It'll probably be an hour or two, actually, it didn't start trading when the market opened. I'm not sure who decides when to pull the trigger, but apparently recent NASDAQ IPOs have been starting around 11:00 eastern, give or take a bit.
IPO opening auctions are scheduled for the middle of the day. The regular market open auction is a very busy time and if they happened at the same time, everyone would be choosing between handling their normal business or the excitement of the IPO.
I wonder what the optimal time is to post to HN. Do people usually wake up, check HN and then go about their day? If so, around 9-10:30AM EST? Or maybe if most HNers come from the west coast, would it be 9 - 10:30AM PST?
Once you hit the front page, the time is quite relevant. But before then.. /newest is so poorly visited and read that you're really throwing yourself into the hands of lady luck and hoping there are more than a handful of people who even see your item. (Yep, tons of good stuff doesn't get voted up at all simply because no-one sees it.)
Yes, but, competition is fiercer. The beginning of a business day in the US is also the time when a lot of strong, interesting articles (from newspapers, blogs, etc) are being read by awakening HN'ers and then submitted. They can crowd out your post. But if you succeed, you'll enjoy strong inertia for a long time as people keep coming back when they should be working. Like right now :)
I've been chatting on HN and posting links for a year or two now, but I still haven't figured out what I gain by a higher karma. Sure, it's a tiny treat to see your link get popular or your number get a bit higher. But am I missing something?
You get the explanation by clicking the question mark in the top-right corner. For convenience:
-
Some good stories posted on Hacker News are upvoted while some are not. Is it always the story or is the time when it's posted? The graph should tell. It follows these definitions:
- Newest stories top average score - is an average of six most voted stories on the HN newest page; indirectly, it measures the number of competing stories or the number of story submitters.
- News stories bottom average score - is an average of six least voted stories on the HN front page; indirectly, it measures the number of fresh stories or the number of story upvoters.
- Pickup ratio - is equal to Newest stories top average score divided by News stories bottom average score; indirectly, it measures what is your chance of getting from newest to the front page; you want a lot of upvoters to be upvoting and very few submitters to be submitting.
- Now it's ... time - gives four recommendations whether now is good time to submit or not. There are four possible values mapped to top four pickup ratio quantiles: very good, good, so-so, and bad.
This small web application is an amalgam of ETL, data mining, and visualization processes with focus on time series analysis. Data from other websites is gathered, enhanced, and presented as decision support tool. Source code is available at GitHub.
I just went to finance.google.com myself and then thought it would be interesting to HN users and posted it right away. And to be honest I didn't check the "new" queue for already submitted links.
Regarding the accidental split test I think the "NASDAQ:FB" title is somehow more appealing.
I didn't mean to sound like I had a problem with it. The situation kicked off an interesting thread where I learned about a new and interesting site. If I had a problem, it would have vanished by now. :)
Someone mentioned on CNBC that he had placed an order (and seem to have gotten) 100 shares of FB via e-trade. Can retail investors (aka ... unsophisticated Joes like me) get in on the IPO allocation? I thought the initial shares were only offered to large investors (> 100K purchases). This doesn't help me for FB, but would be useful info in the future.
Yes, brokerages offer qualified customers access to IPO allocation that the brokerage has access to. It is at their discretion who they allow to participate. Generally, most brokerages will ban you from IPO access if you get allocated shares and sell them within a certain period, usually 90 days or so.
I got 50 shares from e-Trade. Never used eTrade before. It was one of the few platforms that were open for retailers. eTrade mentions that if I flip those shares in less than a month, I might not be able to get access to future IPO shares.
There are tons of Facebook shares floating around - at least partially due to the fact that they increased the offering size by 85 million shares (25%) on Wednesday. Morgan called four separate times between weds and Thursday trying to sling shares.
In general it's usually harder to get allocations but not as hard as you imagine - retail investors always seem to get some.
If you look at the bottom right under "Key stats and ratios"[1] you can see a trace of Google creating a time with 0 (default I guess) and spitting out the year (+/- 1 because of timezones) of the Unix epoch.
I was about to post this same thing. It's the same for any stock that opened this year, and doesn't have a comparable previous year of data e.g. Zynga:
http://www.google.com/finance?q=zynga
This is like a NASCAR race, many (most?) of us watching secretly hope for a spectacular crash. It's wrong, but the potential of schadenfreude is very tempting.
Well, considering the number of people who aren't exactly fans of Facebook, I wouldn't be surprised if some of the people watching with the most interest were the ones actively rooting for it to be a spectacular failure.
Hahaha, that was actually what I realized.. only if it was a mistake to buy would my order get filled. Or a very random fluke resulting in a fill before it jumps to ~60+
update: got my order filled. Maybe a mistake. Please go 'like' something.
I'm guilty of wishing FB a bit of schaden myself, but if they actually have a business on their hands and the market reflects that in the coming months and years, the effect is that access to capital for all of us will not be a problem for the next decade.
Think of the effect that the Google IPO has had on access to angel and other investment capital. Two of my angels are former Googlers and my previous business was a vertical search sold right after Google IPO'd.
All our destinies are in one way or another wrapped up in this little ticker symbol for the next few years.
I'm in agreement here. Like it or not, FB will likely affect everyone here, whether directly or indirectly. Regardless of how the trading goes today, it should be an interesting ride.
I think if most wishes it to tank, its not because of envy, but rather because we all see how people lose control over their private data in the name of chilling out with friends on the cool website. This is extremely sweet candy that feels so good right now, but eventually you will throw up and have cavities.
To me a wake-up call was a huge investment that FB accepted from DST.
Google seems to have a pretty good track record of being a well run, profitable company.
In my opinion anyway, FB still seems to be in the "do something big, figure out how to profit from it later" stage. That's all well and good, but I don't know that it's $130+ per active user good.
How many ad banners are these people going to click? To put this in perspective, the initial valuation of $104B is over 2/3 the entire amount of money spent on all advertising in the US last year ($141B).
I believe that Facebook could make something like AdSense. They have vast quantities of info about people and their interests. Additionally, thanks to the huge presence of facebook tracking codes (Likes) on websites, they can track which websites you visit - additionally increasing targeting efficiency. It would be fun seeing google decreasing their margins on AdSense (38% of webmasters profit?) vs AdvFace(or something like that).
They could also use some of the IPO money to acquire Bing and somehow mold if with the Facebook.
I think that Facebook valuation is so high because of many possibilities similiar to those I've just outlined.
So right now FB (at $110B) is market valued at about 1/2 of Google (at $201B).
Let's say FB builds or buys a search engine, a popular web browser, a smartphone platform equivalent to Android, a Gigabit fiber-to-the-home project, and an AdvFace that takes 50% of that market away from Google.
If all that were to happen, then it might make sense for FB's valuation to be comparable to Google's. G's might even shrink a little bit to help.
But G has that all functioning now, whereas FB's seems merely hypothetical. Could we not equivalently reason that FB could start a P2P auction market to rival Ebay? A distribution channel to rival Amazon?
I remember hearing the same thing about TiVo. They had so much interesting information on what people were interested in that pundits predicted that they'd soon be giving away the boxes for free.
For all of Facebook's data collection, they don't seem to be able to do anything with it. To put it in perspective, I just logged onto facebook and got an ad from a company hiring coal miners. I'm asthmatic, despise big coal, currently employed, have cerebral palsy, and live three states away from this company. I could have targeted that ad better by randomly pulling a name from the phone book.
Other ads include:
* Beer - I don't drink
* Tickets to the Avengers - Okay, I do want to see that movie.
* Getting my Bachelor's Degree Online - I already have a master's degree. Facebook knows this
* Bait - While they get partial credit, since I enjoy camping, I'm not into hunting or fishing.
* Tequila - See above
* Lawn Fertilizer - I live in an apartment
* Airfare from Chicago to Oklahoma City - I don't live in Illinois or Oklahoma. Facebook knows this.
* Hunting Rifles - See above
* Vodka - See above
Conversely, Facebook should know that I'm attending a conference in DC next month, but there hasn't been any comments on restaurants or attractions in that area.
I don't deny that they have a lot of data. However, I think they're in the TiVo situation where the data simply isn't that interesting.
I respect Google. The search engine they built was made out of the hard work of their own employees. They didn't build an empty bucket and wait for everyone else to do the hard work and fill it up.
Sure, Facebook is full of clever hacks and nice features but the gas in that engine is the data happily supplied by their users, for the low low cost of free.
I made a comment below about how I actually profit from things like this (stock going up and the high value assigned) in what I do. I gave it some more thought and think the reason most people (including myself) would secretly wish for the stock to tank is because we feel that there is something unjust going on with how much money they are making relative to what they are doing and whether it is even sustainable. Sure we wish people success (especially when we profit) but this success seems out of proportion (didn't feel the same about google fwiw). If we believe that is the case (overvalued by the metrics and media hype and attention especially) then by the stock dropping our thoughts are validated. That's a guess at the phenomena going on here.
(As an example very few swimmers are probably jealous with Michael Phelps success because he totally earned it. )
I think this is really it, especially in the HN space. Lots of entrepreneurs are looking at Facebook's SEC filings and going "How the hell are they worth that much?".
Actually most web 2.0 startups and especially social startups will be positively affected from an investment perspect, from a successful facebook start.
And if the FB IPO ends up being perceived as primarily a massive transfer of wealth from enthusiastic well-meaning small investors to the brokers and investment bankers?
I'm no investment pro but FB's valuation seems unjustified to me, so I'm searching around for explanations. Where is this additional demand for these shares coming from?
The best explanation I can come up with is that FB benefits from its massive base of engaged users. I imagine there are a great many individual investors who are torn between wanting to participate in "internet tech" and wanting to not invest in what they don't understand. FB comes along and I imagine many of them to reason "I use it all the time, therefore I understand it". I believe Microsoft has also benefited from this effect.
These people believe they are value investing, not playing the market.
>The best explanation I can come up with is that FB benefits from its massive base of engaged users. I imagine there are a great many individual investors who are torn between wanting to participate in "internet tech" and wanting to not invest in what they don't understand. FB comes along and I imagine many of them to reason "I use it all the time, therefore I understand it". I believe Microsoft has also benefited from this effect.
Microsoft also sold products, and had a very strong revenue stream from that. Hype helped MS grow, but their core business fundamentals have traditionally been pretty strong.
Facebook seems overvalued by at least 300%, maybe more. A quick look at tech companies that have about $100 billion market cap(like Facebook), and the closest comparison I can come to is Oracle. Unfortunately, the comparison doesn't look good for Facebook.
Oracle's revenue for 2011 was around $35 billion, which is 10 times Facebook's. Net income was around $8.5 billion(from here: http://www.oracle.com/us/corporate/investor-relations/financ... ). Facebook, according to their SEC filings, had a net income of $1 billion in 2011.
I think that Facebook's valuation is driven entirely by hype, which really means that the stock should perform quite well for the next 30-60 days, until Q2 earnings are released. At that point, I have a feeling that it will drop when investors realize that FB isn't pulling in nearly as much money as their stock is indicating.
There is no line between "well-meaning small investors" and the banks. They are playing the same game.
People who put money into Facebook early were hoping to get rich(er); they didn't do it out of the goodness our their heart. It's an SV fallacy that angels are, well, angels.
I'm not saying anyone was being charitable, I'm saying there might be a psychological demand effect that applies to long term "value" investors and not just hype-driven day traders.
Lots of people are waiting for a crash so they can buy it. My guess is there won't be a crash today or in the coming days. I believe it will open well in the 40s and never come even close to the offering price.
What's really strange is that I actually profit from all of this hype (if they do well people end up wanting to buy domains which I help with and make money from) and for some reason I want to see the carnage also.
The worse years I had were after the first bubble and the best years are during this bubble but I still feel the way you are describing.
Think of bootstrapped companies that do not WANT funding: IPO success=more investment hype, more VC money thrown around (very often irrationally),more competition, harder to hire, especially in SF, all services are more expensive.
goes both ways. Trying to buy services? (for me, dark fiber and data center space) is way more difficult now than it would be without a bubble. (that, and I don't want to sign long-term contracts on any of that stuff, 'cause I know it will get cheaper after the crash, and that I'll have less of the high-end customers to pay for it, too.)
On the other hand, customers are far more free with their money. (but that doesn't help me as much as you'd think; My big weapon seems to be my willingness to accept a reasonable margin; e.g. I can lower my prices more than the competition. (yes, yes, amazon has lower costs than I do. But they also have more credibility, so that translates into margin rather than into savings for the end user.) For me, the big upside is that individual Engineers have more disposable income that can be put towards the 'hobby' budget, which is the budget most of my customers pay me out of.
I dono. I have a long history of crying 'bubble' long before the crash. I refused to buy a house in 1999 because I thought housing was a bubble.
Only recently have I started thinking about this bubble as something that would last long enough to take advantage of on the upside. I have pretty extensive plans to take advantage of a crash, but I'm only now considering how I can take advantage of the upside.
The Nasdaq will be FLOODED with orders when FB begins trading. Will be interesting to see how their systems handle every algorithmic trading machine on the planet trading FB's stock...
Those things are just PR stunts so that news directors have nice clips for the evening news -- they're gathered up, told to clap for a long time, and the cameras roll. In this case, it's particularly transparent because they're doing it in the park. The NYSE at least does this on that balcony overlooking the "trading floor", which gives it a look of legitimacy.
ok, so this started happening last night for me and some friends I pinged: I clicked on a picture (multiple of them!) and each time I see this shit: http://postimage.org/image/rvdiya58z/full/
I say Facebook IS in a lot of financial troubles!!
Although I'm generally a market bear and have been saying we're in a bubble for months, even I'm having a hard time seeing how there isn't going to be an almighty pop today given the sheer amount of irrational exuberance over this.
My bet is FB closes somewhere between $55 and $65. Anyone else fancy making a prediction?
[ edit: stuck an upper limit on my prediction to make it more interesting :) ]
My bet is it closes somewhere between $35 and $45. The owners pushed back against the bankers at every turn to push for a higher price. If they don't price at the start of the day effectively, the original shareholders lose money to the bankers who set up the IPO like what happened to LinkedIn.
That's a good point I hadn't considered. As it looks at the moment, I'm glad I stuck to arm chair punditory (if that's even a word!) and didn't buy any shares...
Attention:
FB order execution slowness
Certain marketplaces are experiencing slowness resulting in delays in execution for Facebook orders. Industry technology teams outside of Fidelity are working to correct the problem. This slowness is being experienced by other online brokers as well, not just Fidelity. This has been reported as a market-wide issue. We do not yet know when the problem will be resolved. We appreciate your patience.
Then back down to $38 for a bit, then back up to $40 for a bit. Oddly step-like price graph, with steps on the even numbers. I guess I have no idea how trading in this kind of opening works to hazard a guess.
JP Morgan or whoever was buying hard at 40, and they did the same at 38. The behavior is very clear, and if it gets to 38 again I might gamble on it...
...not that we need another zerohedge link, but this makes it obvious
Markets care a lot about sentiment. A nice 10-15% pop on the first day leaves everyone feeling pretty good - and a nice halo around the company.
If the price levels off.. Well people will be inclined to be more critical. They'll be wanting FB to start moving the stock north sooner.
I was a bit curious about the pricing. As you say, they want the maximum investment value, but there is some sense in buying the management team some time. A billion less may have saved them a lot of headaches dealing with market criticism, given them time to get some wins...
Anyway. It's a brave new world when you suddenly have to start answering to shareholders.
While Zuckerberg has a complete majority, in what ways do they have to answer to shareholders? Fear of stock price drops as people sell off? Reporting requirements?
Good question! One I've been trying to wrap my head around for a while. This level of control at this stage/size is unprecedented (if somebody has some good analogs I'd be interested to hear...).
There are all sorts of responsibilities and duties for an exec (of a public company in particular) - but I'd assume the FB board is insured to the hilt.
Ultimately execs always answer to shareholders (i.e. they bring a return). Otherwise the market doesn't work - the market they've used to raise 16 billion... How this will manifest for FB now and in the future, I've got no idea.
One thing happy shareholders does give you is access to future capital. However, can't see that being a problem for a while yet.
My take on it, its a non-IPO IPO, this is my reasoning.
Facebook has been trading for a while on secondmarket (a secondary market for 'qualified' investors). The prices have been pretty stable there. These people evaluate the markets in much the same way that every other trader does, and so their value calculation is going to be in line with what any 'real' trader might come up with.
Retail investors, the folks who made the dot com bubble so spectacular, have largely left the market as a mover. So any 'creative' valuations are probably not going to drive a lot of trades.
So trading on the NASDAQ opens up the process to retail investors but they aren't a significant factor, that leaves the more experienced investors and they have already valued the company and shown that on second market, so that the stock moves at all is probably more along the lines of the daily/monthly variations you might see in a Google or Apple or Groupon, rather than the sudden IPO pop of people who wanted to own the stock but were unable to get their hands on it.
That makes it a 'good' sign in the sense that the folks who valued the company in the secondary market were making pretty good guesses on the value. It is also another 'non-bubble' sign in the sense of over-exuberant participation by the retail investors.
This is simply a transfer of wealth between Wall Street and Facebook's major shareholders. (not a broad base at all)
It was made possible because Wall Street believed every Facebook user would try to get in on the action in the open market.
It turns out retail investors and Facebook users didn't join the anticipated mania and now, the valuation of the company is what Wall Street made it out to be and not much more.
In other words, from here on, Facebook's valuation and Wall Street's ROI will solely depend on Facebook's financial success. Obviously, for Wall Street, this is much slower and much more work than having a stock take off on the basis of a mania.
If the financials don't turn up in the next few quarters, watch out.
People are also totally ignoring the reality of the market as a whole today.
In the literal sense of "today", Facebook launched on kind of a crappy day. In the more expansive sense of "today", nobody's terribly optimistic right now. The US still hasn't pulled itself out of the hole, and current events in Greece and France have everybody wondering what happens next in what is collectively the world's largest economy.
Even without the unique features of Facebook's IPO, this isn't a great time to be looking for "pop" in anything.
People who know better can answer this more authoritatively. My two cents are:
1. Stocks are never priced "appropriately" in the US. Companies rarely adopt the Google-style book-building process (kinda like an auction).
2. FB like others was placed privately. What incentive does an investor at the roadshow have to buy it before the markets open? The incentive is the probability (nay near-certaintly) of an opening day "pop".
3. It's common for underwriters to have a 180-day lock in periods for employees who want to sell their newly-public stock (Linkedin had it iirc). This is another way to increase demand for the shares sold during the roadshow.
And yet, big companies and time can change the rules. Google used the Dutch auction. Facebook has long been traded on non-public markets. Facebook also demanded lower fees from underwriters, and less first-day-pop 'money left on the table' for initial-distribution purchasers.
A negligible 'pop' could mean FB's strategy worked beautifully, capturing the maximum amount of capital for their own goals. It doesn't send the same signal as when another company, which needed more help from the underwriters and media, has a stable first-day price.
If you mean that the have succeeded in issuing a stock at 100x earnings, you are absolutely right. This is not, by any measure, a failure for those who funded FB prior to the IPO. In fact, they are getting paid 100x earnings for the company they own!
Its price seems to have been corrected to $7.80 which is down 5% on the day but not as bad as before. I wonder if someone just keyed in an order wrong?
My guess is FB bottomed out and is now trending steadily up, so "panic mode" has subsided somewhat. Also, perhaps some big players saw Zynga at near $7 being quite a value so they swooped in.
318 comments
[ 2.2 ms ] story [ 296 ms ] threadEdit: CNN indicates the company decides in consultation with NASDAQ: http://money.cnn.com/2012/05/17/technology/facebook-ipo-trad...
[1] http://money.msn.com/technology-investment/article.aspx?post...
edit: Not complaining. It seemed like an interesting accidental split test.
[I think; subjective analysis etc etc]
When you have good content and your luck is at its maximum.
That I didn't think about that way immediately probably says that you have a much closer relationship with the HN readership than I do. :-)
Hope this helps. :)
-
Some good stories posted on Hacker News are upvoted while some are not. Is it always the story or is the time when it's posted? The graph should tell. It follows these definitions:
- Newest stories top average score - is an average of six most voted stories on the HN newest page; indirectly, it measures the number of competing stories or the number of story submitters.
- News stories bottom average score - is an average of six least voted stories on the HN front page; indirectly, it measures the number of fresh stories or the number of story upvoters.
- Pickup ratio - is equal to Newest stories top average score divided by News stories bottom average score; indirectly, it measures what is your chance of getting from newest to the front page; you want a lot of upvoters to be upvoting and very few submitters to be submitting.
- Now it's ... time - gives four recommendations whether now is good time to submit or not. There are four possible values mapped to top four pickup ratio quantiles: very good, good, so-so, and bad.
This small web application is an amalgam of ETL, data mining, and visualization processes with focus on time series analysis. Data from other websites is gathered, enhanced, and presented as decision support tool. Source code is available at GitHub.
("Averge" instead of Average, "now it's bad time" instead of now it's a bad time)
Sorry to nitpick but that was what inmediately jumped at me.
Regarding the accidental split test I think the "NASDAQ:FB" title is somehow more appealing.
Of course then we'd end up with flame threads where people say things like "we need a 'being an obtuse jerk' button for the OP."
HN link: http://news.ycombinator.com/item?id=2022547
Source: http://www.solipsys.co.uk/Writings/HackerNewsItemLifetime.ht...
Here is a description of the process for ETrade: https://us.etrade.com/e/t/prospectestation/help?id=130105000...
In general it's usually harder to get allocations but not as hard as you imagine - retail investors always seem to get some.
And in fine, facebook fashion, we both just leaked "personally identifiable information" in a public forum!
Happy Birthday!
[1] http://d.pr/i/sMYb
update: got my order filled. Maybe a mistake. Please go 'like' something.
Think of the effect that the Google IPO has had on access to angel and other investment capital. Two of my angels are former Googlers and my previous business was a vertical search sold right after Google IPO'd.
All our destinies are in one way or another wrapped up in this little ticker symbol for the next few years.
To me a wake-up call was a huge investment that FB accepted from DST.
In my opinion anyway, FB still seems to be in the "do something big, figure out how to profit from it later" stage. That's all well and good, but I don't know that it's $130+ per active user good.
How many ad banners are these people going to click? To put this in perspective, the initial valuation of $104B is over 2/3 the entire amount of money spent on all advertising in the US last year ($141B).
They could also use some of the IPO money to acquire Bing and somehow mold if with the Facebook.
I think that Facebook valuation is so high because of many possibilities similiar to those I've just outlined.
Let's say FB builds or buys a search engine, a popular web browser, a smartphone platform equivalent to Android, a Gigabit fiber-to-the-home project, and an AdvFace that takes 50% of that market away from Google.
If all that were to happen, then it might make sense for FB's valuation to be comparable to Google's. G's might even shrink a little bit to help.
But G has that all functioning now, whereas FB's seems merely hypothetical. Could we not equivalently reason that FB could start a P2P auction market to rival Ebay? A distribution channel to rival Amazon?
For all of Facebook's data collection, they don't seem to be able to do anything with it. To put it in perspective, I just logged onto facebook and got an ad from a company hiring coal miners. I'm asthmatic, despise big coal, currently employed, have cerebral palsy, and live three states away from this company. I could have targeted that ad better by randomly pulling a name from the phone book.
Other ads include:
* Beer - I don't drink
* Tickets to the Avengers - Okay, I do want to see that movie.
* Getting my Bachelor's Degree Online - I already have a master's degree. Facebook knows this
* Bait - While they get partial credit, since I enjoy camping, I'm not into hunting or fishing.
* Tequila - See above
* Lawn Fertilizer - I live in an apartment
* Airfare from Chicago to Oklahoma City - I don't live in Illinois or Oklahoma. Facebook knows this.
* Hunting Rifles - See above
* Vodka - See above
Conversely, Facebook should know that I'm attending a conference in DC next month, but there hasn't been any comments on restaurants or attractions in that area.
I don't deny that they have a lot of data. However, I think they're in the TiVo situation where the data simply isn't that interesting.
Sure, Facebook is full of clever hacks and nice features but the gas in that engine is the data happily supplied by their users, for the low low cost of free.
I haven't heard about facebook sniffing wi-fi packets though.
(As an example very few swimmers are probably jealous with Michael Phelps success because he totally earned it. )
No, I'm much more concerned with the bets the fund in which my dad's union's retirement pension plan is coming from.
The best explanation I can come up with is that FB benefits from its massive base of engaged users. I imagine there are a great many individual investors who are torn between wanting to participate in "internet tech" and wanting to not invest in what they don't understand. FB comes along and I imagine many of them to reason "I use it all the time, therefore I understand it". I believe Microsoft has also benefited from this effect.
These people believe they are value investing, not playing the market.
Microsoft also sold products, and had a very strong revenue stream from that. Hype helped MS grow, but their core business fundamentals have traditionally been pretty strong.
Facebook seems overvalued by at least 300%, maybe more. A quick look at tech companies that have about $100 billion market cap(like Facebook), and the closest comparison I can come to is Oracle. Unfortunately, the comparison doesn't look good for Facebook.
Oracle's revenue for 2011 was around $35 billion, which is 10 times Facebook's. Net income was around $8.5 billion(from here: http://www.oracle.com/us/corporate/investor-relations/financ... ). Facebook, according to their SEC filings, had a net income of $1 billion in 2011.
I think that Facebook's valuation is driven entirely by hype, which really means that the stock should perform quite well for the next 30-60 days, until Q2 earnings are released. At that point, I have a feeling that it will drop when investors realize that FB isn't pulling in nearly as much money as their stock is indicating.
People who put money into Facebook early were hoping to get rich(er); they didn't do it out of the goodness our their heart. It's an SV fallacy that angels are, well, angels.
"If FB can't make money, nothing can!"
The worse years I had were after the first bubble and the best years are during this bubble but I still feel the way you are describing.
On the other hand, customers are far more free with their money. (but that doesn't help me as much as you'd think; My big weapon seems to be my willingness to accept a reasonable margin; e.g. I can lower my prices more than the competition. (yes, yes, amazon has lower costs than I do. But they also have more credibility, so that translates into margin rather than into savings for the end user.) For me, the big upside is that individual Engineers have more disposable income that can be put towards the 'hobby' budget, which is the budget most of my customers pay me out of.
I dono. I have a long history of crying 'bubble' long before the crash. I refused to buy a house in 1999 because I thought housing was a bubble.
Only recently have I started thinking about this bubble as something that would last long enough to take advantage of on the upside. I have pretty extensive plans to take advantage of a crash, but I'm only now considering how I can take advantage of the upside.
I don't know if such an info is made public. If it is, anyone has a link?
http://www.learnvest.com/2011/01/a-money-lesson-from-faceboo...
I believe the figures were also based on an earlier $50 Billion valuation.
http://www.livestream.com/nasdaq/video?clipId=pla_80cca9bb-4...
Seeing the sheer joy on Mark Zuckerberg's face was nice. I thought he was going to shed a tear, actually.
It's always inspiring to see a geek get his day.
I say Facebook IS in a lot of financial troubles!!
to downvoters: hello Facebook staff!
Facebook's photo interface looks like http://cl.ly/1w2M180k0C402q1Y0Y31.
You clicked a wall post from an application.
Are you new to the web and Facebook or something?
My bet is FB closes somewhere between $55 and $65. Anyone else fancy making a prediction?
[ edit: stuck an upper limit on my prediction to make it more interesting :) ]
Occasionally shows streams from the NASDAQ opening with Mark Zuckerberg and the crowd.
2000 Shares at $42.05 (SELL)
Edit: $40 seems to be a barrier (not a surprise). It will take a little while for all the limit orders to be satisfied there.
http://blogs.wsj.com/marketbeat/2012/05/18/crazy-but-true-a-...
Attention: FB order execution slowness Certain marketplaces are experiencing slowness resulting in delays in execution for Facebook orders. Industry technology teams outside of Fidelity are working to correct the problem. This slowness is being experienced by other online brokers as well, not just Fidelity. This has been reported as a market-wide issue. We do not yet know when the problem will be resolved. We appreciate your patience.
...not that we need another zerohedge link, but this makes it obvious
http://www.zerohedge.com/news/facebook-ardennes-spot-syndica...
http://www.businessinsider.com/zynga-shares-crushed-and-halt...
Markets care a lot about sentiment. A nice 10-15% pop on the first day leaves everyone feeling pretty good - and a nice halo around the company.
If the price levels off.. Well people will be inclined to be more critical. They'll be wanting FB to start moving the stock north sooner.
I was a bit curious about the pricing. As you say, they want the maximum investment value, but there is some sense in buying the management team some time. A billion less may have saved them a lot of headaches dealing with market criticism, given them time to get some wins...
Anyway. It's a brave new world when you suddenly have to start answering to shareholders.
There are all sorts of responsibilities and duties for an exec (of a public company in particular) - but I'd assume the FB board is insured to the hilt.
Ultimately execs always answer to shareholders (i.e. they bring a return). Otherwise the market doesn't work - the market they've used to raise 16 billion... How this will manifest for FB now and in the future, I've got no idea.
One thing happy shareholders does give you is access to future capital. However, can't see that being a problem for a while yet.
Google's founders control the majority of Google's votes.
I would expect some movement up and down over the quarter until they deliver results. That is when we'll see the movement either way.
Facebook has been trading for a while on secondmarket (a secondary market for 'qualified' investors). The prices have been pretty stable there. These people evaluate the markets in much the same way that every other trader does, and so their value calculation is going to be in line with what any 'real' trader might come up with.
Retail investors, the folks who made the dot com bubble so spectacular, have largely left the market as a mover. So any 'creative' valuations are probably not going to drive a lot of trades.
So trading on the NASDAQ opens up the process to retail investors but they aren't a significant factor, that leaves the more experienced investors and they have already valued the company and shown that on second market, so that the stock moves at all is probably more along the lines of the daily/monthly variations you might see in a Google or Apple or Groupon, rather than the sudden IPO pop of people who wanted to own the stock but were unable to get their hands on it.
That makes it a 'good' sign in the sense that the folks who valued the company in the secondary market were making pretty good guesses on the value. It is also another 'non-bubble' sign in the sense of over-exuberant participation by the retail investors.
Edit: replace 'going going' with 'not going'
This is simply a transfer of wealth between Wall Street and Facebook's major shareholders. (not a broad base at all)
It was made possible because Wall Street believed every Facebook user would try to get in on the action in the open market.
It turns out retail investors and Facebook users didn't join the anticipated mania and now, the valuation of the company is what Wall Street made it out to be and not much more.
In other words, from here on, Facebook's valuation and Wall Street's ROI will solely depend on Facebook's financial success. Obviously, for Wall Street, this is much slower and much more work than having a stock take off on the basis of a mania.
If the financials don't turn up in the next few quarters, watch out.
In the literal sense of "today", Facebook launched on kind of a crappy day. In the more expansive sense of "today", nobody's terribly optimistic right now. The US still hasn't pulled itself out of the hole, and current events in Greece and France have everybody wondering what happens next in what is collectively the world's largest economy.
Even without the unique features of Facebook's IPO, this isn't a great time to be looking for "pop" in anything.
1. Stocks are never priced "appropriately" in the US. Companies rarely adopt the Google-style book-building process (kinda like an auction).
2. FB like others was placed privately. What incentive does an investor at the roadshow have to buy it before the markets open? The incentive is the probability (nay near-certaintly) of an opening day "pop".
3. It's common for underwriters to have a 180-day lock in periods for employees who want to sell their newly-public stock (Linkedin had it iirc). This is another way to increase demand for the shares sold during the roadshow.
And yet, big companies and time can change the rules. Google used the Dutch auction. Facebook has long been traded on non-public markets. Facebook also demanded lower fees from underwriters, and less first-day-pop 'money left on the table' for initial-distribution purchasers.
A negligible 'pop' could mean FB's strategy worked beautifully, capturing the maximum amount of capital for their own goals. It doesn't send the same signal as when another company, which needed more help from the underwriters and media, has a stable first-day price.
Source: http://www.reuters.com/article/2012/05/18/us-zynga-trading-i...
It definitely wasn't a mistake the first time, I watched it tumble from $8 down to $7.17 in reasonable intervals