical, less than 10 is a general indicator that a stock might be good value and worth a further investigation.

The PE ratio of Facebook, based on the expected IPO price of $34-38, is about 80 based on 2011 earnings, but projected future earnings make it 60 for this year and 40 after 2013 (source). That's still too high: the IPO price isn't supported by real earnings, current or projected.

So why the hype? Because that's how some people make money off of other people, regardless of the fundamentals of the business itself. Investors want to get in early, make a profit, and not be left without a chair when the music stops. The small investors are the ones who are at risk, since the big dogs will be in there first.

Yes, yes, yes. The early employees stand to make stacks of cash. But who will really cash out are the Silicon valley insiders, the venture capital companies and the big guys sponsoring the IPO like Goldman Sachs.


Read more: http://www.businessinsider.com/morgan-stanley-goldman-sachs-facebook-ipo-2012-5?page=5#ixzz1v5qDyI7v

Of course, 1% of a deal the size of Facebook’s will still produce oceans of cash for the banks--$50 to $100 million, depending on how big the IPO ends up being. And if Facebook trades at a $100+ billion valuation after the offering, Goldman's huge investment in the company will earn have earned it $500+ million in a little more than a year. Its private-placement, meanwhile, will have earned it tens of millions more in fees, as well as a return of more than $1 billion for its international clients

You see the underwriting company is given 1% of the shares, at the same time it is supposed to offer to the market at a 'fair price' . It also farms off most of the stock allocation to favoured hedge funds prior to IPO. These guys can hardly lose as they get massive discounts or even free shares but the retail investor is supposed to be able to buy at a higher price? What a joke!

maninasia

Max_Charger wrote: »

Facebook have almost 1500 patents,they bought a shed load of them off IBM a few weeks ago, alot of them to do with hardware. What do facebook want with hardware patents? Strong possibly of a facebook phone and possibly even a search engine. Almost everyone here is writing them off, I wouldn't be so quick.

It's not writing them off, it's trying to justify their huge valuation against earnings and a rather limited bandwidth in terms of services.

For instance Google and Amazon and Microsoft have their hands in pretty much everything. Facebook...not so.

smash

oppenheimer1 wrote: »

They are not selling €100bn worth of shares, but a fraction of that. What they are selling values the total amount of shares at €100bn.

Ah what a load of crap. Sounds like they're just testing the waters.

DB21

maninasia wrote: »

It's not writing them off, it's trying to justify their huge valuation against earnings and a rather limited bandwidth in terms of services.

For instance Google and Amazon and Microsoft have their hands in pretty much everything. Facebook...not so.

You know Google started off as just a search engine, right?

Gurgle

DB21 wrote: »

You know Google started off as just a search engine, right?

The underdog of search engines for that matter.

bnt

maninasia wrote: »

Yes, yes, yes. The early employees stand to make stacks of cash. But who will really cash out are the Silicon valley insiders, the venture capital companies and the big guys sponsoring the IPO like Goldman Sachs.

Yep - that's what I meant by "big dogs". Plus Bono. :cool:

Well, the Facebook IPO went off OK, it seems, but I'm noticing a few odd things. The final IPO price was set at $38, where it opened, shot up to peak at $43.20, and it's currently hovering around the $40 mark. At the open, 89 million shares were sold.

edit: diving back to $39 $38 as I write. I blinked and nearly missed it ...

That's not what bothers me. What concerns me is the news that the existing private shareholders are selling more of their shares than originally planned.

Existing holders will offer 241.2 million shares, bringing the total on offer to 421.2 million, a regulatory filing today shows. Accel, the biggest seller in the IPO, raised the amount it’s selling by 28 percent, while Goldman Sachs more than doubled its shares on offer.
...
While the expanded IPO may mean the appetite for shares is strong, insiders’ decision to pare holdings further may heighten some investors’ concern over Facebook’s earnings growth, said Greenwood Capital’s Walter Todd. “If the demand wasn’t there, they wouldn’t have upsized the deal,” said Todd, who oversees about $940 million as chief investment officer at the Greenwood, South Carolina-based firm. “On the other hand, when you see insiders unloading their stakes, you start to wonder why. I could see it turning some institutional investors off.”

My read of this is: that they want out of FB at the IPO price of $38 or better. They're expecting it to go down from there. I hope the "retail investors" have plenty of lubricant handy. :eek:

edit edit: back up over $40 again. Nope ... hovering around $40. It's going up and down quicker than a hoor's knickers. Real-Time Chart: Google Finance.

Oh, and you'll be pleased to hear that Bono is now the richest musician in the world. His 2.3% stake, through his private equity firm Elevation Partners, is worth around $2.3 billion, far exceeding Sir Paul McCartney's. (The story says $1.5B, but that seems to be from before FB raised the IPO price. )

So did Bono sell his full stake then? Cause 100bn is the valuation based on an 18bn offering. So does he have cash or a largely paper wealth still?

bnt

Deleted User wrote: »

So did Bono sell his full stake then? Cause 100bn is the valuation based on an 18bn offering. So does he have cash or a largely paper wealth still?

I doubt anyone sold their full stake - wasn't expecting that. If a stock is being "dumped", the price will go down like the proverbial Le(a)d Zeppelin. Owners of large stakes have to walk a fine line, even if they want out, to keep the price up and not depress the market. There has to be demand, a buyer for every seller, and that informed their choices of how much to put on the market on IPO day.

Even if it's "paper wealth", it's still wealth in terms of what it can do. It can be collateral on a gargantuan loan, for example. But Bono's denying that he's a billionaire:

Contrary to reports, I'm not a billionaire or going to be richer than any Beatle - and not just in the sense of money, by the way, the Beatles are untouchable - those billionaire reports are a joke.
...
In Elevation, we invest other people's money - endowments, pension funds. We do get paid of course.

I didn't know that - and I wonder how much of the fund belongs to other people outside U2? I'm not particularly bothered either way, it's fun to speculate. Previous reports about Elevation Partners made it sound as if it was all about U2's money.

It's not as if he'll be paying much tax on his earnings - unlike Mark Zuckerberg, who's getting a bill for $195 million from the State of California alone after making nearly $2 billion profit in one day. (That's State tax only, Federal tax is still to come.)

funnights74

Grossly overpriced, check back every 3 months and it will reach it natural value. Google is a far more potent site and is probably undervalued according to most commentators and experts.

OctavarIan

I love how people are comparing Facebook to Bebo as if they're on the same level.

Battered Mars Bar

Max_Charger wrote: »

Facebook have almost 1500 patents,they bought a shed load of them off IBM a few weeks ago, alot of them to do with hardware. What do facebook want with hardware patents? Strong possibly of a facebook phone and possibly even a search engine. Almost everyone here is writing them off, I wouldn't be so quick.

Omg patents, google bought 2200 off IBM.

johnnyjb

twinytwo wrote: »

People are so sad... facebook is a bubble that will burst (and become worthess over night) once the next, better idea comes along

Spot on !!

You can look at all the research you want but you cant rely on teenagers to be content with a free toy when a bright new shiny toy comes along.

Its just human nature. Once a few "cool kids" start using the new social media, or Lady Gaga, Beiber gets paid 10 million dollars to use "Facetube mark 2" exclusively, you can bet there fans will follow suit.

imitation

I wouldn't buy facebook stock, or even hedge against I think, it just seems too volatile. What sticks in most users mind about Facebook is Bebo, and how its user base evaporated.

To be fair however, google was in a similar position when it started and has only gone from strength to strength and I don't think anybody would imagine them disappearing overnight. Facebook definitely need to be doing the same thing, enlarging there portfolio with different projects to make sure they aren't a one trick pony. I wouldn't really have the confidence facebook will do that though, especially when they spent so much on instagram, a not too distant relative of facebook.

They bought instagram as it was competition. He just got married there, big two days ina row.

rn

Impossible to tell as its a digital company. The information technology business is as fickle as the weather. If I was a betting man, I'd say its well overpriced.

superluck

If you want to make money off this, short the stock like hedge funds will, price will inevitably go down. Facebook gets revenue from advertising, that's it....

maninasia

DB21 wrote: »

You know Google started off as just a search engine, right?

Yeah, but that was when the internet was growing at a much faster pace with little established competition. Most social networks have spluttered and failed. Not saying Facebook will, but it will be a challenge for it to hold on to it's dominant position in social media let alone branch out successfully!

Now if Facebook wants to go into mobile, search,online shopping, driverless cars, maps and GPS systems, video , business software ..how is it going to dislodge the established players?

Biggins

Why Facebook share issue might be standing upon quicksand?

You got to read this: http://www.thejournal.ie/readme/column-i-put-my-family-business-on-facebook-here%E2%80%99s-what-happened/

Column: I put my family business on Facebook. Here’s what happened.

Certainly food for thought and lessons that could be learned!
Some have learned them to their cost already it seems!

imitation

Biggins wrote: »

Why Facebook share issue might be standing upon quicksand?

You got to read this: http://www.thejournal.ie/readme/column-i-put-my-family-business-on-facebook-here%E2%80%99s-what-happened/



Certainly food for thought and lessons that could be learned!
Some have learned them to their cost already it seems!

Well I could have told him before he started he was wasting his time. Its one thing to advertise something with broad appeal like a chipper, its another to advertise a packaging business that sells to other businesses. The other fact is they don't have much cred, who wants to like a packaging company, all that springs to most peoples mind is waste and the environment (even if they are eco friendly etc).

It does show that a certain percent of facebooks revenue may feck off when they realize nobody wants to like their toxic waste disposal company. Question how much of the revenue is from those companys.

bnt

I agree, and the Telegraph has a similar piece today: about 5:1 overpriced. But, as I think, the current share price is not based on the fundamental value of the business. It's based on the desire of investors to make money off of other investors. I expect to see it below $20 before too long.

seamus

Down 14% already today. Market hasn't even opened for half an hour yet.

kippy

I'd love to have the knowledge and money to somehow back against that share price and have been saying that for the past few months.
It is well overvalued and will be extremely volatile. Its main revenue is advertising and the statistics I have heard about Facebook advertising are not pretty. I don't see advertisers stick with it in the long run.

Doom

Facebook shares are currently 12% below initial value, according to bbc.

the groutch

it's all about Zuckerberg wanting to put a monetary value on his shares, so that he can sell them all and retire while things are still peachy.
it's no coincidence that he floated the shares the day before he got married.
expect the shares to be worth a tenner each (their REAL value) within a month

Biggins

From what I have read in the heavy tabloids and their financial analysis pages, a lot of them have (before sale and after) come to the conclusion that the stock selling start price was too hight to begin with.

I suspect they were right.

pickarooney

So did Bono not actually magically earn 2 billion dollars then? I have no idea how this stuff works.

Scanlas The 2nd

Shares fell another 9% on Tuesday.

pickarooney

Scanlas The 2nd wrote: »

Shares fell another 9% on Tuesday.

I was reading this and the Hemingway thread at the same time and thought this was a good effort

The stockbroker handling the launch is being investigated as apparently they were telling some of their select clients that they thought the share price was too high !