with only about a month to go until the IPO it seems more people would be talking about it. in my head Im comparing it to the GOOG IPO in 2004 which pretty much marked a turning point for the Market that year- went from bear to bull trend. plus, the GOOG IPO was so negatively thought of it doubled almost immediately, consolidated and then doubled again- it turned out to be one excellent buy. what about Facebook? will that IPO mark a turning point in the Market as well? looks like we could go from the current bull phase to bear- that makes sense as we have been bullish pretty much since March of 2009. I think the sentiment of the IPO itself is pretty bullish so will it be (unlike GOOG) a bad investment from the start? thoughts?
At the 100B valuation people are talking about, it looks to trade around 108x 2011 revenue around 63x 2012 revenue. I would not be so dismissive of the name just because of the valuation though.
I agree that the valuation looks crazy vs revenue, but it also works out to under $200 per user. I just don't think the info they are gathering on all of us is as useful as marketing people seem to believe it is. It's almost like a quantum physics theory, you think you have something valuable until you go to use it and then the act of using it destroys its value. Or, if physics isn't your thing, its like the Rowdy Roddy Piper quote, "Just when you think you have the answers, I go and change the questions." I also think they are in danger of myspacing themselves. Part of the reason they became so popular was the clean, few frills, easy to use interface. No company can stop themselves from adding things until it is too late. Just because of the way companies and bullshit lunch meetings work, the person who suggests adding stuff gets promoted and the guy that says, "Let's leave it alone" gets fired. Having said that, none of these things will affect how it trades on IPO day. As usual that will all be based on unwarranted optimism and panic.
I enjoy your realistic appraisal. Just wanted to note that Facebook now experiences a kind of "incumbent" effect where its main block of users will continue to use it as it is the standard and a competitor (Google+ anyone?) would be hard pressed to offer anything worth switching for since the only current drawback is privacy (and honestly if your looking for this why are you on a social network?). People love some of the frills added on as seen in companies like Zynga and the dev's over at Facebook did actually make some drastic changes to the model to integrate these things without changing the average users "Plain" interface.
You're right, I looked at the S1 again and its 27x 2011 revenue. I'm not sure what figures i was looking at before. So at 100B, the valuation is actually very cheap. I can almost guarantee that this will start trading at a valuation significantly above 100B and remain above that level.
Wait till everyone finds the next new trend, people will leave facebook just like they left friendster, remember bebo...remember myspace that was sold for $500 million+ today its pretty much worthless, same will probably be said for facebook, facebooks growth is going to slow as they already have 850 million users, I am sure there are multiple accounts so in reality there arent actually 850 millions separate users. Anyway how much hype can we continue to hear about facebook and how much its worth, enough, as quick as this hype has skyrocketed it will fade, it always does...
This 04/19/12 article about the Facebook IPO was posted in another ET Thread. Worth a read I think. http://www.mercurynews.com/business/ci_20434597/facebook-ipo-date-may-14-public-offering