Facebook IPO

BingBlangBlaow said:   I saw facebook gift cards at the store recently and thought, "wtf would you use those for"?

Check the S-1 - Facebook made $557MM in 2011 off the 30% cut they get off of "those things".

brettdoyle said:   Facebook S-1 filing is out

Looks like the company is worth around 30-40 Billion to me... Their net income was 1B for 2011 and expenses rose significantly with revenue increases. At 100B it has amazing success already priced in and if things don't work out to perfection for the company then it will be a big shareholder losses. Lots of suckers going to be buying in at 100B.

Here's an article from Yahoo with some selected metrics that I pulled out of it.

http://finance.yahoo.com/news/status-facebook-public-raise-5b-21...

The documents show, as expected, that Facebook is thriving. The company earned $668 million on revenue of $3.7 billion last year, according to the filing. Both figures nearly doubled from 2010.

To make money, Facebook sells the promise of highly targeted advertisements based on the information its users share, including interests, hobbies, private thoughts and relationships. Though most of its revenue comes from ads, Facebook also takes a cut from the money that apps make through its site. For every dollar that "FarmVille" maker Zynga gets for the virtual cows and crops it sells, for example, Facebook gets 30 cents.

uutxs said:   People on Facebook
More than 800 million active users
More than 50% of our active users log on to Facebook in any given day
Average user has 130 friends
Approximately 80% of users are outside of the United States (so 160 million FB users in US - half the population)
I like how Facebook counts every single Zynga Farmville alt-id as a unique active user.
The figure I saw floating around was 200 million unique IPs in a month login. I can't find a reference for that though. While that's not 800 million, it's still a massive amount, especially if you consider that families sitting behind a NAT router would share the same IP.

Facebook's stats at Alexa are impressive. They're at an estimated 43% of all Internet users in a given day visiting them (not necessarily users, but visiting a page on FB). For comparison, Google is at about 50%, Youtube about 32%.


Keyboard said:   To compare Facebook to AOL is ludicrous. In the end, AOL was a hyped-up pipeline (a commodity-service) to the Internet that got easily passed up when people switched over from dial-up to broadband.
A hyped-up pipeline was what AOL became. When it began, most people hadn't even heard about the Internet, and CompuServe was king of the social networking hill. AOL dethroned it to become the top social network. You logged in to AOL to chat, send email (initially only to other AOL users), and view various informational pages. (So I hear - I never used it, I was already on the Internet back in the days before Archie. When the closest thing we had to a web browser was a great big text file which listed different FTP servers which allowed anonymous login and a summary of the types of files they stored.)

AOL didn't join the Internet at large until 1993, about 10 years after its founding and about 4 years after it blossomed into a generic social networking service. Which brings me to my next point:

mannyv said:   Actually, FB is taking out google by simply being the place that people hang out more. The more people use Facebook, the less they use the web...and the google.

Google makes money by selling ads. The less people use google, the less ads google sells. The thing that nobody's figured out yet is how to become the google of Facebook. That requires architectural changes inside Facebook that, obviously, only Facebook can do; that and the idea of how to do that.
This is the second big reason I see Facebook as a very risky investment. Facebook is trying to set itself up as a walled garden. In fact some people here defending FB as an investment are arguing just that - that in the future, there will be no "Internet"; that for most people Facebook will be the Internet.

History has not been kind to walled gardens. Online social networks themselves began as loose associations of sites you visited with a dialup modem and made accounts on (BBSes - bulletin board systems for our younger readers). When those started to become popular, some of the bigger commercial entrants captured the majority of the market with their paid services. First it was CompuServe, then AOL. Microsoft's attempt to provide a similar service was MSN. Gates thought the Internet was a passing fad and that the walled gardens would prevail.

Instead the Internet washed all the walled gardens away. Why? That's the question you have to be asking. I can suggest some answers. Free access at schools. Open architecture when you weren't locked in to AOL's or Yahoo's structure, you could make any web site or service you wanted. Greater global connectivity. Decentralized architecture. Low barrier to entry - you didn't have to give up 30% of your revenue to the company who owned the walls, etc. But they're just guesses. The bottom line is I really don't know. But for whatever reasons, the Internet beat the walled gardens. CompuServe and GEnie became vague memories. AOL is now a shell of its former glory. Microsoft was forced to do a 180, incorporated a TCP/IP stack in Windows 95 (basically, let Win95 boxes connect to the Internet) and turned MSN into a free website. In the end, the open system which was compatible with all, and let people do whatever they wanted to do won out.

Now the pendulum is swinging the other way. We're moving more towards closed systems and walled gardens. Apple's iOS is probably the biggest one (I'd argue bigger than Facebook, since Apple already has a very successful business model built around it). Of course there's Facebook. But there's also XBox Live and Sony PSN. Both combined are over 100 million members. All of these are walled gardens whose user experience is controlled and restricted by the owning company. You are only able to do as much as they allow you to do. Apple won't let you run a code interpreter on iOS, meaning they control every app which will run on iOS. And Facebook won't allow anyone else to make a Google Search on Facebook if they have plans to do so themselves.

Certainly there are advantages, and in Apple's and Facebook's case they've eliminated the monthly fee. But are they good enough to beat out open and free? Will the pendulum swing their way again and stay there? Or will they eventually fall out of favor again as the pendulum swings back towards a open systems? That's what you should be asking yourself before deciding to invest gobs of money in a Facebook IPO.

Voluntarily giving so much information about one's life and than willing letting that information be sold as a product to the highest corporate bidder. Eventually the users will figure out that they should be getting paid for being a commodity.

The filing is up: http://www.sec.gov/Archives/edgar/data/1326801/00011931251203451...

"Simply put: we don’t build services to make money; we make money to build better services."

HumDoHamaraDo said:   With all the cash, what will facebook do, acquire companies, any speculation?
1. payment processing
2. email
3. photo/video hosting
4 linkedin

if facebook has explosive growth, who are their hardware/storage suppliers?
1. EMC?

Is there an REIT that focuses on Silicon Valley? All those new millionaires will be buying houses!

HumDoHamaraDo said:   With all the cash, what will facebook do, acquire companies, any speculation?
1. payment processing
2. email
3. photo/video hosting
4 linkedin

If they do those, the companies they buy are likely not already public. You'll see purchases of small private company's they you've probably never heard of.

Or they'll buy Time Warner

Maybe they will buy eBay & paypal.

HumDoHamaraDo said:   Maybe they will buy eBay & paypal.

Let's hope not!

kenwo88 said:   Hunter111 said:   to the OP's question: check out ticker GSVC
i forget how much facebook they own, but you can buy them right now.

Thanks Hunter for the hint. Might be late to the party on this one too. It popped 20+% on Friday.

Similarly I bought ZNGA @ $8 last month.. It's $12+ today. Wondering if it's time to bail??

HumDoHamaraDo said:   Maybe they will buy eBay & paypal.

That wouldn't compliment their business model and it would only give people new reasons to completely avoid eBay and Paypal.

Facebook has a real problem with the toxicity of its brand among those tired of the intrusions. The ranks grow day by day of those who are waking up to realize that they can't share their lives with their friends without sharing with Facebook and their advertisers, too.

Had they bought Skype, the service would have hemorrhaged a massive quantity of users without delivering an offsetting benefit to Facebook.

I nixed my Skype accounts on the rumor.

vickh said:   kenwo88 said:   Hunter111 said:   to the OP's question: check out ticker GSVC
i forget how much facebook they own, but you can buy them right now.

Thanks Hunter for the hint. Might be late to the party on this one too. It popped 20+% on Friday.

Similarly I bought ZNGA @ $8 last month.. It's $12+ today. Wondering if it's time to bail??

Up over $13 with after hours trading. . .!
There's been a lot of after hours trading this week that I'm considering bailing today (before the weekend on the off chance of a price drop). I'm also tempted to hang on to it until the after hours trading stops. . .
It's hard to sell when I go-to sleep and wake up to see an extra 5% gain

I would love to make money from facebook -- on the short side. May have to wait a few months for the enthusiasm to cool off.

tolamapS said:   vickh said:   kenwo88 said:   Hunter111 said:   to the OP's question: check out ticker GSVC
i forget how much facebook they own, but you can buy them right now.

Thanks Hunter for the hint. Might be late to the party on this one too. It popped 20+% on Friday.

Similarly I bought ZNGA @ $8 last month.. It's $12+ today. Wondering if it's time to bail??

Good move. You can see the greater fool theory working out.

ZNGA's move up is solely due to media coverage of Facebook IPO.

sold half my position today for $14. Time will tell re: the next half

svr411 said:   whodini said:   I would love to make money from facebook -- on the short side. May have to wait a few months for the enthusiasm to cool off.

Be careful not to fight the Fed. When the printing presses are fired up again FB could well become the next AAPL/NFLX/AMZN.

it's the problems down the road that we have to worry about.

Or when to get off the roller coaster...

EvilCapitalist said:   Nothing in common.

All that matters is the sell-side permabulls hitting the hype pipe.

vickh said:   Similarly I bought ZNGA @ $8 last month.. It's $12+ today. Wondering if it's time to bail??
Interesting graphs about that here:
http://www.zerohedge.com/news/facebook-ipo-because-time-its-diff...

motuwallet said:   guys they are going to try their best to run this dog up to keep the music playing. dont be the first or last to sell IMO

Looks like it's already being run up in the private market. Here's an article from WSJ describing how people are trying to get shares pre-IPO in the private market.

http://online.wsj.com/article/SB10001424052970203833004577249512...

jkimcpa said:   brettdoyle said:   Based on some of the research I've done, here is a chart showing all of the products in social networking... just to give you an idea of the intense competition.Sure there is "competition" but Facebook more or less "won" like how Google "won" the search wars. Like the Highlander, there can only be one, and they are it. Currently FB is in its infancy in terms of potential. The reason why they are valued at 30x revenue is that they have a monopoly in the space and can now focus on making (more) money.

What's going to happen is FB will continue to monetize their products internally and concurrently use their valuation and cash to buy the cream of the crop competition and roll it into their product suite. Eventually they will try to get out of their comfort zone and move outside the social space.

IMO Google's biggest existential threat is Facebook. Google currently "owns" internet traffic, in that when we search for something, we go to google to access it. Hell, some of us even google "Lenovo" and click through instead of typing www.lenovo.com. One day you will no longer "need" Google. In 5-10 years, you will see candidate's email addresses jkimcpa@facebook.com instead of gmail. Kids have no need to sign up for a gmail account. You need more info on Tide detergent or want coupons? Search Tide on Facebook, it'll take you to P&G's official Tide page with $5 off purchase. Etc. etc. With users generating content and doing all the legwork posting links, etc., Facebook is on the way to creating the most efficient and relevant search engine on Earth. No more relying on Google's algo in hopes that you show up on page 1. No more spending thousands on SEO "consultants" wondering if they were effective or not. Post that shit on FB and if it's worthy, it'll spread like wildfire.

Would I buy FB stock? No. Do I think people who do are stupid? Yes. Do I think Facebook is a fad? Hell no.

And it begins http://www.cnbc.com/id/46994771

jkimcpa said:   HumDoHamaraDo said:   HumDoHamaraDo said:   With all the cash, what will facebook do, acquire companies, any speculation?
1. payment processing
2. email
3. photo/video hosting
4 linkedin

if facebook has explosive growth, who are their hardware/storage suppliers?
1. EMC?
Facebook picked #3, photo hosting and sharing...

1. They already have FB credits but should look into another payment processing company
2. They already have @facebook.com integrated into FB messenger
3. Instagram
4. BranchOut?
I check emails all the time, FB, once a week. Allowing users to do everything through FB ensures one-stop place for transactions and email...so..
1. Large payment processing..don't know....maybe Square
2. getting @yahoo.com or @aol.com means users just login to FB to get all emails
3. smugmug would be a good addition too
4. linkedin is quite attractive too.