8 ms·

Wait... is that good or bad?

by roadnottaken 16y ago

code_duck 16y ago
Psst, want to buy 50% of Bebo for $200 million? At 2008 prices, this is a steal!
eavc 16y ago
Up to you, I suppose. It's not a point I'd ever raise in trying to sell Facebook stock, though.
kqr2 16y ago
MySpace is probably only worth about $500 million. It generated about $500 million in revenue for 2009, but operated at a lost. On the other hand, Facebook revenue is around $1-2 billion but valued now at around $50 billion. In other words, Facebook commands a huge premium, largely based on its expectation for growth and future revenue. http://www.businessinsider.com/henry-blodget-myspace-worth-zero-2010-2 http://www.businessinsider.com/henry-blodget-myspace-worth-z... http://mashable.com/2010/12/16/facebook-2-billion-revenue/ http://mashable.com/2010/12/16/facebook-2-billion-revenue/
InclinedPlane 16y ago
It's troublesome if you want to invest in facebook. Facebook has 10x as many users as myspace, and they've translated that into a great deal of hype. But they've yet to translate it into sizable revenue, let alone into profit.
- phreanix 16y ago
  Wait, let me get this straight. $2B in revenue is not 'sizeable' ?
  - InclinedPlane 16y ago
    Myspace hasn't released revenue information for 2010 yet. It's likely that the ratio will change substantially in facebook's favor as their revenue has grown considerably (assuming facebook's revenue reporting is trustworthy). Nevertheless, Facebook's valuation is still shockingly inflated. Compared to Apple they have 1/6th the valuation at 1/30th the revenue, 1/4th the valuation at 1/12th the revenue of Google. It seems likely that Facebook is overvalued by at least a factor of 3, perhaps more (since both Google and Apple are bound by stringent revenue reporting rules). At 1/6th the valuation of Apple (which is widely considered to be a bit overvalued today as well) but with one 30th of the revenue (
    - jimbokun 16y ago
      "At 1/6th the valuation of Apple (which is widely considered to be a bit overvalued today as well)" I had also assumed that Apple was trading at a premium, before reading this. http://www.appleinsider.com/articles/11/01/03/verizon_iphone_predicted_to_earn_apple_respect_on_wall_street.html http://www.appleinsider.com/articles/11/01/03/verizon_iphone... "Reiner noted that Wall Street investors typically grant companies with 70 percent earnings per share growth a "premium valuation." But AAPL stock is valued at just 14 times its EPS, which is equivalent to the Standard & Poor's average." The fact that Apple is only trading at the S&P average relative to EPS, and is still the second most highly valued company in the world, with 70 percent EPS growth, puts into perspective what an absurdly good job they're doing.
      - chopsueyar 16y ago
        Keep in mind, they also actually make physical objects that exist in reality.
  - Swannie 16y ago
    Not in the grand scheme of things. Yahoo! Market Cap: 22B. Revenue: 6.5B. Employees: 13,900 Facebook valuation: 50B. Revenue: 2B. Employees: > 1,300 OK, so the costs of running Facebook from a pure employee point of view are smaller than Yahoo. And their cost for traffic is certainly lower (as the YHOO numbers include revenue distributed to ad carriers). But does the 2B revenue really justify a 50B valuation?
    - borism 16y ago
      OK, so the costs of running Facebook from a pure employee point of view are smaller than Yahoo. I wouldn't be so sure...
      - Swannie 16y ago
        You'd hope so! I know most of Facebook would be classed as engineers, vs. a lot of Yahoo as sales, support, etc. But really? 1/10th the employees, you'd expect their salary bill would be less.
        borism 16y ago
        don't forget the stock options
        Swannie 16y ago
        It might be an naive assumption, but aren't shares for options usually set aside relatively early in the process? Interesting comment, just provoked me to do a little research, as I had initially thought that stock options would be accounted as a future liability, and only a cost, at their strike price, when vested AND executed.

Wait... is that good or bad?

code_duck 16y ago

Psst, want to buy 50% of Bebo for $200 million? At 2008 prices, this is a steal!

eavc 16y ago

Up to you, I suppose. It's not a point I'd ever raise in trying to sell Facebook stock, though.

kqr2 16y ago

MySpace is probably only worth about $500 million. It generated about $500 million in revenue for 2009, but operated at a lost. On the other hand, Facebook revenue is around $1-2 billion but valued now at around $50 billion. In other words, Facebook commands a huge premium, largely based on its expectation for growth and future revenue. http://www.businessinsider.com/henry-blodget-myspace-worth-zero-2010-2 http://www.businessinsider.com/henry-blodget-myspace-worth-z... http://mashable.com/2010/12/16/facebook-2-billion-revenue/ http://mashable.com/2010/12/16/facebook-2-billion-revenue/

InclinedPlane 16y ago

It's troublesome if you want to invest in facebook. Facebook has 10x as many users as myspace, and they've translated that into a great deal of hype. But they've yet to translate it into sizable revenue, let alone into profit.

phreanix 16y ago
Wait, let me get this straight. $2B in revenue is not 'sizeable' ?
- InclinedPlane 16y ago
  Myspace hasn't released revenue information for 2010 yet. It's likely that the ratio will change substantially in facebook's favor as their revenue has grown considerably (assuming facebook's revenue reporting is trustworthy). Nevertheless, Facebook's valuation is still shockingly inflated. Compared to Apple they have 1/6th the valuation at 1/30th the revenue, 1/4th the valuation at 1/12th the revenue of Google. It seems likely that Facebook is overvalued by at least a factor of 3, perhaps more (since both Google and Apple are bound by stringent revenue reporting rules). At 1/6th the valuation of Apple (which is widely considered to be a bit overvalued today as well) but with one 30th of the revenue (
  - jimbokun 16y ago
    "At 1/6th the valuation of Apple (which is widely considered to be a bit overvalued today as well)" I had also assumed that Apple was trading at a premium, before reading this. http://www.appleinsider.com/articles/11/01/03/verizon_iphone_predicted_to_earn_apple_respect_on_wall_street.html http://www.appleinsider.com/articles/11/01/03/verizon_iphone... "Reiner noted that Wall Street investors typically grant companies with 70 percent earnings per share growth a "premium valuation." But AAPL stock is valued at just 14 times its EPS, which is equivalent to the Standard & Poor's average." The fact that Apple is only trading at the S&P average relative to EPS, and is still the second most highly valued company in the world, with 70 percent EPS growth, puts into perspective what an absurdly good job they're doing.
    - chopsueyar 16y ago
      Keep in mind, they also actually make physical objects that exist in reality.
- Swannie 16y ago
  Not in the grand scheme of things. Yahoo! Market Cap: 22B. Revenue: 6.5B. Employees: 13,900 Facebook valuation: 50B. Revenue: 2B. Employees: > 1,300 OK, so the costs of running Facebook from a pure employee point of view are smaller than Yahoo. And their cost for traffic is certainly lower (as the YHOO numbers include revenue distributed to ad carriers). But does the 2B revenue really justify a 50B valuation?
  - borism 16y ago
    OK, so the costs of running Facebook from a pure employee point of view are smaller than Yahoo. I wouldn't be so sure...
    - Swannie 16y ago
      You'd hope so! I know most of Facebook would be classed as engineers, vs. a lot of Yahoo as sales, support, etc. But really? 1/10th the employees, you'd expect their salary bill would be less.
      - borism 16y ago
        don't forget the stock options
        Swannie 16y ago
        It might be an naive assumption, but aren't shares for options usually set aside relatively early in the process? Interesting comment, just provoked me to do a little research, as I had initially thought that stock options would be accounted as a future liability, and only a cost, at their strike price, when vested AND executed.