just goes to show what the personal details of their users are worth.
<aside>that photo recognition stuff is real scary</aside>
So Facebook ( and the banks pumping/handling the IPO ) values itself at about 40 x annual earnings.. !
The growth rate would have to be over 35% per annum ( are there enough people in the world should be easy maths ) for many many any years to make sense ..so it doesn't except for Mark's backers and the pumpers.
I'd would be ROTFALOL ..if it wasn't such a scam that some peoples pension funds are going to be poured into whilst the commissions ( win or lose ) are being taken..
Facebook value = $100 bucks worth of code and some office buildings.
People value = priceless when they aggregate in one place.
I think investors have to be weary that people are free to move onto the next big thing, even if that's not currently on the radar. Betting your bucks on unpredictable trends isn't for the faint of heart.
Facebook's users don't even like Facebook, they are just itching for something to come along and replace it. Most advertisers aren't seeing a decent ROI. Investing in Facebook long term is a bad, bad idea.
They will have $10 billion to play with though. Maybe they could use that to develop a Facebook search engine?
The only question is projected growth - you buy the stock hoping it will increase in value. Two ways thats going to happen; they keep expanding the user base, or they can milk more revenue out of the existing base.
This thing is so big, you wonder how much bigger can it get?
The IPO will value Facebook at $86 billion and they currently make around $1 billion profit annually.
So if you bought the company you could wait for the best part of a Century to get your money back.
How much was google when they went public? Wasn't it $99?
The IPO price is arbitrary - whether $1 or $99.
What matters is Profits compared to Market CAP. With 1B members how much more can FB grow. Is that why the owners are cashing out?
Does it matter how many members it can get if they are able to monetize them into new ways in the future? Thought we'd never see ads in Youtube videos.
|values itself at about 40 x annual earnings... |
Actually, it is closer to 100x forward expected earnings. I definately would not buy this stock out of the gate, as the price is almost certain to drop, especially after the lockup period. Might be a good thing to invest in after 8-9 months, but not now.
Maybe they could use that to develop a Facebook search engine?
A person who I would not call very computer savvy when looking for things on the Internet asked me something can't recall exactly what, I said oh just Google it for the answer.. she went and posted the same question into Facebook and returned the answer to her question almost instantly from one of her friends.
After this, I just realised to myself the real potential Facebook has versus a search engine. People really don't need to leave Facebook to have their questions answered when you think about it. Why Google is likely so concerned.
off to sell my site for 100 x annual revenue.
I'll see you on the golf course next week.
For a near $100B valuation you need annual profits of up to $10B instead of their current $1B.
So from their starting position:
$1B .... lets say they double membership
$2B .... they double average spend by members
$4B .... they double it again
$8B .... still not good value.
That doesn't mean I won't buy FB shares on day one - with so much hype the stock could easily double - the market can be as crazy as it was in 1999-2000.
But long-term I wouldn't hang on to them without huge increases in profits.
|she went and posted the same question into Facebook and returned the answer to her question almost instantly from one of her friends. |
... who probably googled it for her.
and where is that profit coming from?
...advertising I presume.
Yet, if their conversion rate doesn't improve I may have to drop facebook advertising altogether. Don't know others position but is it a case of the Emperor's New Clothes?