2 ms·

That's true enough. Of course, it applies to every other stock, too: Google's ~$200 billion market cap is based on the price of the last trade, which for all we

That's true enough. Of course, it applies to every other stock, too: Google's ~$200 billion market cap is based on the price of the last trade, which for all we know was a 100-share buy that mostly constituted an investment in smugness. Since there are so many small investors, and since large investors have lower turnover, the vast majority of investment transactions are non-representative, but they're still the best information we have. It wouldn't be especially surprising if MS overpaid -- but I don't think that's what Facebook wants. Companies usually like to IPO at their peak valuation. Investors very rarely want to buy discounted goods during the IPO (which is why many startups would undervalue their early venture capital investments: if they were funded at $.25/share in January, got another round at $5/share in July, and were going public at $20/share in December, they give new investors a comfortable trendline to look at. Swap the last two valuations, and you start scaring people).

Goladus 19y ago
The whole point is that microsoft is not really an 'investor' in terms of a general market. Microsoft would have competitive reasons for buying a stake in Facebook that go beyond a direct return on investment, which is all a normal investor is looking for. If Microsoft has a 98% of a map to buried treasure, but a critical 2% is missing, that 2% is worth a lot to Microsoft, but nothing to anyone else. Unless MS is willing to buy it from you, that is. If 1.6% is all they really need of Facebook, the rest could be worthless.
- byrneseyeview 19y ago
  That's true, but that's irrelevant. Is an investor really going to be snooty enough to turn Microsoft down, if the most valuable thing that can happen to Facebook is a sale to MS?
  - Goladus 19y ago
    I'm not saying that MS might buy all of Facebook. Some of the fine print in the 240 million dollar deal might be all they were ever looking for to begin with.

Goladus 19y ago

The whole point is that microsoft is not really an 'investor' in terms of a general market. Microsoft would have competitive reasons for buying a stake in Facebook that go beyond a direct return on investment, which is all a normal investor is looking for. If Microsoft has a 98% of a map to buried treasure, but a critical 2% is missing, that 2% is worth a lot to Microsoft, but nothing to anyone else. Unless MS is willing to buy it from you, that is. If 1.6% is all they really need of Facebook, the rest could be worthless.

byrneseyeview 19y ago
That's true, but that's irrelevant. Is an investor really going to be snooty enough to turn Microsoft down, if the most valuable thing that can happen to Facebook is a sale to MS?
- Goladus 19y ago
  I'm not saying that MS might buy all of Facebook. Some of the fine print in the 240 million dollar deal might be all they were ever looking for to begin with.