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Discussion Starter #1
Watching this whole fiasco unfolding with mild amusement on the sidelines... I'm not against companies or people making money but I just could not believe the crazy IPO valuation of this company.

Hopefully, this will divert venture capital back to companies with more social/economical benefit (ie alternative energy, Med device, pharma, and productivity software) vs a social media company that is has net negative productivity affect on the economy.
 

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IPOs are like class action lawsuits, only the attorneys or here the large institutions will gain from it. Everyone else gets sucked in it like a pyramid scam to fund the ones who need it the least....My sentiments.
 

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I am in the space that has a lot to do with FB.

People like to think of them as a 'social network'. They are anything but. They are a media company that makes its money via ad revenue.

One can argue the 'net value', but companies gain significant value from advertising via FB and other networks. It's a marketing channel like any other (tv, print, etc).

There are million metrics out there as to the effectiveness, reach, cost per impression, etc based on industry, analytics, etc.
 

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Discussion Starter #4
Google is an advertising company. Sometimes I click on google ads that interests me. They make a bazzillion dollars on advertising.. FB, not as much, and the growth is slowing

I don't think I've ever clicked on any ads on FB... I don't even notice them.
They do make a lot of their money on games, but I still see that as very limited upside. Not too many people will pay real money to buy trinkets in web games with crappy graphics.
 

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I've done the high tech finance thing for 20 years.

I am not on FB.

Interesting read...

VatorNews - Why Facebook is killing Silicon Valley

...I've been through two rounds of "The Venture Capital model is broken" / "VC is dead" twice in my career alone (some of my colleagues are on round three of that), so I can't say that I totally agree with his sentiments, but food for thought nonetheless.
 

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Discussion Starter #6
thanks for that article Frank, very interesting read
 

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I am just glad that my broker did not allow me to dip a bit into the IPO - would have lost out on that. I have a buy order setup for if it ever hits $20 a share though :)
 

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Discussion Starter #8
even at $20 it is still sky high compare to the valuation of other "growth tech" companies

Apple: about 10X 2013 estimated EPS.
Google:about 12X 2013 estimated EPS.

Facebook currently trading at: about 40X-100X 2013 earnings
 

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even at $20 it is still sky high compare to the valuation of other "growth tech" companies

Apple: about 10X 2013 estimated EPS.
Google:about 12X 2013 estimated EPS.

Facebook currently trading at: about 40X-100X 2013 earnings
really? yikes!
At that forward p/e, they should have proven high growth rates and obviously VERY high projected growth.

At the simplest level... a 10 percent yoy growth rate CAN get you a ~10 p/e. The market will price FB accordingly in time. If its earnings do not back up its p/e, then it is overpriced and is advised against purchasing it.

BUT also, p/e can fluctuate on outside factors. The p/e allowed in 2007 were much higher than the market allowed in 2008.

It is obvious people got caught up in the momentum. I have a co-worker that was talking about putting 10 large down on FB...... I just said ehhhhhhh.

He still has every last penny of that money thank goodness.

I am not too fond of IPO's. At least with a stock that has 30 years of trading history, you have some basis.
 

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so who bought in? and why did linkedin skyrocket when it started and facebook plummet?
 

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No money on facebook, but I am giving spaceX a long hard look.
 

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Not sure what linkedin was valued at compared to earnings, but that was the beginning of the social media IPO hype (along with Zinga etc)

what does ee.engineer stand for? electrical engineering..... engineer?
 

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Discussion Starter #13
as far as their growth potential:

members: sure there are lots of people that still don't have a facebook account, but really the main target audience of advertising is already on it. Hell from my grandma to our tour guide in Costa Rica all have FB accounts. The people that don't either are too poor to afford access to a computer/internet, or don't want to be on FB by choice and never will.

Profit and revenue: this have been covered by the media. they need to figure out how to make money from mobile and more advertising money from web at the minimum just to meet their expected valuation. Can they do that without pissing off their members is the hundred billion dollar question. To grow, they need to figure out other ways of making money.. either by innovating with all the IPO cash or acquiring startups. (paying a freakin billion dollars to Instagram was pretty crazy)
 

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Not sure what linkedin was valued at compared to earnings, but that was the beginning of the social media IPO hype (along with Zinga etc)

what does ee.engineer stand for? electrical engineering..... engineer?
electrical and electronics engineer...
 

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Discussion Starter #19 (Edited)

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