Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
So how Facebook is worth more than AMD?
- Thread starter PeteRoy
- Start date
Shot in the dark but maybe more people prefer facebook than people prefer AMD? I'm pretty sure that has to do with something about worth...
Not another one of these. It's not that Facebook is actually WORTH that much, it's that MS paid the amount they did for a minor percentage so people are multiplying that by the necessary factor to get to 100% and that's where this supposed "worth" comes from.
Edit: Oh, and take a fucking English class.
Edit: Oh, and take a fucking English class.
Facebook makes plenty in advertising revenue. It also captures the always illusive teenager demograph--that makes it worth plenty.
Its mostly just a bunch of BS, but what it boils down to is something is "worth" whatever the heck someone is willing to pay for it. So if someone is willing to have $1 for bottled water then thats what its worth even if there is no good reason. Also this goes into market cap and such and again the stock is "worth" whatever people are willing to buy it for. You think if one day a companies stock goes down by 10% then their assets are suddenly worth 10% less, of course not.
I'll never understand how microsoft could be interested in another stupid networking/pictures site and pay hundreds of millions for it.
Oh the world we live in.
I was thinking of manufacturing soymilk. It's a 300 million dollar a year industry. It costs little to nothing to produce. If only I can get my foot in the door. :/
Oh the world we live in.
I was thinking of manufacturing soymilk. It's a 300 million dollar a year industry. It costs little to nothing to produce. If only I can get my foot in the door. :/
Deeko
Lifer
- Jun 16, 2000
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Originally posted by: PeteRoy
Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
"makes no money"
You have no concept of business, do you? Yes, Microsoft probably overvalued Facebook, but to say Facebook makes no money is ignorant.
Originally posted by: PeteRoy
Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
A company is only worth the net present values of all future cash flows. Simply put, if Facebook's valuation is 2x that of AMD, Facebook is estimated at pulling in 2x the amount of money as AMD. Also, it is likely that Microsoft paid a certain premium that is estimated at the cash synergies (efficiencies) from common operations that they will receive from the Facebook purchase.
0roo0roo
No Lifer
- Sep 21, 2002
- 64,795
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tech bubble 2.0
still can't figure out a way to make money on it lol
they don't make money, they just have a user base people think is potentially valuable.
whether they can make that into money is another question all together during the bubble plenty of people make money off the stock price even if they know the company is full of it. its hard to pass off making money if others are doing it and getting away with it. you generally don't get a reward for not raking in the cash by being sensible. so the question is always how long can you get away with it.
still can't figure out a way to make money on it lol
they don't make money, they just have a user base people think is potentially valuable.
whether they can make that into money is another question all together
during the bubble plenty of people make money off the stock price even if they know the company is full of it. its hard to pass off making money if others are doing it and getting away with it. you generally don't get a reward for not raking in the cash by being sensible. so the question is always how long can you get away with it.
AgaBoogaBoo
Lifer
- Feb 16, 2003
- 26,108
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Haven't been on in a while, but this question got me interested.
First, part of why it's valued so much is that they've just created so much value and meaning among a large group of users and brought them together.
Second, online advertising is a big market and expected to grow a lot in the next few years. Microsoft is spending tons of money on it and a site like Facebook is very ideal for them, they can grab a huge portion of their target market and be the ones handling the advertising. If you want to advertise there, Google Adwords just won't be able to do it.
Third, AMD has been having a lot of trouble, that only adds to it.
In my opinion, it's based on future value, but there is that factor of being a technology related business that makes it much more "hot" and once that happens, the value is multiplied many times.
They're treating Facebook like Google - creating meaning and value, and the money will follow. One of Guy Kawasaki's famous phrases is that if you create meaning, you will probably make money. However, if you seek money, you will not make money, nor will you make meaning. I'm pretty sure we can agree that Facebook has created meaning, now it's just a matter of monetizing it.
First, part of why it's valued so much is that they've just created so much value and meaning among a large group of users and brought them together.
Second, online advertising is a big market and expected to grow a lot in the next few years. Microsoft is spending tons of money on it and a site like Facebook is very ideal for them, they can grab a huge portion of their target market and be the ones handling the advertising. If you want to advertise there, Google Adwords just won't be able to do it.
Third, AMD has been having a lot of trouble, that only adds to it.
In my opinion, it's based on future value, but there is that factor of being a technology related business that makes it much more "hot" and once that happens, the value is multiplied many times.
They're treating Facebook like Google - creating meaning and value, and the money will follow. One of Guy Kawasaki's famous phrases is that if you create meaning, you will probably make money. However, if you seek money, you will not make money, nor will you make meaning. I'm pretty sure we can agree that Facebook has created meaning, now it's just a matter of monetizing it.
intrinsic value.
and they have millions of people's personal info. seen more ad's on facebook lately?
WSJ recently ran a story that tells its nearly impossible to completely cancel your facebook account. they save a copy of your profile even if you cancel.
AMD on the other hand, i can see it being bought out/driven out soon by INTC.
saying facebook is worthless is like saying google is worthless since it doesn't charge its end-users.
and they have millions of people's personal info. seen more ad's on facebook lately?
WSJ recently ran a story that tells its nearly impossible to completely cancel your facebook account. they save a copy of your profile even if you cancel.
AMD on the other hand, i can see it being bought out/driven out soon by INTC.
saying facebook is worthless is like saying google is worthless since it doesn't charge its end-users.
who makes more money, facebook or myspace?
also, I didn't think anyone was using facebook and it looked like something that myspace raped in terms of sheer users/ad rev.
also, I didn't think anyone was using facebook and it looked like something that myspace raped in terms of sheer users/ad rev.
Originally posted by: Cattlegod
Originally posted by: PeteRoy
Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
A company is only worth the net present values of all future cash flows. Simply put, if Facebook's valuation is 2x that of AMD, Facebook is estimated at pulling in 2x the amount of money as AMD. Also, it is likely that Microsoft paid a certain premium that is estimated at the cash synergies (efficiencies) from common operations that they will receive from the Facebook purchase.
Thats not even remotely true. IF you honestly think Facebook makes enough money to validate this sort of purchase, or ALOT of these tech companies actually make nearly as much money as they are "worth" then you are fooling yourself. It is all a bunch of speculation that their huge customer base will someday be worth something. If you ask me, right now they call this "Web 2.0" abut I think "tech bubble 2.0" is a better term TBH.
damn 15 billion vs. fords 16.8. Ford has been in business for 100 years, they do something concrete. Facebook is just some stupid networking site with stupid drunk frat boys and girls posting incessant BS.
<- me jealous.
<- me jealous.
AgaBoogaBoo
Lifer
- Feb 16, 2003
- 26,108
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I think the difference people are getting is that Google has monetized their searching very well... they're estimated to make between 7 and 9 cents for every search, that's insanely amazing in my opinion. (I think Google is falsely reporting something, but have no real idea or proof)
You made a good point on how facebook has a lot of personal information, and I think that once they start showing even more targeted advertising to the user, they will be able to monetize this even more. Right now, I believe they only target consumers by location. They should be able to do this better by looking at the bands a person lists, where they go to school or work, what their favorite movies/tv shows are, their religion, marital status, etc. The list just goes on and on and my thought is that once they sort users by those things more, they can ask a much higher rate from advertisers.
Originally posted by: BrownTown
Originally posted by: Cattlegod
Originally posted by: PeteRoy
Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
A company is only worth the net present values of all future cash flows. Simply put, if Facebook's valuation is 2x that of AMD, Facebook is estimated at pulling in 2x the amount of money as AMD. Also, it is likely that Microsoft paid a certain premium that is estimated at the cash synergies (efficiencies) from common operations that they will receive from the Facebook purchase.
Thats not even remotely true. IF you honestly think Facebook makes enough money to validate this sort of purchase, or ALOT of these tech companies actually make nearly as much money as they are "worth" then you are fooling yourself. It is all a bunch of speculation that their huge customer base will someday be worth something. If you ask me, right now they call this "Web 2.0" abut I think "tech bubble 2.0" is a better term TBH.
What isn't remotely true? NPV analysis? What are you talking about?
There are two numbers associated with the valuation that Microsoft did with the facebook purchase. The first one is the NPV of future cash flows and the 2nd one is the value microsoft gains from the cost synergies with the partial purchase. Those numbers added together equal the purchase price.
AgaBoogaBoo
Lifer
- Feb 16, 2003
- 26,108
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I do agree that there is a bubble of some sorts, but the investors for businesses like this have seen it happen many times. In the end, even with a bubble, it's profitable for them and their limited partners.Originally posted by: BrownTown
Originally posted by: Cattlegod
Originally posted by: PeteRoy
Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
A company is only worth the net present values of all future cash flows. Simply put, if Facebook's valuation is 2x that of AMD, Facebook is estimated at pulling in 2x the amount of money as AMD. Also, it is likely that Microsoft paid a certain premium that is estimated at the cash synergies (efficiencies) from common operations that they will receive from the Facebook purchase.
Thats not even remotely true. IF you honestly think Facebook makes enough money to validate this sort of purchase, or ALOT of these tech companies actually make nearly as much money as they are "worth" then you are fooling yourself. It is all a bunch of speculation that their huge customer base will someday be worth something. If you ask me, right now they call this "Web 2.0" abut I think "tech bubble 2.0" is a better term TBH.
AgaBoogaBoo
Lifer
- Feb 16, 2003
- 26,108
- 5
- 81
Microsoft is pouring tons of money into capturing the online advertising market - so far, they've had tons of trouble competing with Google, and so by capturing Facebook's audience, they at least have one key online real estate to control.Originally posted by: Cattlegod
Originally posted by: BrownTown
Originally posted by: Cattlegod
Originally posted by: PeteRoy
Recent discussions about AMD in danger and how much it worth and Facebook bought by Microsoft have made me puzzeled about how could a company that makes no money like Facebook worth twice as what AMD is worth.
A company is only worth the net present values of all future cash flows. Simply put, if Facebook's valuation is 2x that of AMD, Facebook is estimated at pulling in 2x the amount of money as AMD. Also, it is likely that Microsoft paid a certain premium that is estimated at the cash synergies (efficiencies) from common operations that they will receive from the Facebook purchase.
Thats not even remotely true. IF you honestly think Facebook makes enough money to validate this sort of purchase, or ALOT of these tech companies actually make nearly as much money as they are "worth" then you are fooling yourself. It is all a bunch of speculation that their huge customer base will someday be worth something. If you ask me, right now they call this "Web 2.0" abut I think "tech bubble 2.0" is a better term TBH.
What isn't remotely true? NPV analysis? What are you talking about?
There are two numbers associated with the valuation that Microsoft did with the facebook purchase. The first one is the NPV of future cash flows and the 2nd one is the value microsoft gains from the cost synergies with the partial purchase. Those numbers added together equal the purchase price.
All I can say is that if Microsoft is claiming to be doing a very strict financial analysis on this trade then the "cost synergies" (omfg the word "synergy" makes me want to gouge my want to kill myself) they are expecting are alot more then the NPV of Facebook, because if you can show me somewhere where Facebook had contracts worth Billions of dollars I will be amazed. IF you want to think of everything your way then I would say that IMO Microsoft vastly overestimates the "cost synergies" associated with this purchase. Only time will tell.
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