3 ms·

That's a pretty poor price-to-sales ratio, based on stock valuation theory. I guess people (again) believe that traditional metrics don't apply to dot-com comp

by nas 16y ago

That's a pretty poor price-to-sales ratio, based on stock valuation theory. I guess people (again) believe that traditional metrics don't apply to dot-com companies.

michaelchisari 16y ago
Which worries me. I lived through the first dot-com bust, and I'm not interested in living through another. I'd much rather see the industry take a much more conservative approach to economics than giving way to an irrational exuberance.
- lsc 16y ago
  Now, personally, I agree all this is irrational exuberance. But, I don't see it as a huge problem. As far as that goes, I'm not sure the first .com bubble and crash was really a bad thing for the industry. (the first .com bubble and crash were very good for me personally, even though they were clearly mis-allocations of capital from a societal viewpoint.) Huge amounts of infrastructure (software and hardware) was constructed. Many new Engineers were attracted and trained. (of course, it was bad for those who didn't make the cut during the crash, but it was probably quite good for the industry as a whole) Sure, some speculators are going to get soaked... but that's what happens when a speculator is wrong. I don't see that as a bad thing. Capitalism is based on this idea that speculation is fine; it's just that if you are wrong too many times, well, you can't speculate any more because you don't have any more money. I know that I personally am rather jealous of Zuckburg. I don't feel he "deserves" to be that rich, but eh, that's not mine to decide. He certainly has more of a claim to that money than the CEO of Enron or GM, you know? Sure, we're mis-allocating a lot of capital. But you know? the capital is coming from rich speculators, I believe, as it's so goddamn difficult to IPO these days, and a bunch of it is being used to prop up Engineer salaries, so while I recognize that it's an inefficient mis-allocation of capital, it's a wealth redistribution over which I certainly won't shed any tears. Personally, I think this wealth redistribution from speculators to Engineers will continue this trend towards more realistic and more efficient Internet businesses, as more of the speculators are replaced by Engineers who made it big in the last boom. This is, after all, how we got Paul Graham and Ycombinator.
jamiequint 16y ago
So by your estimation Google is also overpriced? Google's first year as a public company their P/E was around 100 ($193.85 at $2.07EPS), if Facebook IPOs at 33x their stock is a bargain in comparison (if you believe FB has the revenue growth potential of Google, as many do) EDIT: oops, I pulled revenue not earnings. Its irrelevant in any case. By the time Facebook IPOs their earnings should be on par with Google's IPO earnings.
- mikeryan 16y ago
  See this: http://news.ycombinator.com/item?id=1798951 http://news.ycombinator.com/item?id=1798951
- deleted 16y ago
  [deleted]
- wisty 16y ago
  Google grew the market for click ads. Facebook entered a big market, but shown itself to have poor click-through rates. It also has high costs. It might find some new market (selling marketing not sales - banner ads rather than clicks), but it will take years to grow its market. I think Facebook is basically a photo-sharing service, and a host for Farmville (at least, in terms of costs). Photos aren't getting smaller, unless they find some revolutionary compression technology. Hard drives aren't getting much bigger, though RAM and SSD drives will help. Hosting lots of photos (which is the real reason people stay locked-in - it's too difficult to upload their libraries to another network) is not a cheap business. Facebook doesn't get search traffic. People aren't looking to solve a problem (and possible buy something), they are looking for a friend from high-school. There's not click-through in that. Sales (click-throughs) is reportedly poor if you do it in Facebook. What about marketing (banner ads)? They can research how people change their "likes", which gives advertisers some data on how a marketing campaign worked. I'm skeptical though - people aren't on Facebook to shop (look at how their marketplace is going), and they'll just ignore the ads. Besides, it will take a long time to develop the model, convince marketeers to use it, and then wait for the market to grow.
  - jamiequint 16y ago

by nas 16y ago

That's a pretty poor price-to-sales ratio, based on stock valuation theory. I guess people (again) believe that traditional metrics don't apply to dot-com companies.

michaelchisari 16y ago

Which worries me. I lived through the first dot-com bust, and I'm not interested in living through another. I'd much rather see the industry take a much more conservative approach to economics than giving way to an irrational exuberance.

lsc 16y ago
Now, personally, I agree all this is irrational exuberance. But, I don't see it as a huge problem. As far as that goes, I'm not sure the first .com bubble and crash was really a bad thing for the industry. (the first .com bubble and crash were very good for me personally, even though they were clearly mis-allocations of capital from a societal viewpoint.) Huge amounts of infrastructure (software and hardware) was constructed. Many new Engineers were attracted and trained. (of course, it was bad for those who didn't make the cut during the crash, but it was probably quite good for the industry as a whole) Sure, some speculators are going to get soaked... but that's what happens when a speculator is wrong. I don't see that as a bad thing. Capitalism is based on this idea that speculation is fine; it's just that if you are wrong too many times, well, you can't speculate any more because you don't have any more money. I know that I personally am rather jealous of Zuckburg. I don't feel he "deserves" to be that rich, but eh, that's not mine to decide. He certainly has more of a claim to that money than the CEO of Enron or GM, you know? Sure, we're mis-allocating a lot of capital. But you know? the capital is coming from rich speculators, I believe, as it's so goddamn difficult to IPO these days, and a bunch of it is being used to prop up Engineer salaries, so while I recognize that it's an inefficient mis-allocation of capital, it's a wealth redistribution over which I certainly won't shed any tears. Personally, I think this wealth redistribution from speculators to Engineers will continue this trend towards more realistic and more efficient Internet businesses, as more of the speculators are replaced by Engineers who made it big in the last boom. This is, after all, how we got Paul Graham and Ycombinator.

jamiequint 16y ago

So by your estimation Google is also overpriced? Google's first year as a public company their P/E was around 100 ($193.85 at $2.07EPS), if Facebook IPOs at 33x their stock is a bargain in comparison (if you believe FB has the revenue growth potential of Google, as many do) EDIT: oops, I pulled revenue not earnings. Its irrelevant in any case. By the time Facebook IPOs their earnings should be on par with Google's IPO earnings.

mikeryan 16y ago
See this: http://news.ycombinator.com/item?id=1798951 http://news.ycombinator.com/item?id=1798951
deleted 16y ago
[deleted]
wisty 16y ago
Google grew the market for click ads. Facebook entered a big market, but shown itself to have poor click-through rates. It also has high costs. It might find some new market (selling marketing not sales - banner ads rather than clicks), but it will take years to grow its market. I think Facebook is basically a photo-sharing service, and a host for Farmville (at least, in terms of costs). Photos aren't getting smaller, unless they find some revolutionary compression technology. Hard drives aren't getting much bigger, though RAM and SSD drives will help. Hosting lots of photos (which is the real reason people stay locked-in - it's too difficult to upload their libraries to another network) is not a cheap business. Facebook doesn't get search traffic. People aren't looking to solve a problem (and possible buy something), they are looking for a friend from high-school. There's not click-through in that. Sales (click-throughs) is reportedly poor if you do it in Facebook. What about marketing (banner ads)? They can research how people change their "likes", which gives advertisers some data on how a marketing campaign worked. I'm skeptical though - people aren't on Facebook to shop (look at how their marketplace is going), and they'll just ignore the ads. Besides, it will take a long time to develop the model, convince marketeers to use it, and then wait for the market to grow.
- jamiequint 16y ago