4 ms·

Why oh Why is the headline about the stock price? Apple's price is $585ish right now. Apple is not 10 times more expensive than Facebook would be-- only a bit

by nirvana 14y ago

Why oh Why is the headline about the stock price? Apple's price is $585ish right now. Apple is not 10 times more expensive than Facebook would be-- only a bit more than 5 times as expensive. Facebook's price range is around $86B. It seems a lot of people want to buy a car for a "monthly payment they can afford" and car dealers have long sold people terrible terms and terribly overpriced cars by structuring the "monthly payment" lower so the person thinks the car is cheaper. Its amazing people fall for this. Yet people react the same way to stock prices and NYT is putting the stock price in the headline? How about "Rather than the $100B expected, Facebook is set to IPO at around $86B". And more importantly-- and relevant to anyone who might want to buy the stock-- what's that work out to as a PE[1]? Doesn't appear anywhere in the NYT article that I could see. So, is $86B expensive? Cheap? We don't know. [1] On a trailing twelve months basis. I'm sure its in the prospectus, and anybody with financial literacy will look it up before buying the stock, but I still bet that a lot of people will say "$35? I can afford $35!" or "I've got $3,500 in my brokerage, I'll buy 100 shares! Can you imagine what those 100 shares will be worth when Facebook catches up to google and is priced at $350 a share?!" I don't think Facebook will be worth $860B+ in the next decade.

CyrusL 14y ago
Because Facebook hasn't split it's stock in a while, so talking about price per share has a common meaning for everyone that owns shares. I would imagine the majority of people who own Facebook shares know exactly how many shares they own and not an exact percentage of the company.
- deleted 14y ago
  [deleted]
walru 14y ago
As the phrase goes, a fool and his money are soon parted. Along the same mindset are people who want to wait for a split to get in. I always chuckle a little inside when I hear that and then try to educate on why that's not necessarily a good thing. Back to Facebook. I haven't looked at the financials, but regardless of what they are it's safe to say the share price will rise quickly due to the reason you stated, and that's of course why they did it. A lot casual investors will see this as a way to fund their child's college education and jump in as soon as they can, no matter what the mark-up. Who knows, maybe this is the next MSFT or AAPL. We'll see where everything settles after the irrational exuberance of the IPO hits. I don't think this will be another GRPN or ZNGA. Even though they were both rather popular, neither of them had the number of eyes on them that Facebook does. This is set to be the most oversubscribed IPO in as long as I can remember.
- gbog 14y ago
  > Who knows, maybe this is the next MSFT or AAPL. Or the next bubble? Seriously, if you are young enough there is nothing easier and more compelling than leaving Facebook, and Facebook cares a lot about having young people. Why is it so easy to leave? Because youngster do not like their past, they do not like to see themselves as kids. It took a very long time for me to be able to look at a picture of my younger self without instinctive rejection. Only when you are on the "other side" of life that you value past pictures of your life. Why was Instagram so successful? Some other may hvae said it but still, what strikes me the most is why so many people did use Instagram app to share pics instead of Facebook app. It can't be solely based on UI diffs. It is more because Facebook is perceived as an archive where everything goes if anyone is interested, a trashcan if you will. I'll not bet a cent on FB. Moreover, we HN readers should not put all our eggs in the same bag, our work, interests, knowledge, passions are anchored to technologies, let's anchor our bank accounts to some other place.
deleted 14y ago
[deleted]
hkmurakami 14y ago
>How about "Rather than the $100B expected, Facebook is set to IPO at around $86B". I wonder what the people who bought FB shares in the secondary market at nearly $100B valuation are thinking right now. (Though I guess the stock is bound to pop on opening day)
igorsyl 14y ago
You are right from a technical point of view. However the psychology is very different.
jpdoctor 14y ago
> Why oh Why is the headline about the stock price? That should tell you everything you need to know about the buyers. It's gonna be a sheep shearing.
gsharm 14y ago
Mark has gathered a lot of great people, and they're focused. I wouldn't underestimate them.
LaGrange 14y ago
"It seems a lot of people want to buy a car for a "monthly payment they can afford" and car dealers have long sold people terrible terms and terribly overpriced cars by structuring the "monthly payment" lower so the person thinks the car is cheaper. Its amazing people fall for this." Because people actually know they're getting ripped off, but they need the car, and they can't afford anything above the "monthly payment" — not buying the car later, not paying a higher payment. To reap the rewards in x years you first have to survive them. Of course, this doesn't apply to the IPO anymore.
seanalltogether 14y ago
> "Its amazing people fall for this." I imagine for the common man, "investing" is nothing more then betting on who will win the popularity contest. None of us will be able to invest in facebook, we're just buying the chips off of those that did.
adamtmca 14y ago
This is an article on dealbook - everyone reading knows the difference between market cap and price per share and the market cap is in the first paragraph. Headlines include the price per share of stocks all the time, it doesn't mean the readers or writers are stupid.
- adamtmca 14y ago
  Also, price earnings would be a pretty foolish approach to valuing Facebook - I wouldn't be so sure that you are so much more sophisticated than the imaginary bozos you are criticizing.

by nirvana 14y ago

CyrusL 14y ago

Because Facebook hasn't split it's stock in a while, so talking about price per share has a common meaning for everyone that owns shares. I would imagine the majority of people who own Facebook shares know exactly how many shares they own and not an exact percentage of the company.

deleted 14y ago
[deleted]

walru 14y ago

As the phrase goes, a fool and his money are soon parted. Along the same mindset are people who want to wait for a split to get in. I always chuckle a little inside when I hear that and then try to educate on why that's not necessarily a good thing. Back to Facebook. I haven't looked at the financials, but regardless of what they are it's safe to say the share price will rise quickly due to the reason you stated, and that's of course why they did it. A lot casual investors will see this as a way to fund their child's college education and jump in as soon as they can, no matter what the mark-up. Who knows, maybe this is the next MSFT or AAPL. We'll see where everything settles after the irrational exuberance of the IPO hits. I don't think this will be another GRPN or ZNGA. Even though they were both rather popular, neither of them had the number of eyes on them that Facebook does. This is set to be the most oversubscribed IPO in as long as I can remember.

gbog 14y ago
> Who knows, maybe this is the next MSFT or AAPL. Or the next bubble? Seriously, if you are young enough there is nothing easier and more compelling than leaving Facebook, and Facebook cares a lot about having young people. Why is it so easy to leave? Because youngster do not like their past, they do not like to see themselves as kids. It took a very long time for me to be able to look at a picture of my younger self without instinctive rejection. Only when you are on the "other side" of life that you value past pictures of your life. Why was Instagram so successful? Some other may hvae said it but still, what strikes me the most is why so many people did use Instagram app to share pics instead of Facebook app. It can't be solely based on UI diffs. It is more because Facebook is perceived as an archive where everything goes if anyone is interested, a trashcan if you will. I'll not bet a cent on FB. Moreover, we HN readers should not put all our eggs in the same bag, our work, interests, knowledge, passions are anchored to technologies, let's anchor our bank accounts to some other place.

deleted 14y ago

[deleted]

hkmurakami 14y ago

>How about "Rather than the $100B expected, Facebook is set to IPO at around $86B". I wonder what the people who bought FB shares in the secondary market at nearly $100B valuation are thinking right now. (Though I guess the stock is bound to pop on opening day)

igorsyl 14y ago

You are right from a technical point of view. However the psychology is very different.

jpdoctor 14y ago

> Why oh Why is the headline about the stock price? That should tell you everything you need to know about the buyers. It's gonna be a sheep shearing.

gsharm 14y ago

Mark has gathered a lot of great people, and they're focused. I wouldn't underestimate them.

LaGrange 14y ago

"It seems a lot of people want to buy a car for a "monthly payment they can afford" and car dealers have long sold people terrible terms and terribly overpriced cars by structuring the "monthly payment" lower so the person thinks the car is cheaper. Its amazing people fall for this." Because people actually know they're getting ripped off, but they need the car, and they can't afford anything above the "monthly payment" — not buying the car later, not paying a higher payment. To reap the rewards in x years you first have to survive them. Of course, this doesn't apply to the IPO anymore.

seanalltogether 14y ago

> "Its amazing people fall for this." I imagine for the common man, "investing" is nothing more then betting on who will win the popularity contest. None of us will be able to invest in facebook, we're just buying the chips off of those that did.

adamtmca 14y ago

This is an article on dealbook - everyone reading knows the difference between market cap and price per share and the market cap is in the first paragraph. Headlines include the price per share of stocks all the time, it doesn't mean the readers or writers are stupid.

adamtmca 14y ago
Also, price earnings would be a pretty foolish approach to valuing Facebook - I wouldn't be so sure that you are so much more sophisticated than the imaginary bozos you are criticizing.