9 ms·

Zuckerberg IPO Haul Could Top $24 Billion

30 points by kunle 15y ago

deleted 15y ago
[deleted]
GFKjunior 15y ago
That is an absolutely insane number for Facebook.
- boyter 15y ago
  Totally agree. Considering companies like BMW and Toyota are only worth 20 billion I fail to see how Facebook (even with the hype) can be considered so valuable. I know which one I would rather own if offered the choice.
  - spitfire 15y ago
    Facebook. It has all the hype and could IPO soon. Which would I want to run for the next 20 years? A BMW or a Toyota.
    - webista 15y ago
      A Facebook.
  - flyt 15y ago
    Does every person in the world have a BMW? Could every person that doesn't have one be a potential customer for BMW? Facebook has the potential to be a database of every human in the world with extensive metadata about those people's friends, interests, and a minute-by-minute record of their every activity and action in the virtual and real world. How much would advertisers pay for access to that anonymized data? How many services can leverage it to build transformative, long-term businesses? How many more "arab springs" will the world see as even more connect and share the human experience with each other in richer, more meaningful ways? Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. Pretending that there's no long term value in that platform is short sighted.
    - inosql 15y ago
      >> Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. Hmmm... I was under impression that Tech companies work at best for 15-20 years and some other company with newer/better technology beats them.
    - rimantas 15y ago
      You should really try to answer your questions. It may turn out less impressive than you imagined.
    - code_duck 15y ago
      > Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. If you replace Facebook with 'the internet', I'll go along with that. You're way too confident in this single company. Facebook is well positioned in the internet, but they're not everything and never will be.
linuxhansl 15y ago
So now it's a $100bn? Wasn't it 60bn a few weeks back... It seems like folks are outdoing each other by proposing higher and higher valuations. At this rate Facebook will be worth more than the US GDP soon. I can't wait for the day they actually have to post revenue numbers. (Don't get me wrong, what they did is pretty cool from a technical viewpoint, but those numbers are insane, and only designed to make a few insiders and many investment bankers rich.)
firefoxman1 15y ago
If one was to buy some Facebook stock on a secondary market, would those shares be converted into public shares when the company IPO's? And if so, would you have to abide by the IPO rules like the minimum hold time?
- rationalbeats 15y ago
  I was watching Bloomberg West the other day and they were talking about the people who bought Groupon shares on the secondary market at like 30 or 32 a share and that it must really suck to be them because they have to hold for the 180 days.
  - firefoxman1 15y ago
    Ouch, there goes that idea. Though it might be worthwhile to buy into shares on the secondary market now and sell really soon before the IPO date once the initial offering value is officially announced and solidified. That should shoot secondary market shares up to match the public offering price right?
ColinDabritz 15y ago
Facebook has over 800 million active users. (from https://www.facebook.com/press/info.php?statistics https://www.facebook.com/press/info.php?statistics ) With a $100bn valuation, that would be $125 per user. But hey, there's room for growth right? Let's be generous and give them everyone in the world, recently about 7bn potential users total. That's $14.29 per user. It's hard to imagine a business model that can leverage that kind of money per person on average, much less with all the people who are inaccessible for various reasons. It's going to be interesting to see where they go with this.
- firefoxman1 15y ago
  That's just simply valuing each user by dividing Facebook's estimated valuation by the number of users. I'm sure Facebook will not only continue to improve their revenue to constantly please the pencil pushers, but is it so crazy to value each user at $125? Remember, that's not revenue; it's just value per user. Most public companies trade for at least 12 times their earnings. Google is 20x earnings and their market cap is $190 billion. Your math would be assuming that Facebook will have $0 in assets and will be trading with a P/E of 1. Earnings of $6.25 per year, per user (at 800 million users) justifies a $100B valuation at a 20x P/E with $0 in assets and no expected future growth.
  - kunle 15y ago
    I wonder what google's user equivalent value would be (vs FB's $125)
    - catch23 15y ago
      if all 7B people in the world used google, each one would be worth $27. If google only had 800M users like facebook, each one would be worth $237. So maybe FB stock is actually undervalued if one thinks that Facebook provides an equal amount of value compared with Google.
    - firefoxman1 15y ago
      Me too. It doesn't look like Google discloses their worldwide user count. It's got to be over a billion.
1010100101 15y ago
It's all about the short term, as the article makes clear. The biggest winners will be those who can cash out quickly. Goldman and some overseas investors. Long term I think the Facebook _data_ will be sold and resold (licensed) many, many times. It may end up with a company (or companies) that today does not exist. The legacy of Facebook will be the data. We told some antisocial nerd who our friends are. And he sold us out. Facebook the entity will probably fade away, probably by being acquired. The value is the data. They just managed to get an enormous amount of personal private information for free. It's an amazing thing to have 800 million people give you their email address, a list of their friends and possibly additional personal info. Certainly there is potential value there. But that itself does not a business make. In my opinion. We'll see what happens.
- dman 15y ago
  I think the time is ripe for someone to do to facebook what google did to yahoo.
  - 1010100101 15y ago
    The technology is out there, believe me. Making it super user-friendly is another matter. There is a better way to do social networks, I believe. But at present I can only demonstrate it with the command line. The user interface is just not there. We all know Zuckerberg put a lot of effort into user interface. And he did a very good job with that. That is no coincidence.
    - dman 15y ago
      We should talk offline.
- catch23 15y ago
  Honestly, I don't think there's that much value in the data. Most of the big social gaming companies probably have most of that data anyway from scraping the social graph -- if money is in the data, they haven't been mining their data properly.
suivix 15y ago
Does this implicitly mean that top investors or analysts don't expect Google+ to take any market share from Facebook within the next few years?
whyenot 15y ago
That number is so large, it's hard for me to wrap my mind around it. For some reason I keep thinking about the fact that California plans to close 70 state parks in order to save $11 million. That is 0.045% of 24 billion.
- anamax 15y ago
  CA's 2011-2012 budget is just under $86B. Cutting parks to save $11M is saying that there's $86B of other spending that CA thinks are more important than those parks. Note that Zuckerberg will never see the majority of that money. He can't liquidate without taking the price and even if he does, he'll lose a lot to taxes. (CA has no capital gains rate.) Instead, he'll donate a huge fraction to some foundation.
  - vladd 15y ago
    He can use it though as collateral to get real money.
  - beatle 15y ago
    Billionaires (like Larry Ellison) borrow money against his stocks. No tax, no hassles.
    - anamax 15y ago
      Do you really believe that someone would loan $1B backed by $1B in stock gains that haven't been taxed? Yes, you can borrow against stock, but the lender won't give you full value because the stock can go down and they will account for the taxes on unrealized gains. Not to mention that lenders do want their money back. At some point, stock will have to be sold to cover your expenses (including interest on your loans) and that's going to result in taxes paid.
Bud 15y ago
If he gets $24 billion, can he afford to hire some engineers who can fix all the obvious glaring bugs? Facebook has a terrible time figuring out what messages and notifications are new, and which ones I read a month ago, for instance, especially in its iOS apps.
- rwmj 15y ago
  Also it'd be nice if when I scroll down it didn't autoload the exact same set of messages that I've just read.

30 points by kunle 15y ago

deleted 15y ago

[deleted]

GFKjunior 15y ago

That is an absolutely insane number for Facebook.

boyter 15y ago
Totally agree. Considering companies like BMW and Toyota are only worth 20 billion I fail to see how Facebook (even with the hype) can be considered so valuable. I know which one I would rather own if offered the choice.
- spitfire 15y ago
  Facebook. It has all the hype and could IPO soon. Which would I want to run for the next 20 years? A BMW or a Toyota.
  - webista 15y ago
    A Facebook.
- flyt 15y ago
  Does every person in the world have a BMW? Could every person that doesn't have one be a potential customer for BMW? Facebook has the potential to be a database of every human in the world with extensive metadata about those people's friends, interests, and a minute-by-minute record of their every activity and action in the virtual and real world. How much would advertisers pay for access to that anonymized data? How many services can leverage it to build transformative, long-term businesses? How many more "arab springs" will the world see as even more connect and share the human experience with each other in richer, more meaningful ways? Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. Pretending that there's no long term value in that platform is short sighted.
  - inosql 15y ago
    >> Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. Hmmm... I was under impression that Tech companies work at best for 15-20 years and some other company with newer/better technology beats them.
  - rimantas 15y ago
    You should really try to answer your questions. It may turn out less impressive than you imagined.
  - code_duck 15y ago
    > Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. If you replace Facebook with 'the internet', I'll go along with that. You're way too confident in this single company. Facebook is well positioned in the internet, but they're not everything and never will be.

linuxhansl 15y ago

So now it's a $100bn? Wasn't it 60bn a few weeks back... It seems like folks are outdoing each other by proposing higher and higher valuations. At this rate Facebook will be worth more than the US GDP soon. I can't wait for the day they actually have to post revenue numbers. (Don't get me wrong, what they did is pretty cool from a technical viewpoint, but those numbers are insane, and only designed to make a few insiders and many investment bankers rich.)

firefoxman1 15y ago

If one was to buy some Facebook stock on a secondary market, would those shares be converted into public shares when the company IPO's? And if so, would you have to abide by the IPO rules like the minimum hold time?

rationalbeats 15y ago
I was watching Bloomberg West the other day and they were talking about the people who bought Groupon shares on the secondary market at like 30 or 32 a share and that it must really suck to be them because they have to hold for the 180 days.
- firefoxman1 15y ago
  Ouch, there goes that idea. Though it might be worthwhile to buy into shares on the secondary market now and sell really soon before the IPO date once the initial offering value is officially announced and solidified. That should shoot secondary market shares up to match the public offering price right?

ColinDabritz 15y ago

Facebook has over 800 million active users. (from https://www.facebook.com/press/info.php?statistics https://www.facebook.com/press/info.php?statistics ) With a $100bn valuation, that would be $125 per user. But hey, there's room for growth right? Let's be generous and give them everyone in the world, recently about 7bn potential users total. That's $14.29 per user. It's hard to imagine a business model that can leverage that kind of money per person on average, much less with all the people who are inaccessible for various reasons. It's going to be interesting to see where they go with this.

firefoxman1 15y ago
That's just simply valuing each user by dividing Facebook's estimated valuation by the number of users. I'm sure Facebook will not only continue to improve their revenue to constantly please the pencil pushers, but is it so crazy to value each user at $125? Remember, that's not revenue; it's just value per user. Most public companies trade for at least 12 times their earnings. Google is 20x earnings and their market cap is $190 billion. Your math would be assuming that Facebook will have $0 in assets and will be trading with a P/E of 1. Earnings of $6.25 per year, per user (at 800 million users) justifies a $100B valuation at a 20x P/E with $0 in assets and no expected future growth.
- kunle 15y ago
  I wonder what google's user equivalent value would be (vs FB's $125)
  - catch23 15y ago
    if all 7B people in the world used google, each one would be worth $27. If google only had 800M users like facebook, each one would be worth $237. So maybe FB stock is actually undervalued if one thinks that Facebook provides an equal amount of value compared with Google.
  - firefoxman1 15y ago
    Me too. It doesn't look like Google discloses their worldwide user count. It's got to be over a billion.

1010100101 15y ago

It's all about the short term, as the article makes clear. The biggest winners will be those who can cash out quickly. Goldman and some overseas investors. Long term I think the Facebook _data_ will be sold and resold (licensed) many, many times. It may end up with a company (or companies) that today does not exist. The legacy of Facebook will be the data. We told some antisocial nerd who our friends are. And he sold us out. Facebook the entity will probably fade away, probably by being acquired. The value is the data. They just managed to get an enormous amount of personal private information for free. It's an amazing thing to have 800 million people give you their email address, a list of their friends and possibly additional personal info. Certainly there is potential value there. But that itself does not a business make. In my opinion. We'll see what happens.

dman 15y ago
I think the time is ripe for someone to do to facebook what google did to yahoo.
- 1010100101 15y ago
  The technology is out there, believe me. Making it super user-friendly is another matter. There is a better way to do social networks, I believe. But at present I can only demonstrate it with the command line. The user interface is just not there. We all know Zuckerberg put a lot of effort into user interface. And he did a very good job with that. That is no coincidence.
  - dman 15y ago
    We should talk offline.
catch23 15y ago
Honestly, I don't think there's that much value in the data. Most of the big social gaming companies probably have most of that data anyway from scraping the social graph -- if money is in the data, they haven't been mining their data properly.

suivix 15y ago

Does this implicitly mean that top investors or analysts don't expect Google+ to take any market share from Facebook within the next few years?

whyenot 15y ago

That number is so large, it's hard for me to wrap my mind around it. For some reason I keep thinking about the fact that California plans to close 70 state parks in order to save $11 million. That is 0.045% of 24 billion.

anamax 15y ago
CA's 2011-2012 budget is just under $86B. Cutting parks to save $11M is saying that there's $86B of other spending that CA thinks are more important than those parks. Note that Zuckerberg will never see the majority of that money. He can't liquidate without taking the price and even if he does, he'll lose a lot to taxes. (CA has no capital gains rate.) Instead, he'll donate a huge fraction to some foundation.
- vladd 15y ago
  He can use it though as collateral to get real money.
- beatle 15y ago
  Billionaires (like Larry Ellison) borrow money against his stocks. No tax, no hassles.
  - anamax 15y ago
    Do you really believe that someone would loan $1B backed by $1B in stock gains that haven't been taxed? Yes, you can borrow against stock, but the lender won't give you full value because the stock can go down and they will account for the taxes on unrealized gains. Not to mention that lenders do want their money back. At some point, stock will have to be sold to cover your expenses (including interest on your loans) and that's going to result in taxes paid.

Bud 15y ago

If he gets $24 billion, can he afford to hire some engineers who can fix all the obvious glaring bugs? Facebook has a terrible time figuring out what messages and notifications are new, and which ones I read a month ago, for instance, especially in its iOS apps.

rwmj 15y ago
Also it'd be nice if when I scroll down it didn't autoload the exact same set of messages that I've just read.