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Not monetizing to their potential? Sure, I'll buy that. Underplaying it to the tune of $8B+ per year? Yeah, no sale. If FB was really making that much money,

by cletus 16y ago

Not monetizing to their potential? Sure, I'll buy that. Underplaying it to the tune of $8B+ per year? Yeah, no sale. If FB was really making that much money, why would they still be raising venture rounds (eg the Goldman investment)? If it was so the founder and early investors could take money off the table, why would they be undervaluing the sale? It would either be not smart for the founders or arguably misrepresentation to the investors. I maintain my view that FB is still in the hype phase. Pricing will come back to earth at some point, which isn't to say it's not an $XX billion company but the $2B+ they've raised does raise questions about their actual and potential revenue. Remember that Google raised $20-25M and that was it, as just one data point (but a common point of comparison).

besvinick 16y ago
Wouldn't it leak out if Zuck was still raising rounds to take money off the table? While I agree that it's still in the hype phase, I could easily see FB hitting a market cap on the seconday market of $100B pre-IPO. And with regards to raising way more than Google, FB is doing much more at this point in its lifecycle than Google was. FB is launching many more products that are more capital intensive than Google was back in the early 2000s.
orijing 16y ago
I think most of the $2B (1.5B in fact) is a "liquidity" opportunity for employees with significant amount of stock. In that light, Goldman's clients are getting a good deal (and obviously Goldman) and so are the employees selling the stock. Now, you may wonder why someone would sell a stock they are highly confident will appreciate? When you have $60m, but all of that tied in Facebook stock, you would rather forgo the opportunity to gain another $10m in order to sell a quarter ($15m) now, just so you have some cash to buy a house, a nice car, or whatever you want. At that level of wealth, the incremental benefits of additional money is greatly outweighed by the benefits to diversification and liquidity. I know that if I had $60m in Facebook stock, even if I believe each share are likely to be worth $40 in two years, I'd be willing to sell a quarter for $25 apiece just so I have a ton of cash at the moment. So while it's true that it's strange that Facebook is selling so many shares to Goldman, it's less strange if you consider that FB is staying private much longer than Google, and thus has many employees whose wealth is still largely tied to a private, non-liquid stock.
ashu 16y ago
I think you have been trolled.

by cletus 16y ago

besvinick 16y ago

Wouldn't it leak out if Zuck was still raising rounds to take money off the table? While I agree that it's still in the hype phase, I could easily see FB hitting a market cap on the seconday market of $100B pre-IPO. And with regards to raising way more than Google, FB is doing much more at this point in its lifecycle than Google was. FB is launching many more products that are more capital intensive than Google was back in the early 2000s.

orijing 16y ago

I think most of the $2B (1.5B in fact) is a "liquidity" opportunity for employees with significant amount of stock. In that light, Goldman's clients are getting a good deal (and obviously Goldman) and so are the employees selling the stock. Now, you may wonder why someone would sell a stock they are highly confident will appreciate? When you have $60m, but all of that tied in Facebook stock, you would rather forgo the opportunity to gain another $10m in order to sell a quarter ($15m) now, just so you have some cash to buy a house, a nice car, or whatever you want. At that level of wealth, the incremental benefits of additional money is greatly outweighed by the benefits to diversification and liquidity. I know that if I had $60m in Facebook stock, even if I believe each share are likely to be worth $40 in two years, I'd be willing to sell a quarter for $25 apiece just so I have a ton of cash at the moment. So while it's true that it's strange that Facebook is selling so many shares to Goldman, it's less strange if you consider that FB is staying private much longer than Google, and thus has many employees whose wealth is still largely tied to a private, non-liquid stock.

ashu 16y ago

I think you have been trolled.