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As most of the HN crowd is skeptical of Facebook's future stock performance, I'd like to offer another perspective. 1980: Underwriters Morgan Stanley and Ham
by solipsist 14y ago
As most of the HN crowd is skeptical of Facebook's future stock performance, I'd like to offer another perspective.
1980: Underwriters Morgan Stanley and Hambrecht & Quist take Apple
Computer public in the largest IPO since Ford Motor Company went
public in 1956. Originally filed to sell at US$14 a share, the stock
opens at $22 and all 4.6 million shares sell out in minutes. The stock
rises almost 32 percent on its first day of trading to close at US$29,
giving the company a market valuation of US$1.778 billion. For fiscal
year 1980, Apple showed a profit of US$11.7 million, or 24 cents a share
on revenue of US$118 million (compared to US$8.3 billion in fiscal
2004), giving the IPO a P/E ratio of 92. Of Apple's 1,000 employees,
more than 40 become instant millionaires thanks to their stock options.
[1]
Facebook's P/E ratio today (5/29/12): 92.31
Apple's P/E ratio in 1980: 92
Fun fact: Apple's stock was down 20.44% a year after they went public.
[1] - http://www.macobserver.com/columns/thisweek/2004/20041218.shtml http://www.macobserver.com/columns/thisweek/2004/20041218.sh...
- josscrowcroft 14y agoThat is interesting. Thanks!
- solipsist 14y agoGlad I could help. Just remember that numbers aren't everything. I personally would not buy Facebook at this time due to other reasons...
- smartwater 14y agoAnd those reasons are?
- solipsist 14y agoCan't really pinpoint it to one thing. What I was trying to get across was the fact that numbers (P/E ratios, etc.) should only be a factor in one's purchases. I think that when you look at Facebook, the market it is in, and its revenue model, and then compare it to Apple back in 1980, there are some stark contrasts you'll find. Sure, there's hindsight bias and all, but I personally feel that Facebook has entered a market where making money is a lot harder that it was for Apple. In order for Facebook to grow a few order of magnitudes, I feel that there would need to be a radical shift in the way we Internet users feel about spending money online or else the way advertisers reach potential customers. But I just looked at your profile... and wow! That's one impressive resume! I'd be a lot more interested in hearing your perspective on Facebook and its financial strength, etc. This is one of those moments where I'd really wish HN had a PM system.
- smartwater 14y agoTheir ad system is going to make them a lot of money someday. I'm going to buy when I see the early signs of them finally figuring out how to bring their ad system up to par with Google Adwords, before the mainstream realizes it. It will definitely get there, it's just a matter of time.
- josscrowcroft 14y agoDitto what solipsist said - I'd love to hear more input on this!