Facebook stock

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PhantomHorn

1,000+ Posts
So whats up with this thing? It looks like I was right in staying away from it. Their IPO was flat and the pre-market this morning is down 4%.
 
in a nutshell it has no value. if it ceased to exist tomorrow it would have zero impact on anyone's life in any way. they have no real assets, nothing tangible, and no way to drive shareholder value. COmpare to if say, Exxon ceased to exist tomorrow. everyone's lif would be impacted negatively if that happened. FB disappears, nobody cares.
 
There is definitely a great market for selling our personal information, so the business plan is solid. But it's certainly not the next "must buy", IMO.
 
Looking at Yahoo and AOL, I just don't see internet advertising as anything more than junk mail in my mailbox.

Now, Googles, business model of companies paying to be the first one listed for a search is an interesting concept in comparison to Facebook, AOL and Yahoo.

Personal information could be the money winner for Facebook but how many users will they lose if it becomes the main source of income?

I personally don't see Facebook as a long term viable product.
 
Facebook is not a long term product period. It doesn't have any special assets, makes alot of money selling ads and is easily replaceable.

All you need to do is take about $5,000 and hire about 10 genius web programmers and you can create something thats better than Facebook.

The article below is for the Wall Street Journal. It shows that facebook lost $12 billion in value overnight.
The Link

If it starts selling personal information, it will start to disappear.
 
I never have understood how FB was worth $100 billion. I do get that it could be valuable and the product has value just not at the inflated amount.
 
Internet/social media valuations have never made sense, but this one is beyond the normal illogical hype IMO.

To the original posters question, though, this was just a sorry *** job of managing the IPO by the banks. They priced it incorrectly and over-estimated the demand for shares in the market.

Oh well, Facebook insiders are rich and the banks get their fees and the dummies that jumped into the IPO get fleeced.
 
~15% of the world has a Facebook account. That figure is crazy and the potential to monetize it is signifcant. Not sure it's worth a $100b valuation but the success of that 8yr old company will not be easily repeated.
 
Agreed but the problem is that the IPO valuation already discounts exponential growth in the business. GOOG currently trades at around 5x revenue. Assuming Facebook grows into its multiple like every other company does during its lifetime, the company could grow its revenue to $20 Billion and still not budge its overall market cap should growth rates become pedestrian and margins flatten out.

The only hope for shareholders is that the company:

a) maintains a high multiple due to sustained relative sales and earnings momentum giving shareholders a chance to cash out at inflated valuations of future earnings (i.e. getting out right before the bubble pops) or

b) it somehow is a $50 Billion in sales company rather than a $20 Billion one and in that case the company could be undervalued.

I wouldn't get too hyped up over internet traffic stats though. From AOL on down there have been many companies boasting eye-popping traffic statistics that have nevertheless failed to convert its traffic into truly remarkable financial performance for shareholders over time. Facebook would be the exception rather than the rule if its really earns for its shareholders over a sustained period.
 
DFW- I agree completely. The IPO was poorly managed and there is certainly risk involved in the long term viability of the company and there seems to be no justification for its current multiple.

I can only assume that as technology continues to expand that people are betting that FB will be the conduit for future content. Banking, movies, games, apps, education, etc could all end up being bundled through FB which then connects it to everyone else and everything else.

There are not massive barriers to entry but FB certainly has a hell of a jump on anyone else. There numbers really are staggering.

20 years ago people predicted Microsoft would die away because anyone "with $5000 and some smart programmers" could create an operating system better than Windows(I know that wasnt your quote). Yet, Microsoft is still here and still generating billions in profits and new operating systems are few and far between.

Give FB a year to let the excitement factor die down and then we will see. if revenue and profitability continue to grow it might be a good buy at that point.
 
Microsoft is essentially a licensing company now, and still doing quite well with it (Windows, Office, SQL, others). They do need to innovate though, especially in the mobile area, and find a way forward with enterprise technology as the landscape is changing, albeit slowly. Microsoft’s cash cows won’t disappear anytime soon but things are changing.
 
I view Microsoft and Facebook as two completely different animals. Microsoft is a classic packaged software company that built a near monopoly through well-worn cutthroat business tactics that were easily identifiable by competition lawyers. MSFT built this edge very early in the adoption cycel of a critical new technolgy, the PC, and rode the growth of this device for decades.

Facebook is essentially the largest advertising billboard in the world right now and has no other revenue model that I know of.

Can Facebook control the future of computing like MSFT controlled the earlier generation? Who knows but it certainly has a less enviable position than MSFT did way back then. No one has to have a Facebook account like you pretty much had to have a PC if you wanted to go to college, work in a work place, etc. Advertisers have multiple options besides Facebook and the yield of advertising in a 900 million strong next generation chat room is not really understood at this point as underscored by the GM decision the other day of yanking ads on Facebook because of the poor value they were getting for its ad spend.

Point is that their is a widespread lack of understanding right now in how Social Media actually transitions to a sustainable revenue model. No one really knows what social media traffic is worth. The Facebook IPO valuation assumes their is a very lucrative revenue model for the Billion or so users somewhere and Facebook will eventually figure that out while not pissing off its users and damaging its offering. That is the gamble here.
 
bronco
I think this is true
"They are in ZERO danger of being eclipsed by any competitor" as it applies to conventional Puters
But as everyone moves to smart phones and tablets will it still hold?
 
The only serious challengers are Apple and Google. Apple's security is questionable at best. Google's direction is questionable at best. They just bought Motorola, actual hardware, which has been Microsoft's claim to stay away from the H-ware and control the S-ware.....
 
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