10 ms·

Facebook to File for IPO Next Week

282 points by james-fend 15y ago

nchuhoai 15y ago
Just out of curiosity, why is Facebook doing this? I'm unfortunately not very knowledgeable on the field of IPOs, but aren't IPOs usually just needed to raise money? I always thought Facebook is in a position where it does not need to raise money, since it gets sufficient revenue, and being public has its own disadvantages?
- pedalpete 15y ago
  I'm no expert, but I believe that by issuing common stock traded in a public exchange, employees and current common stock holders will be more easily able to sell their stocks, thereby making these people more liquid. It could have advantages in hiring, where now, people can actually realize the value by selling their options/stock.
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- pilom 15y ago
  The founders and everyone else with current equity in Facebook need a liquidity event. They are all collectively sitting on $100 Billion worth of value but right now the only way for them to see anything from that value is to collect their share of the profits (if Facebook is even distributing profits as opposed to rolling them into future growth spending). The IPO gives them a chance to actually collect some cash for the value of their shares and live like the millionaires their tax returns say they should be.
  - gfodor 15y ago
    How is this true anymore with secondary markets? Surely the founders and first employees are all rich by now.
    - chollida1 15y ago
      There are often restrictive covenants on employee's wrt what they can sell of their vested stock when a company is private. The largest secondary market (secondaryMarket) allows the company to list the terms of who, how and when their stock can be traded.
    - trotsky 15y ago
      I believe that facebook won't allow current employees to trade on the secondary markets (though obviously there will be exceptions to that rule). I also believe that it's been years since facebook has been compensating with actual stock (since '07?), my understanding is that they take the form of restricted stock units that convert into stock once the company is public. This was to avoid breaking 500 shareholders at the time. I doubt any of those are a primary concern - I think it's much more likely that since they broke 500 shareholders last year they've just assumed they would. With a calm, up market it's probably a better time to IPO than recent conditions. Being able to put $10B in the bank for a rainy day is nothing to sneeze at.
  - ojbyrne 15y ago
    My understanding is that the IPO is because of the 500 shareholder rule: http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-person-threshold/ http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-...
    - guan 15y ago
      The 500 shareholder rule requires the companies covered to register with the SEC, but not necessarily to publicly list their stock. They could register and stay private. However, registration means that they have to publish almost the same information as public companies do and be subject to many of the same regulations. Since there are some benefits to going public, such as liquidity for current shareholders, few companies choose to register and stay private for very long.
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- smanek 15y ago
  The SEC requires private companies that have more than 500 shareholders to file basically the same paperwork/disclosures that a public company has to. FB is probably nearing (or over) the 500 shareholder limit. Since they are going to go through most of the downside involved with an IPO anyways, they might as well get some cash too. Plus, share/option holders (employees, investors, etc) are probably clamoring for liquidity. It's great if you own a hundred million dollars of FB stock on paper - but it's even better if you have the option to sell and diversify your holdings.
  - encoderer 15y ago
    Facebook has skirted this for a year now. They sold a bloc of shares to, IIRC, Goldman Sachs who runs it like a private equity fund, selling shares of the fund to as many of its rich clients as possible. In other words, they NAT'ed the shares.
    - tim_h 15y ago
      What does it mean that they "NAT'ed the shares"?
      - veyron 15y ago
        like the networking NAT (network address translation). To facebook, goldman sachs is a single investor. However, many individual investors are part of that GS banner. In much the same way, with a NAT, there may be many computers within an internal network (but to the outside world there is a single external IP address)
- necrecious 15y ago
  I would assume for the benefit of the last round of investors and employees.
- andrewhillman 15y ago
  FB is going public because they have a lot of investors/early employees who want liquidity. I think FB is going to file for IPO the day after they hit 1 Billion "active" users, which is very likely to be soon. That would be some impressive news to piggy-back on an IPO announcement.
bitsweet 15y ago
What would the world look like if Facebook IPOs and Apple immediately buys them out with their horde of cash?
- loganfrederick 15y ago
  Considering CNBC on the TV near my desk just said Facebook is going to be valued between $75 billion and $100 billion, I would say Apple is not going to make that acquisition.
- radicaldreamer 15y ago
  Typically, the number of shares available on the public market at IPO time won't give anyone a controlling share- even if they bought all of the available shares.
- thetrendycyborg 15y ago
  Wouldn't happen. You can't just make huge purchases on the stock market. They'd have to iceberg that over such a long time I could never imagine it, and even then it would definitely get noticed. They'd have to do a heck of a lot of paperwork too, it would need a lot of scrutiny.
- alpb 15y ago
  That's not a piece of cake. Buying a company is not just buying its assets —employees, database, source code etc, but also acquiring its culture and it is really hard to sustain a culture. There should be a reason behind why Apple buys Facebook. Does it want user base, for what? Does it want employees or the project idea? Not that simple as many of you already know.
- raldi 15y ago
  They're only selling 10% of the company, according to this report.
- philwelch 15y ago
  What on earth would Apple do with Facebook? Apple, by virtue of actually making things people want to buy, has massive profit margins compared to Facebook, and can more usefully spend their horde of cash on, say, cornering the market on NAND flash.
bilalhusain 15y ago
for the lazy tweets - https://twitter.com/search?q=facebook+ipo https://twitter.com/search?q=facebook+ipo google results for past 24 hrs - https://www.google.com/search?q=facebook%20ipo&tbs=qdr:d https://www.google.com/search?q=facebook%20ipo&tbs=qdr:d
untog 15y ago
It'll be interesting to see what Facebook employees do once the IPO goes through. There must be a good number that want to break off and do their own thing, but are sitting on stock they don't want to lose. It'll be interesting to see what ideas/startups they come up with. Didn't the same happen when Google IPO'd?
- necrecious 15y ago
  They probably have to wait a bit before selling their shares. So you won't see an exodus until probably a year or two down the road.
  - CyrusL 15y ago
    The lockup is 180 days
    - necrecious 15y ago
      for vested shares. I am assuming most will not have all their shares vested yet.
      - rationalbeats 15y ago
        Really? 4 year to vest for most companies here so if you were hired in winter of 2008 into spring of 09 all of those shares will be vested by time the lock up expires. That is assuming they file next week go through the 3-4 month quiet period and revisions to their S-1 and then IPO late spring, maybe June and then the lock up expires in December 2012.
- arctangent 15y ago
  I think the canonical example (but not necessarily the first) is the "PayPal Mafia" [1]. Many early PayPal employees went on to found successful companies in the wake of the dot-com bust at the end of the nineties. [1] http://en.wikipedia.org/wiki/PayPal_Mafia http://en.wikipedia.org/wiki/PayPal_Mafia
senthilnayagam 15y ago
IPO is inevitable but timing is not right, groupon, zynga, LinkedIn, pandora are all trading at very low valuations and so is investor sentiment
- byrneseyeview 15y ago
  GRPN: 9.5X sales ZNGA: 6.5X sales LNKD: 16.2X sales P: 8.7X sales S&P 500: 1.3X sales. It appears that valuations are very high right now. The stocks are down from their peaks—-in other words, investors are not at a record level of optimism about these companies. But a fair assessment is that they've gone from "Wildly optimistic" to "Optimistic."
  - lpolovets 15y ago
    What's interesting is that even the most aggressive ratio among these companies, the 16.2X, would value Facebook at approximately $60 billion. And yet, the company is expected to offers shares at a valuation of $75-$100 billion.
    - tim_h 15y ago
      The reported $3.8 billion in FB revenue is not an official number. It came from a CNBC reporter who cited undisclosed sources. Official revenue would have to be about $6 billion for FB to have the 16x ratio.
      - tim_h 15y ago
        Why the downvotes? The parent poster used $3.8 billion to come up with the $60 billion estimate (3.8 * 16.2 is approx 60). Isn't it true that we don't officially know what Facebook's revenue is? I was merely trying to point out that 3.8 may not be an accurate number. Then I went on to say approx how much revenue Facebook would need in order to have a 16x ratio given the current estimated valuation of $100 billion.
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CyrusL 15y ago
I took part in SecondMarket's 1/18/12 Facebook auction and was unaware of any trading being halted for that week. Does anyone know what normal IPO timelines are? My uneducated expectation is that shares begin trading something like 3-6 months after filing the prospectus.
aviherschman 15y ago
If facebook goes through with this. How would this effect the privacy of their users?
joejohnson 15y ago
Does anyone know how long to expect between the filing date and the IPO date?
- r4vik 15y ago
  If they file next week then mid-April would be reasonable for the IPO to take place
- MichaelApproved 15y ago
  Typically takes about 10-12 weeks. http://www.quora.com/How-long-does-it-take-between-a-company-filing-to-go-public-IPO-and-the-IPO-itself-to-happen http://www.quora.com/How-long-does-it-take-between-a-company...
philwelch 15y ago
Well, now we get to see their financials. This hasn't been an encouraging step for other recent IPOs, like Groupon, and at least their business model involves people actually paying them. Unless Facebook's profitability is much better, the other shoe's going to drop and things might get pretty rough.
- samstave 15y ago
  There is going o be way too much FB worship in the near future. I expect that this will be hyped to high hell, and with the insidious Goldman Sachs running the IPO - I expect their value to be enourmous - regardless of their actual financials.
  - zecho 15y ago
    Wall Street Journal says it's likely going to be Morgan Stanley leading the IPO.
    - samstave 15y ago
      Ah, thanks - I thought it was previously stated that GS was running it - Maybe that was due to the GS leading the most recent investment channel they had... I don't recall the details of how that was setup.
RuggeroAltair 15y ago
Well, honestly I think that buying Facebook shares right now is a high risk move. While it is possible maybe to forecast some ups and downs in the immediate following days, if the evaluation actually goes to 100 billions it'd look scary to me. I'm not saying that Facebook is dying or that it's gonna die anytime soon, but I am not able to foresee any significant growth. The article compared, with sort of negative terms, Facebook's IPO to Google's, saying that google didn't even impress that much when it went public. But we all know here, that Wall Street made a mistake with Google, since now their shares now are worth 5 times as much as they were at the opening. So, my question is, how can Facebook ever be worth half a trillion dollars? What should the company do to get evaluated 5 times as much as it is now? At least with the number of users, it seems to me that they can't be too far from their natural limits. Facebook is a company certainly with great minds and ideas, but after all it's a website, and I'm not sure people will want to stick around for so much longer on just a website. It seems unfeasible to me that people will stop using the rest of internet, just doing everything on Facebook. Sure, they can improve a million things (like a real search in Facebook posts, or ways of sharing more complicated things, or better off site integration (which is already pretty good though), but at the same time they can't just open too much, or people will just start migrating. Yet, if they stay too close, people will get bored and start migrating anyways. Sure, they can start having actual physical products and increase their presence on different markets, but there are lots of tradeoffs for that too. People won't eventually be happy to have a anything-Facebook. So, maybe I'm wrong, but I tend to believe that this might be one of the highest points that Facebook can reach. I'm sure it can still grow, but I can't expect a growth of orders of magnitudes, it just seems unreasonable. Maybe it's just that I got bored of Facebook's social life a long time ago and ended up spending very little time on it, almost using it as an email server for certain friends. But I certainly don't think that things like timeline can do this huge difference. To me, timeline is just another improvement (maybe) to avoid people to get bored after a while. One of the constant and frequent improvements and changes that every feature/product has to do to feel alive, but can anyone see any change that could make this company much bigger than what it already is? If I were Zuckerberg I would probably sell a bunch of my shares and buy a bunch of companies, without necessarily integrating them into Facebook, you never know...
- 15y ago
bproper 15y ago
And of course, the entire social media sector surges on news of the IPO. http://www.streetinsider.com/IPOs/Entire+Social,+Online+Media+Sector+Surging+on+Reports+of+Facebook+IPO+Filing+Next+Week+(SINA)+(GRPN)+(QPSA)+(RENN)+(more)/7114813.html http://www.streetinsider.com/IPOs/Entire+Social,+Online+Medi...
mkr-hn 15y ago
I'm looking forward to a good IPO. It feels like the economy is on the rebound for real, and good news out of this could help.
albertsun 15y ago
Why is this a link to Mashable when all the reporting work and original information is from the Wall Street Journal? http://online.wsj.com/article/SB10001424052970204573704577187062821038498.html http://online.wsj.com/article/SB1000142405297020457370457718...
- benologist 15y ago
  That's what professional blogging is - rewrite someone's article, hope you hit the news aggregators first.
- amirmc 15y ago
  I can see the Mashable article but I can't see the WSJ article (presumably because I'm not a subscriber).
  - jlarocco 15y ago
    That's odd. I can read the entire WSJ article, and I'm not a subscriber either. However, if I click links to other articles about half the time I only get the first paragraph.
    - lbotos 15y ago
      As far as I remember the WSJ does some referrer magic that if you have the right referrer it will let you read the whole article. Otherwise you are greeted with a subscribe link. This has been my experience in the past.
      - davej 15y ago
        Yeah, usually if you google the article's title and enter the site through a search engine then you can read the full article.
  - jcampbell1 15y ago
    The article is being blocked by adblock. Pause adblock, and you should see the article.
joelmaat 15y ago
Damn that 2009 job request of mine. I coulda, woulda, and shoulda. Haha.
mkramlich 15y ago
I wonder if the timing has to do with Google's recent "hey let's fuck up our core feature!" (search)
stevenj 15y ago
I'm long Facebook over the next 20 years or so. So I'm going to buy shares.
outside1234 15y ago
this is great news - end of the hype era and the beginning of the reality and earnings era for Facebook.
aresant 15y ago
Here's why I am going to buy: Google's Retargeting product drives insanely strong conversions for clients vs. their traditional adwords. You're able to re-reach folks that, by arriving on your site in the first place, have categorized themselves as interested and, as a result, close at a much higher rate. Google's recent move to consolidate privacy policies, and in effect, sets of customer data is going to provide massively better targeting capabilities. As a result they'll be able to sell the exact same ad-space to advertisers and yet advertisers will see better results, thanks to better targeting. In the "bid-for-space" model this will translate to higher ECPM to Goog, to site owners, etc. Now, enter FB, coiner of the "Social graph" and consolidator of all the things and people. They are doubtlessly working to build and improve their advertising products. They are going to earmark a lot of that $100b to buy large advertising businesses, just like Goog bought AdMob etc, that they believe they can improve ECPMs on. Is it speculative? Absolutely. Does $100b already have a lot of this expected upside baked-in? No doubt. But still, I have seen the future of online advertising and it be profitable. He with the most customer data wins, and FB has that in abundance.
gojomo 15y ago
The S-1 filing will almost certainly contain enough info to allow my bets with jacquesm and il, that Facebook's revenues would reach $2B/yr by 2014, to settle (2 years early!): http://news.ycombinator.com/item?id=689993 http://news.ycombinator.com/item?id=689993 http://news.ycombinator.com/item?id=1163144 http://news.ycombinator.com/item?id=1163144 Would still be happy to take $200 in Facebook stock instead. :)
- ajkessler 15y ago
  Revenue is (estimated at) already over $4b a year: http://www.bloomberg.com/news/2011-09-20/facebook-revenue-will-reach-4-27-billion-emarketer-says-1-.html http://www.bloomberg.com/news/2011-09-20/facebook-revenue-wi...
  - pepdek 15y ago
    This is the IPO PR tour. Similar to Groupon's hype and retreat.
    - gojomo 15y ago
      I'll bet you that with Facebook, there's no Groupon-like 50%-restatement. To be more concrete, between first and final S-1, I'll say no more than a 5% restatement of revenues in the downward direction. Facebook is not in the same panicked 'damn the torpedos' rush as Groupon was.
pathik 15y ago
There hardly seems to be much upside left. Most of the potential for appreciation has already been milked by late stage VCs (DST), Goldman's preferred clients, and investors on SharesPost and Second Market. This probably won't be a Google or Amazon. But then, 5 years down the line, who knows.
zotz 15y ago
I wonder if the timeline being made mandatory is tied to the IPO somehow.
ArchD 15y ago
FB is very well-known by virtue of its huge user base. This probably means that many people from among its user base will consider buying at the IPO. Whether or not the stock is "correctly price", only a small fraction of that huge user base enamored with FB needs to buy it at that price for the price to be supported.
gersh 15y ago
What is the history of IPOs for companies traded on private market exchanges? Does an official IPO give the company a pop?
psychotik 15y ago
It would be awesome if Apple would spend a small fraction of their cashpile to buy all outstanding Facebook stock. ;)
joelrunyon 15y ago
Groupon Zynga Is anyone paying attention? Just because a company has a massive user base, big popularity, and lots of VCs, doesn't mean it has a great business model. Sure,you can buy shares, watch them triple in the first 24 and dump them, but when the dust settles, what really happens? Groupon is trading at $20.04. It IPO'd at $20. Zynga is trading at $10.05. It IPO'd at $10. Good for the VC's, finally getting a return on their money and all, but it doesn't seem that the companies are really doing much to deserve the hype. Facebook is presumably making money, and has a crap-load of user-data, but 100 Billion dollar valuation? Maybe based on what people are willing to pay for it, in the hype to get some of it's stock, but its revenues were 2.5 Billion last year. A valuation that's 50x their revenues seems a little steep to me - but again, that could just be me.
- 3pt14159 15y ago
  If that scares you look at sales force 5500 p/e and a 15B valuation. For SaaS software. Insanity. (Disclaimer, I have a vested interest in this stock going down.)
  - spitfire 15y ago
    I had never looked at sales forces' P/E before. It's at 7700 right now. Insanity.
- pwaring 15y ago
  It is a daft valuation - for $100bn you could buy the big three quoted supermarkets in the UK (Sainsbury's, Tesco and Morrisons) and control 50% of a market whose main product (food) is a necessity. Or you could do the same in retail banking, again a necessity in the modern world. Or you could buy Facebook, with $2-3bn in revenue and a big database of users which they haven't really worked out how to monetise yet.
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csomar 15y ago
Facebook can be the next big thing. Bigger than it is now, much more bigger. Facebook have a competitive edge: influence. Facebook is like a drug. It's addictive because it makes you live in an idealized life. You feel like a celebrity and getting 5 likes on a status update is like consuming nicotine. So you keep updating, commenting and liking. And you keep getting delighted. The next big thing that Facebook can do is to integrate with businesses (like restaurants, shops...). Since they can influence people, they can generate strong and massive leads. I can see Facebook a trillion dollars business with that. It'll need a genuine organization to do that, but they already did a good progress. *[I'm talking here about my Facebook friends (100% of my friends use Facebook on a daily basis)]

282 points by james-fend 15y ago

Just out of curiosity, why is Facebook doing this? I'm unfortunately not very knowledgeable on the field of IPOs, but aren't IPOs usually just needed to raise money? I always thought Facebook is in a position where it does not need to raise money, since it gets sufficient revenue, and being public has its own disadvantages?

pedalpete 15y ago
I'm no expert, but I believe that by issuing common stock traded in a public exchange, employees and current common stock holders will be more easily able to sell their stocks, thereby making these people more liquid. It could have advantages in hiring, where now, people can actually realize the value by selling their options/stock.
- deleted 15y ago
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pilom 15y ago
The founders and everyone else with current equity in Facebook need a liquidity event. They are all collectively sitting on $100 Billion worth of value but right now the only way for them to see anything from that value is to collect their share of the profits (if Facebook is even distributing profits as opposed to rolling them into future growth spending). The IPO gives them a chance to actually collect some cash for the value of their shares and live like the millionaires their tax returns say they should be.
- gfodor 15y ago
  How is this true anymore with secondary markets? Surely the founders and first employees are all rich by now.
  - chollida1 15y ago
    There are often restrictive covenants on employee's wrt what they can sell of their vested stock when a company is private. The largest secondary market (secondaryMarket) allows the company to list the terms of who, how and when their stock can be traded.
  - trotsky 15y ago
    I believe that facebook won't allow current employees to trade on the secondary markets (though obviously there will be exceptions to that rule). I also believe that it's been years since facebook has been compensating with actual stock (since '07?), my understanding is that they take the form of restricted stock units that convert into stock once the company is public. This was to avoid breaking 500 shareholders at the time. I doubt any of those are a primary concern - I think it's much more likely that since they broke 500 shareholders last year they've just assumed they would. With a calm, up market it's probably a better time to IPO than recent conditions. Being able to put $10B in the bank for a rainy day is nothing to sneeze at.
- ojbyrne 15y ago
  My understanding is that the IPO is because of the 500 shareholder rule: http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-person-threshold/ http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-...
  - guan 15y ago
    The 500 shareholder rule requires the companies covered to register with the SEC, but not necessarily to publicly list their stock. They could register and stay private. However, registration means that they have to publish almost the same information as public companies do and be subject to many of the same regulations. Since there are some benefits to going public, such as liquidity for current shareholders, few companies choose to register and stay private for very long.
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smanek 15y ago
The SEC requires private companies that have more than 500 shareholders to file basically the same paperwork/disclosures that a public company has to. FB is probably nearing (or over) the 500 shareholder limit. Since they are going to go through most of the downside involved with an IPO anyways, they might as well get some cash too. Plus, share/option holders (employees, investors, etc) are probably clamoring for liquidity. It's great if you own a hundred million dollars of FB stock on paper - but it's even better if you have the option to sell and diversify your holdings.
- encoderer 15y ago
  Facebook has skirted this for a year now. They sold a bloc of shares to, IIRC, Goldman Sachs who runs it like a private equity fund, selling shares of the fund to as many of its rich clients as possible. In other words, they NAT'ed the shares.
  - tim_h 15y ago
    What does it mean that they "NAT'ed the shares"?
    - veyron 15y ago
      like the networking NAT (network address translation). To facebook, goldman sachs is a single investor. However, many individual investors are part of that GS banner. In much the same way, with a NAT, there may be many computers within an internal network (but to the outside world there is a single external IP address)
necrecious 15y ago
I would assume for the benefit of the last round of investors and employees.
andrewhillman 15y ago
FB is going public because they have a lot of investors/early employees who want liquidity. I think FB is going to file for IPO the day after they hit 1 Billion "active" users, which is very likely to be soon. That would be some impressive news to piggy-back on an IPO announcement.

bitsweet 15y ago

What would the world look like if Facebook IPOs and Apple immediately buys them out with their horde of cash?

loganfrederick 15y ago
Considering CNBC on the TV near my desk just said Facebook is going to be valued between $75 billion and $100 billion, I would say Apple is not going to make that acquisition.
radicaldreamer 15y ago
Typically, the number of shares available on the public market at IPO time won't give anyone a controlling share- even if they bought all of the available shares.
thetrendycyborg 15y ago
Wouldn't happen. You can't just make huge purchases on the stock market. They'd have to iceberg that over such a long time I could never imagine it, and even then it would definitely get noticed. They'd have to do a heck of a lot of paperwork too, it would need a lot of scrutiny.
alpb 15y ago
That's not a piece of cake. Buying a company is not just buying its assets —employees, database, source code etc, but also acquiring its culture and it is really hard to sustain a culture. There should be a reason behind why Apple buys Facebook. Does it want user base, for what? Does it want employees or the project idea? Not that simple as many of you already know.
raldi 15y ago
They're only selling 10% of the company, according to this report.
philwelch 15y ago
What on earth would Apple do with Facebook? Apple, by virtue of actually making things people want to buy, has massive profit margins compared to Facebook, and can more usefully spend their horde of cash on, say, cornering the market on NAND flash.

bilalhusain 15y ago

for the lazy tweets - https://twitter.com/search?q=facebook+ipo https://twitter.com/search?q=facebook+ipo google results for past 24 hrs - https://www.google.com/search?q=facebook%20ipo&tbs=qdr:d https://www.google.com/search?q=facebook%20ipo&tbs=qdr:d

untog 15y ago

It'll be interesting to see what Facebook employees do once the IPO goes through. There must be a good number that want to break off and do their own thing, but are sitting on stock they don't want to lose. It'll be interesting to see what ideas/startups they come up with. Didn't the same happen when Google IPO'd?

necrecious 15y ago
They probably have to wait a bit before selling their shares. So you won't see an exodus until probably a year or two down the road.
- CyrusL 15y ago
  The lockup is 180 days
  - necrecious 15y ago
    for vested shares. I am assuming most will not have all their shares vested yet.
    - rationalbeats 15y ago
      Really? 4 year to vest for most companies here so if you were hired in winter of 2008 into spring of 09 all of those shares will be vested by time the lock up expires. That is assuming they file next week go through the 3-4 month quiet period and revisions to their S-1 and then IPO late spring, maybe June and then the lock up expires in December 2012.
arctangent 15y ago
I think the canonical example (but not necessarily the first) is the "PayPal Mafia" [1]. Many early PayPal employees went on to found successful companies in the wake of the dot-com bust at the end of the nineties. [1] http://en.wikipedia.org/wiki/PayPal_Mafia http://en.wikipedia.org/wiki/PayPal_Mafia

senthilnayagam 15y ago

IPO is inevitable but timing is not right, groupon, zynga, LinkedIn, pandora are all trading at very low valuations and so is investor sentiment

byrneseyeview 15y ago
GRPN: 9.5X sales ZNGA: 6.5X sales LNKD: 16.2X sales P: 8.7X sales S&P 500: 1.3X sales. It appears that valuations are very high right now. The stocks are down from their peaks—-in other words, investors are not at a record level of optimism about these companies. But a fair assessment is that they've gone from "Wildly optimistic" to "Optimistic."
- lpolovets 15y ago
  What's interesting is that even the most aggressive ratio among these companies, the 16.2X, would value Facebook at approximately $60 billion. And yet, the company is expected to offers shares at a valuation of $75-$100 billion.
  - tim_h 15y ago
    The reported $3.8 billion in FB revenue is not an official number. It came from a CNBC reporter who cited undisclosed sources. Official revenue would have to be about $6 billion for FB to have the 16x ratio.
    - tim_h 15y ago
      Why the downvotes? The parent poster used $3.8 billion to come up with the $60 billion estimate (3.8 * 16.2 is approx 60). Isn't it true that we don't officially know what Facebook's revenue is? I was merely trying to point out that 3.8 may not be an accurate number. Then I went on to say approx how much revenue Facebook would need in order to have a 16x ratio given the current estimated valuation of $100 billion.
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CyrusL 15y ago

I took part in SecondMarket's 1/18/12 Facebook auction and was unaware of any trading being halted for that week. Does anyone know what normal IPO timelines are? My uneducated expectation is that shares begin trading something like 3-6 months after filing the prospectus.

aviherschman 15y ago

If facebook goes through with this. How would this effect the privacy of their users?

joejohnson 15y ago

Does anyone know how long to expect between the filing date and the IPO date?

r4vik 15y ago
If they file next week then mid-April would be reasonable for the IPO to take place
MichaelApproved 15y ago
Typically takes about 10-12 weeks. http://www.quora.com/How-long-does-it-take-between-a-company-filing-to-go-public-IPO-and-the-IPO-itself-to-happen http://www.quora.com/How-long-does-it-take-between-a-company...

philwelch 15y ago

Well, now we get to see their financials. This hasn't been an encouraging step for other recent IPOs, like Groupon, and at least their business model involves people actually paying them. Unless Facebook's profitability is much better, the other shoe's going to drop and things might get pretty rough.

samstave 15y ago
There is going o be way too much FB worship in the near future. I expect that this will be hyped to high hell, and with the insidious Goldman Sachs running the IPO - I expect their value to be enourmous - regardless of their actual financials.
- zecho 15y ago
  Wall Street Journal says it's likely going to be Morgan Stanley leading the IPO.
  - samstave 15y ago
    Ah, thanks - I thought it was previously stated that GS was running it - Maybe that was due to the GS leading the most recent investment channel they had... I don't recall the details of how that was setup.

RuggeroAltair 15y ago

Well, honestly I think that buying Facebook shares right now is a high risk move. While it is possible maybe to forecast some ups and downs in the immediate following days, if the evaluation actually goes to 100 billions it'd look scary to me. I'm not saying that Facebook is dying or that it's gonna die anytime soon, but I am not able to foresee any significant growth. The article compared, with sort of negative terms, Facebook's IPO to Google's, saying that google didn't even impress that much when it went public. But we all know here, that Wall Street made a mistake with Google, since now their shares now are worth 5 times as much as they were at the opening. So, my question is, how can Facebook ever be worth half a trillion dollars? What should the company do to get evaluated 5 times as much as it is now? At least with the number of users, it seems to me that they can't be too far from their natural limits. Facebook is a company certainly with great minds and ideas, but after all it's a website, and I'm not sure people will want to stick around for so much longer on just a website. It seems unfeasible to me that people will stop using the rest of internet, just doing everything on Facebook. Sure, they can improve a million things (like a real search in Facebook posts, or ways of sharing more complicated things, or better off site integration (which is already pretty good though), but at the same time they can't just open too much, or people will just start migrating. Yet, if they stay too close, people will get bored and start migrating anyways. Sure, they can start having actual physical products and increase their presence on different markets, but there are lots of tradeoffs for that too. People won't eventually be happy to have a anything-Facebook. So, maybe I'm wrong, but I tend to believe that this might be one of the highest points that Facebook can reach. I'm sure it can still grow, but I can't expect a growth of orders of magnitudes, it just seems unreasonable. Maybe it's just that I got bored of Facebook's social life a long time ago and ended up spending very little time on it, almost using it as an email server for certain friends. But I certainly don't think that things like timeline can do this huge difference. To me, timeline is just another improvement (maybe) to avoid people to get bored after a while. One of the constant and frequent improvements and changes that every feature/product has to do to feel alive, but can anyone see any change that could make this company much bigger than what it already is? If I were Zuckerberg I would probably sell a bunch of my shares and buy a bunch of companies, without necessarily integrating them into Facebook, you never know...

15y ago

bproper 15y ago

And of course, the entire social media sector surges on news of the IPO. http://www.streetinsider.com/IPOs/Entire+Social,+Online+Media+Sector+Surging+on+Reports+of+Facebook+IPO+Filing+Next+Week+(SINA)+(GRPN)+(QPSA)+(RENN)+(more)/7114813.html http://www.streetinsider.com/IPOs/Entire+Social,+Online+Medi...

mkr-hn 15y ago

I'm looking forward to a good IPO. It feels like the economy is on the rebound for real, and good news out of this could help.

albertsun 15y ago

Why is this a link to Mashable when all the reporting work and original information is from the Wall Street Journal? http://online.wsj.com/article/SB10001424052970204573704577187062821038498.html http://online.wsj.com/article/SB1000142405297020457370457718...

benologist 15y ago
That's what professional blogging is - rewrite someone's article, hope you hit the news aggregators first.
amirmc 15y ago
I can see the Mashable article but I can't see the WSJ article (presumably because I'm not a subscriber).
- jlarocco 15y ago
  That's odd. I can read the entire WSJ article, and I'm not a subscriber either. However, if I click links to other articles about half the time I only get the first paragraph.
  - lbotos 15y ago
    As far as I remember the WSJ does some referrer magic that if you have the right referrer it will let you read the whole article. Otherwise you are greeted with a subscribe link. This has been my experience in the past.
    - davej 15y ago
      Yeah, usually if you google the article's title and enter the site through a search engine then you can read the full article.
- jcampbell1 15y ago
  The article is being blocked by adblock. Pause adblock, and you should see the article.

joelmaat 15y ago

Damn that 2009 job request of mine. I coulda, woulda, and shoulda. Haha.

mkramlich 15y ago

I wonder if the timing has to do with Google's recent "hey let's fuck up our core feature!" (search)

stevenj 15y ago

I'm long Facebook over the next 20 years or so. So I'm going to buy shares.

outside1234 15y ago

this is great news - end of the hype era and the beginning of the reality and earnings era for Facebook.

aresant 15y ago

Here's why I am going to buy: Google's Retargeting product drives insanely strong conversions for clients vs. their traditional adwords. You're able to re-reach folks that, by arriving on your site in the first place, have categorized themselves as interested and, as a result, close at a much higher rate. Google's recent move to consolidate privacy policies, and in effect, sets of customer data is going to provide massively better targeting capabilities. As a result they'll be able to sell the exact same ad-space to advertisers and yet advertisers will see better results, thanks to better targeting. In the "bid-for-space" model this will translate to higher ECPM to Goog, to site owners, etc. Now, enter FB, coiner of the "Social graph" and consolidator of all the things and people. They are doubtlessly working to build and improve their advertising products. They are going to earmark a lot of that $100b to buy large advertising businesses, just like Goog bought AdMob etc, that they believe they can improve ECPMs on. Is it speculative? Absolutely. Does $100b already have a lot of this expected upside baked-in? No doubt. But still, I have seen the future of online advertising and it be profitable. He with the most customer data wins, and FB has that in abundance.

gojomo 15y ago

The S-1 filing will almost certainly contain enough info to allow my bets with jacquesm and il, that Facebook's revenues would reach $2B/yr by 2014, to settle (2 years early!): http://news.ycombinator.com/item?id=689993 http://news.ycombinator.com/item?id=689993 http://news.ycombinator.com/item?id=1163144 http://news.ycombinator.com/item?id=1163144 Would still be happy to take $200 in Facebook stock instead. :)

ajkessler 15y ago
Revenue is (estimated at) already over $4b a year: http://www.bloomberg.com/news/2011-09-20/facebook-revenue-will-reach-4-27-billion-emarketer-says-1-.html http://www.bloomberg.com/news/2011-09-20/facebook-revenue-wi...
- pepdek 15y ago
  This is the IPO PR tour. Similar to Groupon's hype and retreat.
  - gojomo 15y ago
    I'll bet you that with Facebook, there's no Groupon-like 50%-restatement. To be more concrete, between first and final S-1, I'll say no more than a 5% restatement of revenues in the downward direction. Facebook is not in the same panicked 'damn the torpedos' rush as Groupon was.

pathik 15y ago

There hardly seems to be much upside left. Most of the potential for appreciation has already been milked by late stage VCs (DST), Goldman's preferred clients, and investors on SharesPost and Second Market. This probably won't be a Google or Amazon. But then, 5 years down the line, who knows.

zotz 15y ago

I wonder if the timeline being made mandatory is tied to the IPO somehow.

ArchD 15y ago

FB is very well-known by virtue of its huge user base. This probably means that many people from among its user base will consider buying at the IPO. Whether or not the stock is "correctly price", only a small fraction of that huge user base enamored with FB needs to buy it at that price for the price to be supported.

gersh 15y ago

What is the history of IPOs for companies traded on private market exchanges? Does an official IPO give the company a pop?

psychotik 15y ago

It would be awesome if Apple would spend a small fraction of their cashpile to buy all outstanding Facebook stock. ;)

joelrunyon 15y ago

Groupon Zynga Is anyone paying attention? Just because a company has a massive user base, big popularity, and lots of VCs, doesn't mean it has a great business model. Sure,you can buy shares, watch them triple in the first 24 and dump them, but when the dust settles, what really happens? Groupon is trading at $20.04. It IPO'd at $20. Zynga is trading at $10.05. It IPO'd at $10. Good for the VC's, finally getting a return on their money and all, but it doesn't seem that the companies are really doing much to deserve the hype. Facebook is presumably making money, and has a crap-load of user-data, but 100 Billion dollar valuation? Maybe based on what people are willing to pay for it, in the hype to get some of it's stock, but its revenues were 2.5 Billion last year. A valuation that's 50x their revenues seems a little steep to me - but again, that could just be me.

3pt14159 15y ago
If that scares you look at sales force 5500 p/e and a 15B valuation. For SaaS software. Insanity. (Disclaimer, I have a vested interest in this stock going down.)
- spitfire 15y ago
  I had never looked at sales forces' P/E before. It's at 7700 right now. Insanity.
pwaring 15y ago
It is a daft valuation - for $100bn you could buy the big three quoted supermarkets in the UK (Sainsbury's, Tesco and Morrisons) and control 50% of a market whose main product (food) is a necessity. Or you could do the same in retail banking, again a necessity in the modern world. Or you could buy Facebook, with $2-3bn in revenue and a big database of users which they haven't really worked out how to monetise yet.

deleted 15y ago

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csomar 15y ago

Facebook can be the next big thing. Bigger than it is now, much more bigger. Facebook have a competitive edge: influence. Facebook is like a drug. It's addictive because it makes you live in an idealized life. You feel like a celebrity and getting 5 likes on a status update is like consuming nicotine. So you keep updating, commenting and liking. And you keep getting delighted. The next big thing that Facebook can do is to integrate with businesses (like restaurants, shops...). Since they can influence people, they can generate strong and massive leads. I can see Facebook a trillion dollars business with that. It'll need a genuine organization to do that, but they already did a good progress. *[I'm talking here about my Facebook friends (100% of my friends use Facebook on a daily basis)]