6 ms·

Facebook raises $1.5 Billion at $50 Billion Valuation

22 points by siddhant 16y ago

kno 16y ago
Is Facebook a billion burning machine?
- spitfire 16y ago
  Yes.
- kmfrk 16y ago
  It may not necessarily be a matter of burn rate; they may be trying to do what Groupon did and spread abroad and compete in areas where they aren't the primary social network like Russia (and Brazil?). You'd think they already have enough money, though ...
- alnayyir 16y ago
  Yes.
alex1 16y ago
So, Facebook has now raised, like, $2.3 billion in VC? Isn't that some sort of record?
- trotsky 16y ago
  For sure. At least as of about a year ago the record was somewhere around 1.3B total for Clear. So not only did they break the record for total investment, but they also raised more in a single round than anyone else had ever raised in total. Curious that when breaking all the records they don't even have a explanation for why they're doing it. Perhaps they think the funding environment is going to change for the worse.
kmfrk 16y ago
Isn't Zuckerberg getting very close to getting his share control to the point where he doesn't retain a ~50% stake along with his staff[1]? [1]: http://www.businessinsider.com/chart-of-the-day-who-owns-facebook-2011-1 http://www.businessinsider.com/chart-of-the-day-who-owns-fac...
- lyime 16y ago
  He doesn't need more than 50% common stock to retain control of the company. Facebook has different classes of stock. Zuckerberg has more than 50% of voting rights based on ownership of certain classes of stock.
  - rst 16y ago
    FWIW, the Ford family used to have an even more favorable arrangement for their shares of Ford Motor Company. The family preferred shares were the only ones with voting rights; the publicly traded shares got dividends, but didn't have voting rights at all. They revamped this arrangement ten years ago, but the family "class B" shares still have disproportional voting rights. See http://www.time.com/time/magazine/article/0,9171,823982,00.html http://www.time.com/time/magazine/article/0,9171,823982,00.h...
    - r00fus 16y ago
      IIRC, isn't this the case with Google as well (with the triumvirate holding 1/3 each of the voting shares)... the public shares aren't voting shares at all.
      - jwegan 16y ago
        I am familiar with the stock market, but I am far from a sophisticated investor. One thing I always had trouble understanding is what is value of holding shares in a company like Google? You have no voting power, no dividends, and an event like liquidation or sale of Google is very unlikely and would only happen in the case of a serious problem (which would have caused the share prices to fall drastically). So what is the tangible value of holding a share in Google (other than the fact other people also want to own this item that to me seems to not have any intrinsic value)?
faramarz 16y ago
So how does the average Joe get in on the IPO action?
- alnayyir 16y ago
  >How does the average Joe get in on the shorting action FTFY I am chomping at the bit to short them so badly.
  - spitfire 16y ago
    champing at the bit.
    - jmatt 16y ago
      It seems to be a valid alternative: http://en.wiktionary.org/wiki/chomp_at_the_bit http://en.wiktionary.org/wiki/chomp_at_the_bit
      - spitfire 16y ago
        It isn't. Horses champ at their bits when they're anxious to go. Post-rationalizing "chomping at the bit" is simply incorrect.
        alnayyir 16y ago
        Prescriptivists acting as if their fetish is important is more amusing when it's not distracting from demonstrably more valuable subject matter. I wasn't using some of kind of mongoloid newspeak. Chill out
  - rst 16y ago
    Unfortunately, the strategy's not a lock even if you're right on the fundamentals; quoth Keynes, "the market can remain irrational longer than you can remain solvent." Concretely: If a parade of idiots bid up the price for no good reason whatever, the price is still going up, and you're still at risk of a margin call because of it. (Accounts with short positions are (quoth investopedia[1]) typically required to own securities worth at least as much as the shorted shares, and typically 30-40% than that. If the value of the shorted shares goes up, you can be required to give the broker more cash to meet this margin requirement, or close out the position immediately at a loss. So, if a stock is getting bid up by crazed fools, and you think it's the next Enron, you can still go broke shorting it even if you're right, unless the crazed fools come to their senses before you run out of money to cover the margin requirement.) [1]: http://www.investopedia.com/ask/answers/05/shortmarginrequirements.asp http://www.investopedia.com/ask/answers/05/shortmarginrequir...
JacobAldridge 16y ago
From the release - Facebook "expects to start filing public financial reports no later than April 30, 2012." TC interpretation - "Clearly, it looks like Facebook plans to IPO no later than April 2012." My understanding (worth sharing, if I'm correct, as I think TC's surety in their statement is misleading) is that Facebook can report publicly for as long as they like without having to go through an IPO and list. While they're unlikely to do so indefinitely, I don't think their statement means that "Clearly" they'll be doing an IPO in the next 15 months.
- danielayele 16y ago
  they'll probably register the securities/file an S-1 by April but won't actually hold a sale of new shares until Augustish (Google followed the same timetable in 04).
corin_ 16y ago
Under the transaction’s terms, Facebook had the option to accept between $375 million and $1.5 billion from the Goldman Sachs overseas offering, at the discretion of Facebook. While the offering was oversubscribed, Facebook made a business decision to limit the offering to $1 billion. One has to wonder if the fact that Goldman excluded U.S. investors from the round had to do with Facebook not raising the full $1.5 billion (which would push the total investment to a whopping $2 billion). They quoted a statement saying it was "oversubscribed" and that, had Facebook wanted to, they could have chosen to take $1.5b from it... and then analysed that to mean that they were unable to raise $1.5b. What?

22 points by siddhant 16y ago

kno 16y ago

Is Facebook a billion burning machine?

spitfire 16y ago
Yes.
kmfrk 16y ago
It may not necessarily be a matter of burn rate; they may be trying to do what Groupon did and spread abroad and compete in areas where they aren't the primary social network like Russia (and Brazil?). You'd think they already have enough money, though ...
alnayyir 16y ago
Yes.

alex1 16y ago

So, Facebook has now raised, like, $2.3 billion in VC? Isn't that some sort of record?

trotsky 16y ago
For sure. At least as of about a year ago the record was somewhere around 1.3B total for Clear. So not only did they break the record for total investment, but they also raised more in a single round than anyone else had ever raised in total. Curious that when breaking all the records they don't even have a explanation for why they're doing it. Perhaps they think the funding environment is going to change for the worse.

kmfrk 16y ago

Isn't Zuckerberg getting very close to getting his share control to the point where he doesn't retain a ~50% stake along with his staff[1]? [1]: http://www.businessinsider.com/chart-of-the-day-who-owns-facebook-2011-1 http://www.businessinsider.com/chart-of-the-day-who-owns-fac...

lyime 16y ago
He doesn't need more than 50% common stock to retain control of the company. Facebook has different classes of stock. Zuckerberg has more than 50% of voting rights based on ownership of certain classes of stock.
- rst 16y ago
  FWIW, the Ford family used to have an even more favorable arrangement for their shares of Ford Motor Company. The family preferred shares were the only ones with voting rights; the publicly traded shares got dividends, but didn't have voting rights at all. They revamped this arrangement ten years ago, but the family "class B" shares still have disproportional voting rights. See http://www.time.com/time/magazine/article/0,9171,823982,00.html http://www.time.com/time/magazine/article/0,9171,823982,00.h...
  - r00fus 16y ago
    IIRC, isn't this the case with Google as well (with the triumvirate holding 1/3 each of the voting shares)... the public shares aren't voting shares at all.
    - jwegan 16y ago
      I am familiar with the stock market, but I am far from a sophisticated investor. One thing I always had trouble understanding is what is value of holding shares in a company like Google? You have no voting power, no dividends, and an event like liquidation or sale of Google is very unlikely and would only happen in the case of a serious problem (which would have caused the share prices to fall drastically). So what is the tangible value of holding a share in Google (other than the fact other people also want to own this item that to me seems to not have any intrinsic value)?

faramarz 16y ago

So how does the average Joe get in on the IPO action?

alnayyir 16y ago
>How does the average Joe get in on the shorting action FTFY I am chomping at the bit to short them so badly.
- spitfire 16y ago
  champing at the bit.
  - jmatt 16y ago
    It seems to be a valid alternative: http://en.wiktionary.org/wiki/chomp_at_the_bit http://en.wiktionary.org/wiki/chomp_at_the_bit
    - spitfire 16y ago
      It isn't. Horses champ at their bits when they're anxious to go. Post-rationalizing "chomping at the bit" is simply incorrect.
      - alnayyir 16y ago
        Prescriptivists acting as if their fetish is important is more amusing when it's not distracting from demonstrably more valuable subject matter. I wasn't using some of kind of mongoloid newspeak. Chill out
- rst 16y ago
  Unfortunately, the strategy's not a lock even if you're right on the fundamentals; quoth Keynes, "the market can remain irrational longer than you can remain solvent." Concretely: If a parade of idiots bid up the price for no good reason whatever, the price is still going up, and you're still at risk of a margin call because of it. (Accounts with short positions are (quoth investopedia[1]) typically required to own securities worth at least as much as the shorted shares, and typically 30-40% than that. If the value of the shorted shares goes up, you can be required to give the broker more cash to meet this margin requirement, or close out the position immediately at a loss. So, if a stock is getting bid up by crazed fools, and you think it's the next Enron, you can still go broke shorting it even if you're right, unless the crazed fools come to their senses before you run out of money to cover the margin requirement.) [1]: http://www.investopedia.com/ask/answers/05/shortmarginrequirements.asp http://www.investopedia.com/ask/answers/05/shortmarginrequir...

JacobAldridge 16y ago

From the release - Facebook "expects to start filing public financial reports no later than April 30, 2012." TC interpretation - "Clearly, it looks like Facebook plans to IPO no later than April 2012." My understanding (worth sharing, if I'm correct, as I think TC's surety in their statement is misleading) is that Facebook can report publicly for as long as they like without having to go through an IPO and list. While they're unlikely to do so indefinitely, I don't think their statement means that "Clearly" they'll be doing an IPO in the next 15 months.

danielayele 16y ago
they'll probably register the securities/file an S-1 by April but won't actually hold a sale of new shares until Augustish (Google followed the same timetable in 04).

corin_ 16y ago

Under the transaction’s terms, Facebook had the option to accept between $375 million and $1.5 billion from the Goldman Sachs overseas offering, at the discretion of Facebook. While the offering was oversubscribed, Facebook made a business decision to limit the offering to $1 billion. One has to wonder if the fact that Goldman excluded U.S. investors from the round had to do with Facebook not raising the full $1.5 billion (which would push the total investment to a whopping $2 billion). They quoted a statement saying it was "oversubscribed" and that, had Facebook wanted to, they could have chosen to take $1.5b from it... and then analysed that to mean that they were unable to raise $1.5b. What?