Facebook IPO watch.

[Eug]

Tech bubble 2.0

Or maybe just Facebubble?

BTW, the same types of hopelessly optimistic remarks were made about various tech companies just before the last tech bubble burst.

The valuation of FB at even $30 makes no sense. Facebook DOES have a viable business and they do make money, but the stock has been hyped up far too much, and the pump from the hype still exists in the current stock price. The 20% drop is a nice start, but the price is still too high IMO.

 

[rsutoratosu]

class action in the works already

 

[Miramonti]

You'll find no shortage of guys online bragging about how much money they've made on a stock but rarely admit how much they've lost on another.

Aka 'flashing a floyd mayweather.'

 

[sactoking]

I'm pretty sure FB will be worth high 50's - 60 (i.e. double) in 1-2 years. People who bought in at 38 have nothing to worry about once the pump and dumpers are done, as long as FB keeps its revenue up.

At the offer price of $38, given the number of shares offered, Facebook would have to grow earnings by a sustained 50% per year for 5 years to grow into a "normal" P/E. Their current projected earnings growth is 33%.

To hit a "normal" P/E of 20 at $58 earnings would have to grow at a sustained 71.5% for 5 years.

The bottom line is Facebook offered way too many shares.

 

[dagamer34]

Everyone knows that Facebook is going to have to explain themselves what they are doing with investors money during their first shareholder's meeting in about 3 months. Oh, and I suspect a few people are going to wise up and figure out that ~1 billion accounts does not equal an instant payday.

Plus, have you heard about the serious bruhaha that apparently went on during the roadshow last week? Definitely very shady business: http://www.businessinsider.com/excl...y-of-what-happened-on-the-facebook-ipo-2012-5

And of course, they are already being sued for $15 billion for privacy violations. And the whole Yahoo! thing. So fun times ahead.

 

[dagamer34]

And I wasn't really old enough for the last tech bubble. Were people even aware of the term and using it back then? I feel like while there are still some people wildly chasing the next hot thing, most people today are fully aware of sham businesses with no real product. The problem this time is that the products are stuff large sums of people actually use, but the business model isn't fully fleshed out.

 

[Jeffg010]

lol $60 in two years? Really? What do you think Facebook will be doing in two years that will make it worth that much? Social networking is big, but facebook is NOT the end point of it at all.

Do you honestly think a Facebook phone, from a company who has no OS, no hardware, and no telecom experience would compete with an iPhone or the Galaxy S II or III? Networking appliance? Seriously?

They will just buy a company that will make it for them or lease anther company to do it. They now have 100 billion to play with.

No on knows what is going to happen in the next 3 years but the one thing Facebook has is the people or "sheep" like all you guys want to call them to push what ever product they might come up with. Now if Facebook does nothing but focuses only on the social part of it then they might be doomed but no on knows for sure what zuckerberg has in store. He now has a few billion to play with.

 

[Eug]

And I wasn't really old enough for the last tech bubble. Were people even aware of the term and using it back then? I feel like while there are still some people wildly chasing the next hot thing, most people today are fully aware of sham businesses with no real product. The problem this time is that the products are stuff large sums of people actually use, but the business model isn't fully fleshed out.

Yeah, back then they were using the term "bubble" for sure, but I don't remember if they specifically labelled it "tech bubble".

People were just throwing money at tech startups left and right. It was bizarre. I can sort of understand why though. For example my investment broker invested in an online gambling company, for himself. He didn't do it with his conservative clients, because he felt it was too high risk, but decided to try it himself, and he made big money off of it. Lots of people were chasing that dream.

As for big companies, the one that stood out to me as way overhyped was AOL. (I'm not talking about its IPO per se, but its value later when it essentially bought Time-Warner.) It just made no sense whatsoever to me. Look at where AOL is today. I did think at the time that AOL did the smart thing and struck when the iron was hot, by merging with Time-Warner. Similarly FB made the most of their hype. They raised a TON of money.

 

[Skel]

http://money.msn.com/technology-investment/news.aspx?feed=OBR&date=20120523&id=15143547

FB and Morgan Stanley sued over the IPO

 

[dmcowen674]

http://money.msn.com/technology-investment/news.aspx?feed=OBR&date=20120523&id=15143547

FB and Morgan Stanley sued over the IPO

How many ATers lost big time?

 

[mugs]

Yeah, back then they were using the term "bubble" for sure, but I don't remember if they specifically labelled it "tech bubble".

It was called the dot-com bubble, and I'm pretty sure it was called that even before it burst.

As for big companies, the one that stood out to me as way overhyped was AOL. (I'm not talking about its IPO per se, but its value later when it essentially bought Time-Warner.) It just made no sense whatsoever to me. Look at where AOL is today. I did think at the time that AOL did the smart thing and struck when the iron was hot, by merging with Time-Warner. Similarly FB made the most of their hype. They raised a TON of money.

I did poorly in the stock market game in high school, because everyone else bought AOL. At least I got my moral victory in the long run. Now I realize that playing the stock market game in high school is kind of stupid, because high school students (and most adults) really have no business picking stocks with a 3 month timeframe. We essentially teach kids to use the stock market to gamble.

 

[FelixDeCat]

http://money.msn.com/technology-investment/news.aspx?feed=OBR&date=20120523&id=15143547

FB and Morgan Stanley sued over the IPO

I told you puts were the only play for FB. It will be one scandal after another.

 

[OlafSicky]

We essentially teach kids to use the stock market to gamble.

The way the stock market is setup today is a pure gambling. Get in get out etc. If a company makes 100 mil profit year in and year out it's no good because we need growth 50% quarterly why? So the stock goes up and then we can sell it quick to the waiting suckers. The product is not important or irrelevant what is the commodity, is stocks and only rising ones.
An analysts “guess” is as good as a flip of a coin yet people continue to take a chance on these predictions.

 

[Eug]

Don't forget about dividends. Stock price is not the only way to get some cash out of a stock.

 

[gorcorps]

R
O
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(lol)

 

[The-Noid]

FB-O soon to be FB-N from the new reports. Intriguing. It must not be that the stock is overvalued, it was the exchange...

 

[SP33Demon]

lol $60 in two years? Really? What do you think Facebook will be doing in two years that will make it worth that much? Social networking is big, but facebook is NOT the end point of it at all.

Do you honestly think a Facebook phone, from a company who has no OS, no hardware, and no telecom experience would compete with an iPhone or the Galaxy S II or III? Networking appliance? Seriously?

Are you stupid? LinkedIn is over double it's IPO a year back and trading at 800 P/E. Of course that won't last but speculation can easily drive a stock through the roof for a couple years. P/E only matters over long periods of time and FB could easily be trading in the 60's in a year.

 

[abaez]

Are you stupid? LinkedIn is over double it's IPO a year back and trading at 800 P/E. Of course that won't last but speculation can easily drive a stock through the roof for a couple years. P/E only matters over long periods of time and FB could easily be trading in the 60's in a year.

You really believe this? Wanna bet $50 facebook won't be near a $60 share price next June 1?

 

[The-Noid]

You really believe this? Wanna bet $50 facebook won't be near a $60 share price next June 1?

This sounds like an OTC derivative. Better make sure ISDA knows.

 

[SP33Demon]

You really believe this? Wanna bet $50 facebook won't be near a $60 share price next June 1?

If I was a gambler I would have bought the stock. I'll let you do all the gambling since you cannot fathom that stocks double within a year all the time, despite PE ratios. It's called speculation. Don't be surprised if it's in the 50+ range in a year, especially if they post big revenue in the next couple of quarters. Even if I'm right you can keep your fucking money, I don't want it.

 

[uclabachelor]

If I was a gambler I would have bought the stock. I'll let you do all the gambling since you cannot fathom that stocks double within a year all the time, despite PE ratios. It's called speculation. Don't be surprised if it's in the 50+ range in a year, especially if they post big revenue in the next couple of quarters. Even if I'm right you can keep your fucking money, I don't want it.

If you truly believe that Facebook will double in a year, then you'd put money where your mouth is at and buy some shares, but you won't do it. You don't have the guts to back up your "speculation".

 

[kranky]

FB stock at $30.20 this morning, down another 5% so far today. Wow. Now down 20% from the IPO price.

 

[Fritzo]

FB stock at $30.20 this morning, down another 5% so far today. Wow. Now down 20% from the IPO price.

Analysts on MSNBC are saying they have no idea how they thought $38 was a good starting price. They would have valued it around $11-$16

One of those "Told ya so" moments.

 

[Eug]

Analysts on MSNBC are saying they have no idea how they thought $38 was a good starting price. They would have valued it around $11-$16

One of those "Told ya so" moments.

Except most of them are saying this with the retrospectoscope. It's always easy to be right after the fact, and almost nobody was saying $11 was appropriate.

 

[sactoking]

Analysts on MSNBC are saying they have no idea how they thought $38 was a good starting price. They would have valued it around $11-$16

One of those "Told ya so" moments.

In all fairness, you have to remember that Facebook only makes money on the IPO and not the market trading. The general thinking is that if you offer at $38 and it shoots up to $60 then the underwriters left a bunch of money on the table. From the perspective of Facebook and the underwriters having it offer at $38, sell out, and then drop to $30 is pretty much the perfect scenario since that means they got the maximum value in the offering.