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  (Source: Getty Images/Justin Sullivan)
Company is estimated to be worth around $107B USD, including unexercised share options

Facebook -- the world's most used website and the largest social network in the world -- is on the eve of its initial public offering of stock.

The price of shares -- $38 USD -- was just announced.  That places Facebook's tenative market capitalization at $81B USD, more than some expected.  Combined with executives unexercised share options, the company's total valuation appears to be around $107B USD, according to experts.  That's notably a higher valuation than the world's top online retailer, Amazon.com, Inc. (AMZN) who "only" has a current market cap of $98.4B USD.

The IPO will raise $16B USD, based on the announced share price.  The IPO is the third largest in U.S. history, behind only Visa Inc.'s (V) 2008 offering of $19.7B USD in stock and General Motors, Inc.'s (GM) $18.1B USD post-bankruptcy stock offering.

Shares will trade under the symbol "FB".  It is unlikely that many shares will reach the hands of small independent traders; the IPO is underwritten by finance house Morgan Stanley (MS) and most shares will go to large institutional investors, mutual funds and hedge funds.  This is different from other top tech IPOs of the past, such as Google, Inc. (GOOG) who sold directly to individual investors via a "Dutch auction" process.

The expected offering date is May 18, pending approval by the U.S. Securities and Exchange Commission.

The stock offering is destined to transform Facebook's early investors and founding members into multi-millionaires, if not billionaires.  Facebook's co-founder has reportedly abandoned his U.S. citizenship in order to avoid paying much of the taxes on the windfall that will be coming his way.  Iconic co-founder Mark Zuckerberg remains a U.S. citizen and has pledged to give away his fortune to charity when he dies, as suggested by his mentor, Bill Gates.

Facebook is a company of much controversy and potential.  Some believe it could increase profits by a substantial multiplier if it jumped into the online payments business as a competitor to eBay, Inc.'s (EBAY) Paypal service.  However, concerns over privacy and censorship remain active discussions and may make some investors cautious of diving in to the Facebook stock.

Source: CNN Money



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Comparison with AMZN
By TakinYourPoints on 5/18/2012 12:55:56 AM , Rating: 2
The comparison with Amazon is funny given that AMZN is massively overvalued itself. AMZN has a price multiple of about 180 while AAPL and MSFT are around 10 and Google is at around 20.

While I don't expect Facebook's margins to be as razor thin as Amazon's, their net revenue certainly isn't as high. Their earnings will be public and on the books going forward, very curious to see how they grow their revenue.




RE: Comparison with AMZN
By MrBlastman on 5/18/2012 7:44:37 AM , Rating: 2
Amazon is only trading at barely 2x revenues and it actually provides something of worth to society. I'd say they are at the very least fairly valued. In case my opinion isn't good enough, the analysts at Morningstar fairly value them at 250 bucks. The stock is at what, only 218 a share?

Facebook is IPO'ing at 20+ times revenues! The only thing ridiculous here is Facebook.


RE: Comparison with AMZN
By skirvmi on 5/18/2012 9:31:59 AM , Rating: 2
Amazon is trading at about 180 P/E, not sure where you are getting your numbers from. A P/E of 20 is well withing the realm of normal. Google is at about 19. A higher P/E just means it is a "growth" stock.


RE: Comparison with AMZN
By mcnabney on 5/18/2012 9:56:57 AM , Rating: 2
That logic of a ludicrously high PE works for small, up and coming companies. Not so much with a mature and well known one. Just because everyone has heard of something doesn't mean that they are going to give you a ton of money. Remember, this IPO values FB higher than Disney, which is a mammoth company with holdings as diverse as a TV network, cable channels, theme parks, Pixar + their own production studio, theme parks, and a catalog of IP dwarfing all others. Facebook is a place where people play casual games, check out past girlfriends, and tell mom that the kid is riding a bike without training wheels.


RE: Comparison with AMZN
By skirvmi on 5/18/2012 10:15:03 AM , Rating: 2
The value of a company is more than its assets and earnings. The brand itself has value. Removing all assets, how would you value a company like Coke simply on the brand? While this is part of it, Facebook's value is based largely on the information they posses. Detailed information about peoples preferences, locally, nationally, and globally would be worth a huge amount of money for people producing and marketing products. To me, this is why there is such a buzz around Facebook. It will be interesting to see how much the market thinks this information is worth.


RE: Comparison with AMZN
By mcnabney on 5/18/2012 3:08:51 PM , Rating: 2
Uhm, brand value is actually recorded in a company valuation as goodwill. For Facebook, a $108B market-cap would imply goodwill of over $100B. Insanity. And I thought that Amazon was insanely priced.


RE: Comparison with AMZN
By MrBlastman on 5/18/2012 11:01:33 AM , Rating: 2
Common people refer to P/E as the holy grail of ratios. People that know what they're talking about look at other figures, like Revenues versus Market Cap. Re-read my previous post. You'll see quite clearly I didn't mention P/E.

Also, you do NOT know what you're talking about, at all. Not one bit. To try and equate a standardized P/E of 20 with every single company out there is laughable.

P/E is relative, like all other ratios. It isn't a hard set number with thresholds. In order to make sense of P/E, like all other ratios, you have to compare them with their peers in the same industry or similar sector. This is the only way you can begin to shed any light and make sense of them. There is no steadfast rule here, it is purely governed versus their peers.

If companies were only valued by their P/E, then companies that lose money (i.e. have negative P/Es) would be worthless. They aren't though! You can see it for yourself by looking up Sprint's figures. They have a negative PE--i.e. they are losing almost ten cents on every dollar they bring in on revenues. Yet, still, even though they are losing money, they still have a market cap of 7 Billion.

FYI Facebook is going to open with a PE of 126. That is meaningless to me given their slowing growth. I'm far more concerned about Revenues vs. Market Cap than anything else here. You cross 8x in a high growth industry like the tech industry and I start getting worried. Even companies like Rackspace who are growing rapidly only trade at 6.8x.


RE: Comparison with AMZN
By skirvmi on 5/18/2012 11:20:15 AM , Rating: 2
I appreciate your honest feedback regarding my knowledge. My experience in the area is limited to grad school and I don't do this on a daily basis.

I was mistaken about the FB PE, but my real point was that it was not unheard of even at 126 in its industry. I never made the argument that it was the holy-grail.

It is going to be difficult to value a company like FB based solely on its financials. Its real value is in the information it possesses. Just because they have not effectively monetized it yet doesn't mean there is no value.


RE: Comparison with AMZN
By MrBlastman on 5/18/2012 11:47:43 AM , Rating: 2
That information is only as good as how current it is too. You're right, they hold quite a bit of their value in that information. The challenge is trying to monetize it in a timely manner before:

a. That information deteriorates and is less valid
b. Before users start leaving Facebook to the next big thing

They have a great asset. They need to capitalize on it now, not later. The problem is their growth is slowing, which is not something you want to see in this kind of company. Earning only a dollar per user isn't exactly making much off of it, either.

One other alternative way to value Facebook is to actually value that information--what could it be sold for today to another company--say a marketing company.


RE: Comparison with AMZN
By mcnabney on 5/18/2012 3:17:16 PM , Rating: 2
Sprint actually does have no value.

Their cash flow allows them to continue to exist (as do bond purchasers which continue to float the idiotic management, hoping for change). Having no earnings is expected in startups, but is only briefly tolerated in mature companies. If a business isn't currently delivering or have certain to appear profits there is no reason for shareholders to hold their shares and bond holders should brace for a haircut.
Now Facebook doesn't really seem to have much of a plan for future revenue or earnings growth. They do know how to waste money (Instagram) on other companies and ideas that also don't appear to have a ROI.
That is why I rate Facebook as "point and laugh at people scrambling to buy", because it is going to be a hot potato and you don't want to be left holding the Old Maid when everybody darts for the exits when the illusion fades.


RE: Comparison with AMZN
By TakinYourPoints on 5/18/2012 5:41:21 PM , Rating: 2
You are correct that PE is only one factor out of many (I'm mainly a technical trader myself, using charts, etc).

However, AMZN's PE is an indicator of other issues with the company, namely slowing growth and razor thin profit margins. And while using 20 as a standard PE isn't a hard and fast rule, comparing it with other mature large cap mature tech companies does say quite a lot.

180 PE for a major large cap that has yet to improve their profit margins is a bit much. Wall Street is better on Amazon to improve theirs at some point. Either their profits will justify the stock price, or eventually the price will drop to better reflect what Amazon actually makes.


RE: Comparison with AMZN
By TakinYourPoints on 5/18/2012 5:42:50 PM , Rating: 2
You are correct that PE is only one factor out of many (I'm mainly a technical trader myself, using charts, etc).

However, AMZN's PE is an indicator of other issues with the company, namely slowing growth and razor thin profit margins. And while using 20 as a standard PE isn't a hard and fast rule, comparing it with other mature large cap mature tech companies does say quite a lot.

180 PE for a major large cap that has yet to improve their profit margins is a bit much. Wall Street is better on Amazon to improve theirs at some point. Either their profits will justify the stock price, or eventually the price will drop to better reflect what Amazon actually makes.

As for Rockspace, the reason it is so poorly valued is that few believe that it will make any real headway. Why would anyone run up the price except on a big rumor?


RE: Comparison with AMZN
By TakinYourPoints on 5/18/2012 5:36:37 PM , Rating: 2
Revenue growth isn't there, and profit margins most definitely aren't there to justify the stock price.

It is the strangest thing, investors treat Amazon like a tech stock when their business model is much much closer to a big traditional retailer such as Walmart's (make razor thin profits in order to maintain market share).

Fairly valued? We'll see, either they finally start making profits to justify the valuation or the stock price comes down accordingly.


RE: Comparison with AMZN
By zephyrprime on 5/21/2012 1:22:18 PM , Rating: 2
I agree. I don't see where AMZN is ever going to make huge margins. They basically are the next walmart and should be priced accordingly. Being the next walmart is actually a very enviable thing to be but it's not some sort of magical position to be in.


RE: Comparison with AMZN
By sarfralogy on 5/18/2012 3:12:26 PM , Rating: 2
Today's Facebook IPO has made Zuckerberg the 29th richest person in the world. At $38 a share, Zuckerberg's 503.6 million shares and options are valued at $19.1 billion, surpassing the wealth of Google Inc. co- founders Sergey Brin and Larry Page.

“Zuckerberg doesn’t think about his wealth,” David Kirkpatrick, author of “The Facebook Effect,” a history of the company, said in an interview on May 17. “This is a huge success for everybody. There’s no way it can be seen otherwise.” http://bit.ly/Kzsbjx


HERE COMES FACEBOOK'S FIRST STOCK TRADE...
By sirah on 5/18/2012 11:20:49 AM , Rating: 1
NASDAQ has delayed the opening of the stock trading.
Now word on what's holding up the trading. The speculation is that it's due to heavy volume.
The process for quote matching has begun.
The first pairing was at $45 and now it's down to $42.
Stay Updated http://www.patexia.com/companies/facebook-inc-us/d...




RE: HERE COMES FACEBOOK'S FIRST STOCK TRADE...
By sarfralogy on 5/18/2012 11:35:34 AM , Rating: 2
The stock was priced at $38 for the IPO, so it's up just 5%


RE: HERE COMES FACEBOOK'S FIRST STOCK TRADE...
By sirah on 5/18/2012 11:44:08 AM , Rating: 2
This is quite unexpected. Most people were assuming the stock would have a monster pop at the opening.


RE: HERE COMES FACEBOOK'S FIRST STOCK TRADE...
By sarfralogy on 5/18/2012 11:58:12 AM , Rating: 2
Officially Facebook opened at $42.05 and shot up to $43 immediately.... WSJ reports


RE: HERE COMES FACEBOOK'S FIRST STOCK TRADE...
By mcnabney on 5/18/2012 3:24:22 PM , Rating: 2
And now it is drooping down to 38.

It appears that there just aren't enough suckers.


By kleinma on 5/18/2012 4:00:01 PM , Rating: 2
What a crappy first day on the public market when your stock sinks back down to the IPO investor price. I guess just having 900 million users that you suck the privacy from does not equal a valuable company that people want to invest in.


RE: HERE COMES FACEBOOK'S FIRST STOCK TRADE...
By iluvdeal on 5/18/2012 6:14:09 PM , Rating: 2
Multiple reports that the underwriting banks of the FB IPO had to step in and prop up the stock as it almost sunk below the IPO price of $38 today. Glad I didn't join the stampede in wanting to own shares today.


By TakinYourPoints on 5/18/2012 9:40:55 PM , Rating: 2
The support at $38 is crazy. Investment banks are doing their best to hold the price there


rise and fall
By Nortel on 5/17/2012 6:39:25 PM , Rating: 5
Facebook isn't a long hold.. hell it isn't even a week hold. Watch for a big push at the open followed by a fall back to earth. Nobody in their right mind who knows anything about the actual Facebook company would hold this dog turd of a stock and its a very hard prospect to argue that point.




RE: rise and fall
By MrBlastman on 5/17/2012 9:10:02 PM , Rating: 2
Flip it fast cause it's gonna crash! ;)


RE: rise and fall
By martin5000 on 5/18/2012 5:12:34 AM , Rating: 2
A lot of people are going to get burned on this, and a lot of experienced traders are going to get rich from burning them.


RE: rise and fall
By tayb on 5/18/2012 11:24:49 AM , Rating: 2
High frequency trading. A lot of people are going to get rich in a 3-5 hour timespan. I wish I had more money so I could make more. Almost all of these IPOs have the exact same pattern. Skyrocket up within the first day and then come back down. If you get in when the bell rings and get out within a few hours you might make 600% ROI.


RE: rise and fall
By Nortel on 5/18/2012 3:47:55 PM , Rating: 3
I hope you didn't lose your lunch on the dog turd


Charity
By EricMartello on 5/18/2012 6:24:40 AM , Rating: 1
There are more productive uses of money than giving it to charity. Poor people are going to be poor no matter what because that's their maximum potential. Even if one of those poor schmucks wins the lottery, it's only a matter of weeks before they squander it all on some dumb sh1t and end up back in the same situation they were before.

I'd not be so arrogant as to think that when I die, my company dies with me - instead I'd rather have my money go back into my company and I would make sure to appoint some quality leadership to keep it going.




RE: Charity
By GuinnessKMF on 5/18/2012 7:48:18 AM , Rating: 2
Is that what you think charity is? Just handing out wads of cash to people on the street?

Bill Gate's largest philanthropic focus is on addressing malaria in third world countries. It's not about giving gold chains to impoverished people, it's about providing the means for them to be productive members of society.

The attitude of "Poor people are going to be poor no matter what" will keep them at the food banks and welfare offices.


RE: Charity
By mcnabney on 5/18/2012 3:26:03 PM , Rating: 2
The same rule applies to dumbasses, so don't waste your time trying to teach him anything. He will always be dumb.


RE: Charity
By EricMartello on 5/18/2012 10:17:51 PM , Rating: 1
No, I'd rather just let nature run its course and let them die off. The ones who are motivated to do something FOR THEMSELVES can survive and I'd be happy to help them.

The rest of them who are too dead-set in their ways or are otherwise unwilling to pull their own weight don't need to be populating the earth.

We have plenty of humans on Earth; we're not an endangered species and I'd rather preserve the resources of this planet for people that are actually going to give back rather than just take.

Donating to charity usually results in a large portion of that money going to overpay some non-profit execs a 6-figure salary while the rest is food and drug handouts - a lot of which is seized by warlords/gangs.

Rich people giving away their fortunes is just something they do to feel good about themselves. Malaria, cancer and other diseases exist to keep the human population in check...cure one and a few more will pop up.

Point is there are better things to do with a large cache of money than to give it away to charity.


RE: Charity
By dark matter on 5/18/2012 8:52:47 AM , Rating: 2
Poor people are going to be poor because that is their maximum potential.

Spoken like a true fascist.


RE: Charity
By 91TTZ on 5/18/2012 2:53:44 PM , Rating: 2
Calling the poster a fascist doesn't dispute what he's saying in any way.


RE: Charity
By overlandpark4me on 5/20/2012 1:58:16 AM , Rating: 2
You are wrong, he is right. Why do you think a certain useless voting blocks votes the way it does. Their elected officials want them to stay poor, otherwise who would they vote for? Not to mention the fact that they're so stupid, they don't even know how racist that party has been in the past.


MySpace
By BSMonitor on 5/18/2012 12:47:34 PM , Rating: 2
Not bad for a MySpace knock off.




and close at 38 bucks
By overlandpark4me on 5/20/2012 1:40:50 AM , Rating: 2
with institutions propping it up when it was going to drop below




By overlandpark4me on 5/22/2012 7:08:06 PM , Rating: 2
Now we'll have people testifying and getting sued over this. Zucker the idiot pulled the wool over everybody. He said more retail customers would have a shot. The problem is that the trades didn't go through all the time and people took it up their poop shoot. How does it feel with it closing under 32 people? Toilet paper up your butt might stop the bleeding for a while. So glad I stayed away from this turd. Oh, and where is Zucker? Hiding, while he laughs he arse off. What kind of idiot gets married in a laughing stock of a community property state the day after he is handed billions. She's not even hot. That alone should tell you he's an idiot. Oops, that and Instagram.




"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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