6 ms·

FB stock priced at $38/share on Thursday, raises $18.4 billion

48 points by jasondc 14y ago

bluedevil2k 14y ago
It was trading at $32-$34 just a month ago in SecondMarket trading, so it's up about 11% in just the past month, even with the market in general down about 10%. Will open trading at 110 P/E ratio, Google's currently at 18.8. GM announces they are pulling $10M from Facebook advertising because it's completely ineffective. Their latest quarterly results prior to their IPO show that revenue is plateauing, even though their IPO prices in a 30% revenue growth year-over-year for the next 5 years. Most inside investment banks (Goldman e.g.) are dumping more than 50% of their shares. Other than that...great investment opportunity.
- sp332 14y ago
  GM announces they are pulling $10M from Facebook advertising because it's completely ineffective. Don't forget Ford following up and claiming their FB ads are working fine. http://www.autoblog.com/2012/05/17/ford-and-gm-in-twitterfight-over-facebook-advertising/ http://www.autoblog.com/2012/05/17/ford-and-gm-in-twitterfig...
  - debacle 14y ago
    It couldn't be because Ford is a much healthier company than GM and people are more interested in their cars?
    - sp332 14y ago
      Right, their point is there's nothing wrong with Facebook ads.
    - dkrich 14y ago
      You sure about that? Have you compared their financials lately?
      - OstiaAntica 14y ago
        GM is a ward of the U.S. Treasury, Ford never took a bailout. GM's bankrupt GMAC finance arm is another American state-run enterprise, the re-named Ally Bank.
        dkrich 14y ago
        Not sure what your point is. Are they or are they not a substantially weaker company than Ford? When comparing financials between the two one would be very hard-pressed to make a case as to why he believes that it is. And btw, just because the Department of the Treasury has holdings in a company does not make it a "state-run enterprise." At least if you are going to make a sensational statement, try and ground some of it in reality.
  - yumraj 14y ago
    It could very well be, but it could also be that Ford is just using this as a creative marketing opportunity, to piggyback on the GM and FB hype to get their name out. It would be interesting to see if Ford continues with their current FB Ads investment or increases in future.
- chestercheetaz 14y ago
  "BUT everyone's on Facebook!!" ...what could possibly go wrong??
- hullo 14y ago
  As far as I know, GM was never really directly quoted about Facebook ads, short of being characterized in the original WSJ piece as "deciding that paid ads on the site have little impact on consumers' car purchases" and "its marketing team began to question the effectiveness of the ads". My impression from following the ad scene is that it's as much about not being able to measure results than the ads being 'completely ineffective'. Big advertisers like GM are used to having robust analytics behind their buys, and Facebook doesn't (currently) let people tie their purchases in to the same technology (read as: tracking) ecosystem as most other display buys everywhere else on the web. Everyone not selling something on a click-and-buy-me basis is still feeling out the effectiveness. Maybe it's good, maybe it's not. But watch that 10M canceled buy become a 100M buy if the tables are turned and Facebook can figure out how to sell folks on the same advertising tracking their exposed to everywhere else.
- EternalFury 14y ago
  LOL, glad to realize not everyone sees golden tulip bulbs.
- bcjordan 14y ago
  > Will open trading at 110 P/E ratio, Google's currently at 18.8. Khan Academy on P/E Ratios (great joke 4 minutes in): http://www.youtube.com/watch?v=V-rko8jgJ9o http://www.youtube.com/watch?v=V-rko8jgJ9o
- sek 14y ago
  Some investors will lose their money and job. There will be a dramatic aftermath, but that doesn't change the fact that FB has 16B more in it's warchest. I changed my opinion, this could be good for the industry. One big player more who can afford massive buyouts, i rather see this money in the ecosystem than in some retirement funds.
  - ameyamk 14y ago
    Not all 16B is going to go into FB's bank. Insiders are selling in the IPO. So not all of it will into FB's books.
    - sek 14y ago
      Why do they use the word 'raise' then? So 18B are just the value on the shares combined offered at IPO. I wonder how much of it goes to Facebook.
      - pents90 14y ago
        Only 43% goes to FB, which is essentially unprecedented.
- hkmurakami 14y ago
  >Will open trading at 110 P/E ratio, Google's currently at 18.8. Well, for some reference, here's another company that currently trades at an excess of 100 P/E. Amazon, trading at 179.33 P/E. Is Amazon egregiously overpriced? Or are bets on its growth justified?
  - zred 14y ago
    This is just my personal opinion and I'll be the first to admit that I'm conservative with my money. That said, I think that a bet on Facebook's growth might be overreaching. 1. Facebook's profits are declining (by 12%). Revenue is up 43%, but revenue isn't what counts - profits are. Likewise, 43% isn't such an amazing increase. By contrast, Apple's profits are up 117% and their revenue is up 73%. Apple's P/E ratio is around 13. Even if you consider Apple an outlier, Google's profits are up 14% with revenue up 29% and a P/E ratio of around 19. So, in terms of growth, it doesn't look like Facebook is there. They don't seem to show a stronger growth pattern than companies that are trading with much more favorable P/E ratios. 2. Facebook could be a fad. While I think Facebook has much better engineering chops than AOL, Friendster, or MySpace, it's definitely possible that they could suffer the same fate. In a certain light, Facebook is a club and sometimes the crowd up and moves somewhere else. I have to emphasize that I really respect Facebook's engineering and that such strength and willingness to confront hard problems will help them a lot. Still, I remember when everyone used AIM and now everyone I know uses GTalk. 3. Facebook hasn't found a way to monetize users well. I read some estimate that Google earns 10-20x more per user. Facebook is at 900M users. They aren't going to justify such a high price by adding users. They need to figure out how to monetize them. Now, they may very well do that. If you think they will, it might justify that price. If Facebook could get its monetization per user up to Google's level, they would certainly justify that price (shrinking that P/E ratio to 8 or maybe even better). However, that's a big "if" (at least for me). I think that people betting on Facebook are betting that they will be able to figure that problem out. 4. Their mobile app doesn't have ads. To stay in the same place, they need to be able to monetize mobile as well as they've monetized their site. 5. People might become wary of Facebook. I hear a lot more ramblings about privacy and Facebook than privacy and Google. Maybe people feel more confident about Google being able to make money off of them through more traditional means. Maybe people have just felt Facebook trying to force them to be more open for their own ends several times before. 6. People are gunning for Facebook. Facebook has something that isn't making a ton of money, but people really want to be in that space. That's not great. Apple has a bunch of people that want in on mobile, but it's somewhat limited to major players - making a phone takes more than making Instagram in terms of time, money, and diversity of skills. Plus, Apple's making great money. 7. I think that Facebook isn't the best positioned for cool, new, useful things. I think that the mobile telecom industry is going to be flipped upside-down over the next half decade or so with LTE and then LTE Advanced. It's possible that a mandate for neutrality toward VoIP will come down. Google will be in a great position owning Android and GTalk. Apple has the iPhone and FaceTime. Even Microsoft has Windows Phone and Skype. Google and Apple are both working hard on mapping and other geo problems. While I like being kept up on random things in acquaintances lives, GMail and my phone know who I really interact with. -- To be fair, I do think that Amazon is overvalued. While their revenue has grown well, their margins and profits haven't. Frankly, unlike social networking, retail isn't going to be a single-source industry in the future. Amazon will continue to have to compete against other retailers and they may face better organized competition in the future. Plus, when a company can increase its revenue so much and not have its profits go up, it just seems like a business model that relies on such thin margins that an attempt to thicken them leads to great loss of business. -- Again, Facebook very well might justify that price. If they're able to greatly increase their monetization per user, that P/E ratio could drop fast. However, currently people are speculating that social doesn't lend to good monetization. We're also seeing that investors are willing to throw money at this with no monetization strategy (ala Instagram) and that means that Facebook isn't going to be on easy street with the space to itself. Frankly, it isn't always about whether a company will justify a price. It's sometimes about having other options. Apple is trading at a P/E ratio of 13. If we assume that companies hit an equilibrium around 15 for slow-growth companies, Apple could get 15% earnings growth per year and return a little more than 15% per year in the stock market to get to that 15 P/E ratio. By contrast, if Facebook increases earnings 50% per year for 5 years, their P/E ratio would be 17 assuming absolutely no increase in Facebook's share price. To kind of put that growth in perspective, if Facebook's user base grew at that rate for 5 years, everyone on earth would be on Facebook. So, Facebook has to figure out how to increase monetization per user by a good deal, fend off challenges from very smart people, make sure user apathy doesn't happen and that people don't go somewhere else, and make sure that it can adapt to mobile and other cool new things. I'm not saying they won't. I just think that there are places I could put my money that are smoother sailing. Facebook hasn't given me a plan of how they expect to increase their earnings: Zuck has even said that earnings aren't really their concern. In some ways, he's more interested in running a good site that people like - and that's good for me as a Facebook user. However, if earnings don't hockey-stick, that would leave me in an unfortunate position as an investor. Facebook is sustainable in that they're a profitable business. That doesn't mean the share price won't tank at some point if people begin to believe that Facebook will merely remain sustainable rather than hockey-sticking. Zuck is exiting this IPO with $1B in cash. It doesn't matter if Facebook tanks from here on out and he might be happy to see it remain more popular rather than more profitable. I think a lot of companies can operate that way - Patagonia does - but I don't think that's the ethos of those getting in on this IPO (even if it may be Zuck's). I'm indifferent toward being proven wrong - I'd rather risk less and this is just an opinion. I respect Facebook's engineering and they've done a much better job than those who have come before as well as open-sourcing some great stuff. Facebook just hasn't shown me a plan for increasing profits. Without that, I wouldn't bet on that happening - and that's what people are betting on. Likewise, while Amazon has shown me how they intend to continue getting more popular, they haven't shown me increasing profitability. Again, Bezos is interested in creating a great customer experience that I appreciate as a customer. For the most part, I appreciate Facebook - it's reliability, consistency, speed. But that isn't the only thing I'm looking for in an investment - certainly not an investment with such a high P/E ratio. If Amazon's P/E ratio were 8, I would care less about a plan to increase profits - being able to keep them relatively level would be good enough. The same applies to Facebook. And I'm not saying that it won't happen. I just don't yet see how and I don't think Facebook does either - I think they're hopeful that they will figure it out later. They definitely could. I just prefer something more concrete.
melvinmt 14y ago
$18.4 billion dollars is a LOT of cash (to compare, Google raised $2.7 bn with their IPO). They can buy 18 SpaceX's, 2.3 Twitters or, you know, 18 more Instagrams. Their future is minted.
- jlgreco 14y ago
  > "18 SpaceX's, 2.3 Twitters" This industry is so messed up...
  - dguaraglia 14y ago
    I completely agree. When the perceived value of a company whose only asset is a clever idea and some hype is bigger than that of a established company with a real business model (say, Philips) you know you are treading into make-wish territory. But nooo, say that to most people in the industry and they'll chew your head off for being narrow-minded and oblivious to how 'the economics of startups' works.
    - EternalFury 14y ago
      Oh, you will be down-voted times and times again for even posting things like that. It's self-preservation, since a large percentage of current start-ups rely on similarly ad-driven pie-in-the-sky schemes where the best and only possible exit is a sale to Facebook or another large entity with more money than sense.
  - mkramlich 14y ago
    Agreed. One is literally rocket science (ok, engineering) and if things go wrong, people die. The other is something I could code up this weekend, and if things go wrong, a tweet is mistweeted or delayed, oh noes.
EternalFury 14y ago
These "poor" people have earned their cash-out time. Hopefully, it triggers a new VC monsoon in Silicon Valley so that newcomers can finally afford those > $1M houses. :)
- narrator 14y ago
  Check out this redfin graph of San Mateo county $ per square foot. Everyone's taking their house off the market and/or jacking up the price in anticipation. http://www.redfin.com/county/343/CA/San-Mateo-County http://www.redfin.com/county/343/CA/San-Mateo-County
  - EternalFury 14y ago
    Greed knows no bound, clearly. This being said, my rent got jacked up $300 a month. I must leave this place before I start paying to work here.
leif 14y ago
TIL Visa didn't go public until 2008.
beagle3 14y ago
Anyone know how the tax situation is handled for employees? Is there a tax event + lockup for anyone, or do all employees own their shares outright as RSUs with prior 83(b) elections?
TomGullen 14y ago
At $100b valuation it's worth 50% what Google is. This seems ludicrous, Google is far more diverse and actually has a working ad revenue model! I'd rather have 1 Google share than 2 Facebook shares for sure.
- iends 14y ago
  Of course you would: GOOG: $623.05 FB: $38
  - vladd 14y ago
    He may have actually meant share in the sense of percentage: I'd rather have 1% of Google than 2% of Facebook. 1 Google: 203.13 billions (market cap in http://www.google.com/finance?q=GOOG http://www.google.com/finance?q=GOOG ) 2 Facebooks: 2 * 104 billions = 208 billions
    - TomGullen 14y ago
      Yes that's what I meant :)
- waterlesscloud 14y ago
  Google isn't more diverse. Of Google's $37.9 billion in revenue for 2001, $36.5 billion of that came from advertising. Fancy self-driving cars aside, Google is wholly dependent on the success of its ad targeting mechanism. Beat them out for that (and Facebook could potentially do so), and they're done for.
  - vladd 14y ago
    > Beat them out for that (and Facebook could potentially do so) Google searches have purchasing intent, see http://cdixon.org/2012/05/15/facebooks-business-model/ http://cdixon.org/2012/05/15/facebooks-business-model/ .
    - waterlesscloud 14y ago
X4 14y ago
I believed that the time Goldman Sachs winged into the Game (long before the IPO) it would kill Facebook slowly. I can't believe that a valuation for FB can be that high without political corruption. So $18.4 billion for a Social-Network with ~1 billion users, whose only income is using/selling AD-impact valuation Data. (And in the future an AppCenter where users can buy FB credits to play Games.) I think Google and Amazon have more Data to predict and raise AD-impacts than FB will ever have. +The FB code has already been stolen. Every other stock would fall hard, but not FB.
- redwood 14y ago
  It's the opposite: not wall st. screwing SV but SV screwing Wall St. on this one. Facebook is giving itself a super-high valuation, as high as they can get away with, because that way they get as much money from the initial stock sale as possible (rather than seeing Goldman flip their IPO'd stock for a pretty profit to Goldman rather than to Facebook). Since Facebook is the first SV company with a mega-IPO to be truly in tune with Wall St's tricks (LinkedIn totally blew it) there is indeed a good chance their stock price could head south after IPO. On the other hand the hype keeps things going so who knows...
cpeterso 14y ago
Ads are Facebook's and Google's primary source of revenue. I wonder if there will ever be a market for ad-free, subscription-based search or social sites.
389401a 14y ago
Insiders are selling. Insider trades are always based on stronger information than you have and they are never random. There is always a purpose when they are selling. Why are insiders selling pre-IPO? There's a Marketwatch article in the queue.
- mkramlich 14y ago
  A lot of folks would rather have $1M of real money than $10M+ of maybe-someday-maybe money. That's one lesson you can take away from past bubbles and missed sell opportunities. Especially for those who don't have FU-level wealth.
  - 389401a 14y ago
    But these insiders most certainly do have FU-level wealth, and they are selling, pre-IPO.

48 points by jasondc 14y ago

It was trading at $32-$34 just a month ago in SecondMarket trading, so it's up about 11% in just the past month, even with the market in general down about 10%. Will open trading at 110 P/E ratio, Google's currently at 18.8. GM announces they are pulling $10M from Facebook advertising because it's completely ineffective. Their latest quarterly results prior to their IPO show that revenue is plateauing, even though their IPO prices in a 30% revenue growth year-over-year for the next 5 years. Most inside investment banks (Goldman e.g.) are dumping more than 50% of their shares. Other than that...great investment opportunity.

sp332 14y ago
GM announces they are pulling $10M from Facebook advertising because it's completely ineffective. Don't forget Ford following up and claiming their FB ads are working fine. http://www.autoblog.com/2012/05/17/ford-and-gm-in-twitterfight-over-facebook-advertising/ http://www.autoblog.com/2012/05/17/ford-and-gm-in-twitterfig...
- debacle 14y ago
  It couldn't be because Ford is a much healthier company than GM and people are more interested in their cars?
  - sp332 14y ago
    Right, their point is there's nothing wrong with Facebook ads.
  - dkrich 14y ago
    You sure about that? Have you compared their financials lately?
    - OstiaAntica 14y ago
      GM is a ward of the U.S. Treasury, Ford never took a bailout. GM's bankrupt GMAC finance arm is another American state-run enterprise, the re-named Ally Bank.
      - dkrich 14y ago
        Not sure what your point is. Are they or are they not a substantially weaker company than Ford? When comparing financials between the two one would be very hard-pressed to make a case as to why he believes that it is. And btw, just because the Department of the Treasury has holdings in a company does not make it a "state-run enterprise." At least if you are going to make a sensational statement, try and ground some of it in reality.
- yumraj 14y ago
  It could very well be, but it could also be that Ford is just using this as a creative marketing opportunity, to piggyback on the GM and FB hype to get their name out. It would be interesting to see if Ford continues with their current FB Ads investment or increases in future.
chestercheetaz 14y ago
"BUT everyone's on Facebook!!" ...what could possibly go wrong??
hullo 14y ago
As far as I know, GM was never really directly quoted about Facebook ads, short of being characterized in the original WSJ piece as "deciding that paid ads on the site have little impact on consumers' car purchases" and "its marketing team began to question the effectiveness of the ads". My impression from following the ad scene is that it's as much about not being able to measure results than the ads being 'completely ineffective'. Big advertisers like GM are used to having robust analytics behind their buys, and Facebook doesn't (currently) let people tie their purchases in to the same technology (read as: tracking) ecosystem as most other display buys everywhere else on the web. Everyone not selling something on a click-and-buy-me basis is still feeling out the effectiveness. Maybe it's good, maybe it's not. But watch that 10M canceled buy become a 100M buy if the tables are turned and Facebook can figure out how to sell folks on the same advertising tracking their exposed to everywhere else.
EternalFury 14y ago
LOL, glad to realize not everyone sees golden tulip bulbs.
bcjordan 14y ago
> Will open trading at 110 P/E ratio, Google's currently at 18.8. Khan Academy on P/E Ratios (great joke 4 minutes in): http://www.youtube.com/watch?v=V-rko8jgJ9o http://www.youtube.com/watch?v=V-rko8jgJ9o
sek 14y ago
Some investors will lose their money and job. There will be a dramatic aftermath, but that doesn't change the fact that FB has 16B more in it's warchest. I changed my opinion, this could be good for the industry. One big player more who can afford massive buyouts, i rather see this money in the ecosystem than in some retirement funds.
- ameyamk 14y ago
  Not all 16B is going to go into FB's bank. Insiders are selling in the IPO. So not all of it will into FB's books.
  - sek 14y ago
    Why do they use the word 'raise' then? So 18B are just the value on the shares combined offered at IPO. I wonder how much of it goes to Facebook.
    - pents90 14y ago
      Only 43% goes to FB, which is essentially unprecedented.
hkmurakami 14y ago
>Will open trading at 110 P/E ratio, Google's currently at 18.8. Well, for some reference, here's another company that currently trades at an excess of 100 P/E. Amazon, trading at 179.33 P/E. Is Amazon egregiously overpriced? Or are bets on its growth justified?
- zred 14y ago
  This is just my personal opinion and I'll be the first to admit that I'm conservative with my money. That said, I think that a bet on Facebook's growth might be overreaching. 1. Facebook's profits are declining (by 12%). Revenue is up 43%, but revenue isn't what counts - profits are. Likewise, 43% isn't such an amazing increase. By contrast, Apple's profits are up 117% and their revenue is up 73%. Apple's P/E ratio is around 13. Even if you consider Apple an outlier, Google's profits are up 14% with revenue up 29% and a P/E ratio of around 19. So, in terms of growth, it doesn't look like Facebook is there. They don't seem to show a stronger growth pattern than companies that are trading with much more favorable P/E ratios. 2. Facebook could be a fad. While I think Facebook has much better engineering chops than AOL, Friendster, or MySpace, it's definitely possible that they could suffer the same fate. In a certain light, Facebook is a club and sometimes the crowd up and moves somewhere else. I have to emphasize that I really respect Facebook's engineering and that such strength and willingness to confront hard problems will help them a lot. Still, I remember when everyone used AIM and now everyone I know uses GTalk. 3. Facebook hasn't found a way to monetize users well. I read some estimate that Google earns 10-20x more per user. Facebook is at 900M users. They aren't going to justify such a high price by adding users. They need to figure out how to monetize them. Now, they may very well do that. If you think they will, it might justify that price. If Facebook could get its monetization per user up to Google's level, they would certainly justify that price (shrinking that P/E ratio to 8 or maybe even better). However, that's a big "if" (at least for me). I think that people betting on Facebook are betting that they will be able to figure that problem out. 4. Their mobile app doesn't have ads. To stay in the same place, they need to be able to monetize mobile as well as they've monetized their site. 5. People might become wary of Facebook. I hear a lot more ramblings about privacy and Facebook than privacy and Google. Maybe people feel more confident about Google being able to make money off of them through more traditional means. Maybe people have just felt Facebook trying to force them to be more open for their own ends several times before. 6. People are gunning for Facebook. Facebook has something that isn't making a ton of money, but people really want to be in that space. That's not great. Apple has a bunch of people that want in on mobile, but it's somewhat limited to major players - making a phone takes more than making Instagram in terms of time, money, and diversity of skills. Plus, Apple's making great money. 7. I think that Facebook isn't the best positioned for cool, new, useful things. I think that the mobile telecom industry is going to be flipped upside-down over the next half decade or so with LTE and then LTE Advanced. It's possible that a mandate for neutrality toward VoIP will come down. Google will be in a great position owning Android and GTalk. Apple has the iPhone and FaceTime. Even Microsoft has Windows Phone and Skype. Google and Apple are both working hard on mapping and other geo problems. While I like being kept up on random things in acquaintances lives, GMail and my phone know who I really interact with. -- To be fair, I do think that Amazon is overvalued. While their revenue has grown well, their margins and profits haven't. Frankly, unlike social networking, retail isn't going to be a single-source industry in the future. Amazon will continue to have to compete against other retailers and they may face better organized competition in the future. Plus, when a company can increase its revenue so much and not have its profits go up, it just seems like a business model that relies on such thin margins that an attempt to thicken them leads to great loss of business. -- Again, Facebook very well might justify that price. If they're able to greatly increase their monetization per user, that P/E ratio could drop fast. However, currently people are speculating that social doesn't lend to good monetization. We're also seeing that investors are willing to throw money at this with no monetization strategy (ala Instagram) and that means that Facebook isn't going to be on easy street with the space to itself. Frankly, it isn't always about whether a company will justify a price. It's sometimes about having other options. Apple is trading at a P/E ratio of 13. If we assume that companies hit an equilibrium around 15 for slow-growth companies, Apple could get 15% earnings growth per year and return a little more than 15% per year in the stock market to get to that 15 P/E ratio. By contrast, if Facebook increases earnings 50% per year for 5 years, their P/E ratio would be 17 assuming absolutely no increase in Facebook's share price. To kind of put that growth in perspective, if Facebook's user base grew at that rate for 5 years, everyone on earth would be on Facebook. So, Facebook has to figure out how to increase monetization per user by a good deal, fend off challenges from very smart people, make sure user apathy doesn't happen and that people don't go somewhere else, and make sure that it can adapt to mobile and other cool new things. I'm not saying they won't. I just think that there are places I could put my money that are smoother sailing. Facebook hasn't given me a plan of how they expect to increase their earnings: Zuck has even said that earnings aren't really their concern. In some ways, he's more interested in running a good site that people like - and that's good for me as a Facebook user. However, if earnings don't hockey-stick, that would leave me in an unfortunate position as an investor. Facebook is sustainable in that they're a profitable business. That doesn't mean the share price won't tank at some point if people begin to believe that Facebook will merely remain sustainable rather than hockey-sticking. Zuck is exiting this IPO with $1B in cash. It doesn't matter if Facebook tanks from here on out and he might be happy to see it remain more popular rather than more profitable. I think a lot of companies can operate that way - Patagonia does - but I don't think that's the ethos of those getting in on this IPO (even if it may be Zuck's). I'm indifferent toward being proven wrong - I'd rather risk less and this is just an opinion. I respect Facebook's engineering and they've done a much better job than those who have come before as well as open-sourcing some great stuff. Facebook just hasn't shown me a plan for increasing profits. Without that, I wouldn't bet on that happening - and that's what people are betting on. Likewise, while Amazon has shown me how they intend to continue getting more popular, they haven't shown me increasing profitability. Again, Bezos is interested in creating a great customer experience that I appreciate as a customer. For the most part, I appreciate Facebook - it's reliability, consistency, speed. But that isn't the only thing I'm looking for in an investment - certainly not an investment with such a high P/E ratio. If Amazon's P/E ratio were 8, I would care less about a plan to increase profits - being able to keep them relatively level would be good enough. The same applies to Facebook. And I'm not saying that it won't happen. I just don't yet see how and I don't think Facebook does either - I think they're hopeful that they will figure it out later. They definitely could. I just prefer something more concrete.

melvinmt 14y ago

$18.4 billion dollars is a LOT of cash (to compare, Google raised $2.7 bn with their IPO). They can buy 18 SpaceX's, 2.3 Twitters or, you know, 18 more Instagrams. Their future is minted.

jlgreco 14y ago
> "18 SpaceX's, 2.3 Twitters" This industry is so messed up...
- dguaraglia 14y ago
  I completely agree. When the perceived value of a company whose only asset is a clever idea and some hype is bigger than that of a established company with a real business model (say, Philips) you know you are treading into make-wish territory. But nooo, say that to most people in the industry and they'll chew your head off for being narrow-minded and oblivious to how 'the economics of startups' works.
  - EternalFury 14y ago
    Oh, you will be down-voted times and times again for even posting things like that. It's self-preservation, since a large percentage of current start-ups rely on similarly ad-driven pie-in-the-sky schemes where the best and only possible exit is a sale to Facebook or another large entity with more money than sense.
- mkramlich 14y ago
  Agreed. One is literally rocket science (ok, engineering) and if things go wrong, people die. The other is something I could code up this weekend, and if things go wrong, a tweet is mistweeted or delayed, oh noes.

EternalFury 14y ago

These "poor" people have earned their cash-out time. Hopefully, it triggers a new VC monsoon in Silicon Valley so that newcomers can finally afford those > $1M houses. :)

narrator 14y ago
Check out this redfin graph of San Mateo county $ per square foot. Everyone's taking their house off the market and/or jacking up the price in anticipation. http://www.redfin.com/county/343/CA/San-Mateo-County http://www.redfin.com/county/343/CA/San-Mateo-County
- EternalFury 14y ago
  Greed knows no bound, clearly. This being said, my rent got jacked up $300 a month. I must leave this place before I start paying to work here.

leif 14y ago

TIL Visa didn't go public until 2008.

beagle3 14y ago

Anyone know how the tax situation is handled for employees? Is there a tax event + lockup for anyone, or do all employees own their shares outright as RSUs with prior 83(b) elections?

TomGullen 14y ago

At $100b valuation it's worth 50% what Google is. This seems ludicrous, Google is far more diverse and actually has a working ad revenue model! I'd rather have 1 Google share than 2 Facebook shares for sure.

iends 14y ago
Of course you would: GOOG: $623.05 FB: $38
- vladd 14y ago
  He may have actually meant share in the sense of percentage: I'd rather have 1% of Google than 2% of Facebook. 1 Google: 203.13 billions (market cap in http://www.google.com/finance?q=GOOG http://www.google.com/finance?q=GOOG ) 2 Facebooks: 2 * 104 billions = 208 billions
  - TomGullen 14y ago
    Yes that's what I meant :)
waterlesscloud 14y ago
Google isn't more diverse. Of Google's $37.9 billion in revenue for 2001, $36.5 billion of that came from advertising. Fancy self-driving cars aside, Google is wholly dependent on the success of its ad targeting mechanism. Beat them out for that (and Facebook could potentially do so), and they're done for.
- vladd 14y ago
  > Beat them out for that (and Facebook could potentially do so) Google searches have purchasing intent, see http://cdixon.org/2012/05/15/facebooks-business-model/ http://cdixon.org/2012/05/15/facebooks-business-model/ .
  - waterlesscloud 14y ago

X4 14y ago

I believed that the time Goldman Sachs winged into the Game (long before the IPO) it would kill Facebook slowly. I can't believe that a valuation for FB can be that high without political corruption. So $18.4 billion for a Social-Network with ~1 billion users, whose only income is using/selling AD-impact valuation Data. (And in the future an AppCenter where users can buy FB credits to play Games.) I think Google and Amazon have more Data to predict and raise AD-impacts than FB will ever have. +The FB code has already been stolen. Every other stock would fall hard, but not FB.

redwood 14y ago
It's the opposite: not wall st. screwing SV but SV screwing Wall St. on this one. Facebook is giving itself a super-high valuation, as high as they can get away with, because that way they get as much money from the initial stock sale as possible (rather than seeing Goldman flip their IPO'd stock for a pretty profit to Goldman rather than to Facebook). Since Facebook is the first SV company with a mega-IPO to be truly in tune with Wall St's tricks (LinkedIn totally blew it) there is indeed a good chance their stock price could head south after IPO. On the other hand the hype keeps things going so who knows...

cpeterso 14y ago

Ads are Facebook's and Google's primary source of revenue. I wonder if there will ever be a market for ad-free, subscription-based search or social sites.

389401a 14y ago

Insiders are selling. Insider trades are always based on stronger information than you have and they are never random. There is always a purpose when they are selling. Why are insiders selling pre-IPO? There's a Marketwatch article in the queue.

mkramlich 14y ago
A lot of folks would rather have $1M of real money than $10M+ of maybe-someday-maybe money. That's one lesson you can take away from past bubbles and missed sell opportunities. Especially for those who don't have FU-level wealth.
- 389401a 14y ago
  But these insiders most certainly do have FU-level wealth, and they are selling, pre-IPO.