Facebook to sink?

Lots of speculation but worth a read.

 

http://online.wsj.com/article/SB1000142405..._LEFTTopStories

 

Facebook Readies IPO Filing

 

Facebook Inc. could file papers for its initial public offering as early as this coming week, people familiar with the matter said, as anticipation mounts for what is likely to be one of the biggest debuts for a U.S. company.

 

The deal, seen as defining moment for the latest Web investing boom, could raise as much as $10 billion and value the social network between $75 billion and $100 billion, said people familiar with the matter. A valuation of $75 billion would be below earlier expectations.

 

The website, which in less than eight years has attracted more than 800 million members, has changed the way people across the globe communicate, from organizing political protests to sharing baby pictures.

 

The Internet giant is close to picking Morgan Stanley to lead the deal, these people said. Wall Street banks, many of them struggling amid a crimp in trading profits, have been jostling for a leading role in the deal, which could yield them tens of millions of dollars in banker fees, potential new business and bragging rights.

 

A nod for Morgan Stanley would mark a disappointment for rival Goldman Sachs Group Inc., which a year ago was viewed as having an edge to lead the deal. One person familiar with the matter said that while Morgan Stanley would likely land the coveted "lead-left" spot on an IPO financial filing, Goldman would also likely play a significant role.

 

Spokespeople for Facebook, Morgan Stanley and Goldman Sachs declined to comment

 

Facebook could file documents with the Securities and Exchange Commission as early as this coming Wednesday, said one person familiar with the matter. But that timing is just one scenario Facebook executives are considering, the person said. Executives are also considering filing a few weeks later, the person said.

 

People familiar with the matter have said the company is targeting an IPO sometime between April and June.

 

A $10 billion Facebook offering would rank fourth among IPOs for U.S. companies, behind Visa Inc., General Motors Co. and AT&T Wireless, according to Dealogic. It would rank Facebook as the biggest U.S. Internet offering ever, replacing Google Inc., which raised $1.9 billion in 2004 at a $23 billion valuation.

 

At a $100 billion valuation, Facebook would be worth about the same as McDonald's Corp. and nearly half of Google.

 

Facebook's revenue is driven by its advertising business, as big brands rush to the site to interact with consumers through display ads and fan pages. Facebook has been able to increase its world-wide advertising revenue from $738 million in 2009 to $3.8 billion in 2011, according to estimates from research firm eMarketer. It isn't known if Facebook is profitable.

 

Facebook's final valuation will be determined by a variety of factors, people familiar with the matter said, such as investor demand for social media, the IPO market and the health of the European economy.

[FBOOK]

 

The IPO will mint a new generation of Silicon Valley millionaires on the level not seen since Google's offering. Some 3,000 people work at Facebook.

 

An IPO will also test the ability of Chief Executive Mark Zuckerberg, age 27, to manage a global company whose financial performance will be scrutinized every three months by investors. Mr. Zuckerberg started the company in 2004 out of his Harvard University dorm room. Overall, about 500 million users now log into the site daily, according to Facebook.

 

Mr. Zuckerberg had been reluctant to push forward with an IPO. People familiar with his thinking said he has been fearful of the damage an IPO could do to the company's culture. He wants employees focused on making great products, not the stock price, they said.

 

But outside forces are partly pushing his hand. Facebook executives began to realize in 2010 that Facebook would have more than 500 shareholders by the end of 2011, which would trigger a regulatory requirement that Facebook start publicly reporting financial information.

 

Mr. Zuckerberg decided it made more sense for Facebook to go public and reap some financial benefit from an IPO, rather than stay private but have to release its financial information, said people familiar with his thinking.

 

Leading the Facebook sale would be a huge win for Morgan Stanley, which last year cemented its position as the top Internet stock underwriter by leading the IPOs of LinkedIn Corp., Groupon Inc., and Zynga Inc. The bank's global tech banking team, led by Michael Grimes and Paul Chamberlain, is also based in Menlo Park.

Lots of speculation but worth a read.

 

http://online.wsj.com/article/SB1000142405..._LEFTTopStories

 

 

I wonder what price the IPO will open at..

 

 

I just hope they don't get Scottied...

So....how much will this make Mr. Mark Zuckerberg worth? His Facebook stock is going to make him a billionaire with a liquid net worth (!!!!!!!!). And he's still under thirty, the bastard.

At a $100 billion valuation, Facebook would be worth about the same as McDonald's Corp. and nearly half of Google.

 

 

Uh oh. That is a very big number

I wonder what price the IPO will open at..

Shares of Facebook have been selling on the private market for a while now.... The object of the IPO is to value the IPO sharers at the same value as those privately held shares (The owners of which will be prohibited from selling for a period of time- Usually six months or so- after the Public Issue date.)

I just hope they don't get Scottied...

You need to lay off Scott. The end.

Freakin scary to think that at best it'll still be only worth half of Google... Talk about a company that could buy the planet haha

Nice numbers! Mark Zuckerberg is a damn awesome man. He's very lucky to know how to use a powerful and very flexible language like PHP. I hope I could create one, and beat him.

Nice numbers! Mark Zuckerberg is a damn awesome man. He's very lucky to know how to use a powerful and very flexible language like PHP. I hope I could create one, and beat him.

 

 

good luck, there is no chance, really.. how are you going to entice users to leave facebook? that's right, you can't

 

 

 

I wouldn't buy it. Can't say for certain till I see the numbers, but from what I've heard, it's fairly valued or overvalued. It is already seeing user saturation in the largest markets and now it's all about increasing user time on the site and selling as many ads and products as possible. I've heard their profit right now is about $1B. If that's the case, an 80-100B valuation would put a very mature company at a 80-100 PE. Mature tech companies with such high market caps generally have higher PE's, but not 80-100.

 

 

Consider that a company like Google or Microsoft would have 2-3x the valuation but pulling in 10-20x as much profit. Facebook has room to grow, but in my opinion, it will be growing into it's shoes, not outgrowing them. Debuting with such a large market cap leaves questionable room for growth. It's not a stock I'd be looking to own for growth or value. The ship sailed a while ago, now it's time to cash out.

Maybe I am just thinking small here, but I just have this feeling that Facebook's days are numbered. I'm sure it will be around for a while yet, and while the internet has never seen anything remotely like Facebook (myspace was never this big) I just can't get past the feeling that FB has seen its most popular days already.

 

 

Maybe I am just thinking small here, but I just have this feeling that Facebook's days are numbered. I'm sure it will be around for a while yet, and while the internet has never seen anything remotely like Facebook (myspace was never this big) I just can't get past the feeling that FB has seen its most popular days already.

 

 

I think that this is almost certainly true... It has alkmost certainly reached its peak in popularity. However- Im not sure thats the same thing as saying is has reached its peaked it PROFITABILITY. Which is the REAL question. In terms of profitability, I think it hasnt even begun to tap its potential.

Maybe I am just thinking small here, but I just have this feeling that Facebook's days are numbered. I'm sure it will be around for a while yet, and while the internet has never seen anything remotely like Facebook (myspace was never this big) I just can't get past the feeling that FB has seen its most popular days already.

 

All it takes is for every teenage/under-30 girl to drop it like yesterday's fashion and pickup something new - and they lose a large majority of users. And why do most teenage/under-30 boys have Facebook accounts? To follow those girls.

 

Either their days are numbered or they will last forever. It really depends on the return that the users are getting. If something better pops up that offers them something Facebook can't - OR Facebook becomes so infested with ads/spam/crappy users that the young people who left MySpace with .edu accounts and invites to Facebook in the first place drop it and move on to a more exclusive site. One early sign Facebook is on its way downhill? My Mom is on there. Think about it...

I think that this is almost certainly true... It has alkmost certainly reached its peak in popularity. However- Im not sure thats the same thing as saying is has reached its peaked it PROFITABILITY. Which is the REAL question. In terms of profitability, I think it hasnt even begun to tap its potential.

 

 

Agreed. I want to see how much pressure they get and what is implement to make FB become more profitable after going public. No doubt, there is more $ to be made. As a stockholder, Zuks mindset is not what you want. However, I love the possibility of what can happen. I'm buying. I think they want to make bigger changes to the site and have the right ideas; they are just waiting for the right time.

I think that this is almost certainly true... It has alkmost certainly reached its peak in popularity. However- Im not sure thats the same thing as saying is has reached its peaked it PROFITABILITY. Which is the REAL question. In terms of profitability, I think it hasnt even begun to tap its potential.

 

But what difference will it make if it debuts with $100B market cap? It will have to be earning $5B/year to come down to the normal levels for such a mature tech company. The market doesn't make sense, so I sure as hell wouldn't short it, but this price makes Google, Apple, Microsoft, and IBM look cheeeeeeeeeeeeeeeeeeeap. These guys are earning $10, $20, $30, even maybe even $40B per year and have massive amounts of cash just sitting.

But what difference will it make if it debuts with $100B market cap? It will have to be earning $5B/year to come down to the normal levels for such a mature tech company. The market doesn't make sense, so I sure as hell wouldn't short it, but this price makes Google, Apple, Microsoft, and IBM look cheeeeeeeeeeeeeeeeeeeap. These guys are earning $10, $20, $30, even maybe even $40B per year and have massive amounts of cash just sitting.

 

definitely - would rather invest in those than in FB

Facebook offers no product,, and no service. It's no McDonalds, IBM or Google. It's users have no reason to stay. It's just a trendy chatroom. Trends on the internet can change faster than the direction of a fly. I think Facebook has already hit it's peak.

 

I wouldn't touch it. Stock will tank as it's users get bored of it and go elsewhere. Looks at MySpace. It's users have all fled to Facebook. And one day they will all flee Facebook and go somewhere else. Facebook is the flavor of the week.

Facebook is the flavor of the week.

Everyone keeps saying this, and I don't really understand it. Facebook has been heavily growing for almost a decade, and new competitors are flopping hard, even when already integrated with users (google+).

 

What will a new upstart bring to the table the google+ hasn't?

Everyone keeps saying this, and I don't really understand it. Facebook has been heavily growing for almost a decade, and new competitors are flopping hard, even when already integrated with users (google+).

 

What will a new upstart bring to the table the google+ hasn't?

 

 

 

Anonymous facebook, you add friends just like here, (knowing who they are) and then comments are all without names. How addicting would the drama be for the 11-39 female demo?

Everyone keeps saying this, and I don't really understand it. Facebook has been heavily growing for almost a decade, and new competitors are flopping hard, even when already integrated with users (google+).

 

What will a new upstart bring to the table the google+ hasn't?

 

FB didn't have anything that MySpace didn't have either. Times change, new ideas pop up. Facebook was created by a couple of college kids. Wha replaces it could pop up just the same. Social networking came after something, and something will come after social networking. You're assuming that FB is the way of the future. Things change. I stopped using FB years ago and I'm in just as good of contact with people as I was before.

 

Like others have said, it has no product. If people get tired off it and engagement falls, so does profit. You could say the same about IBM, Google, Microsoft, and McDonalds, but these people offer products and services that people need. People can't get tired of Google search unless something replaces it. People can't lose interest in software unless something replaces it. People need to eat and will eat at McDonalds unless something replaces it. Most companies offer products and services that people need in one form or another.

 

It may not be easier for FB to be overtaken by another social network of the same type, but it is possible that people simply tire of it. It's not just about user base either, but rather user engagement. They know the main markets are reaching saturation, so they are now focusing on getting people to use it more often and longer. Currently people spend 8 hours/month on FB, or so they say. What if that drops down to 5 hours? People would still be using it a lot and getting the use they need out of it, but not as much. This means FB serves less ads and has less opportunity for profit. People got sick of all the ads and bs on MySpace, so what happens if they start seeing too many ads and shit on FB? People already complain about increased ad presence and sponsored stuff in their feeds. Maybe there is a limit to how much they can show before it begins to significantly hurt user experience?

 

FB is a business model that relies heavily on the fact that people like to use it rather than have to use it. There are tons of people who aren't interested and don't use FB, myself included. I know lots of people who don't use it nearly as much as they used to either. Culture changes, and quite rapidly. While I don't think FB is going any time soon, I highly doubt the 'social' landscape and means of communication/interaction will be the same 5-10 years from now.

 

It's also significantly harder for FB to break into new markets than it is for others. The costs are significantly greater for them to branch out than it is for huge companies with massive infrastructure, highly skilled talent, and powerful connections with business and consumers already intact.

 

Whatever you do, don't buy the pop on day one!

Whatever you do, don't buy the pop on day one!

 

Well said sir, both times!

Well said sir, both times!

 

 

Brian, your posts rock . Spot on. Although, I'm still buying some, the question is when.

FB to file Wednesday....? 5B

 

http://techcrunch.com/2012/01/31/reuters-f...28TechCrunch%29

What galls me is how in twenty or thirty years, there are going to be more new tech companies that rise up and create whole new products and services that change the culture and create new billionaires in the process and I'm going to be kicking myself thinking, "DAMMIT, why didn't I think of that!"