05-21-12, 08:45 AM #1
I am going to follow FB's stock movement in this thread, just like the GRPN one.
It debuted at $38 on Friday, the price moving between $45-38, settling just above $38. Right now just a day later it is already below $34. The IPO was a success, rising the most money for the company (the goal of any IPO), but giving investors not much extra profit. There were also technical glitches, but that is a different issue.
My prediction is that because the stock is way overvalued, it will be under $20 in 2 years or less...
For info on the IPO:
Last edited by Syzygys; 05-21-12 at 08:52 AM.
05-21-12, 09:11 AM #2
The price decline we see today was expected. Personally I am not a fan of Facebook. I have been there; seen it; have a Facebook account and family that use it; but I am not impressed. I wouldn't be suprised if your prediction should turn out to be correct.
05-21-12, 09:30 AM #3
With little else than an income from advertising companies to earn it money, I really can't see that company doing well for very long. It seems every year or so another company comes along like facebook and everybody goes crazy over how it is the best thing going just like facebook now. Without much actual income, other than advertising, I see it going to be going down in value not up unless there's something that it does to earn more income than its now doing.
05-24-12, 05:02 PM #4
I thought Facebook made their money data-mining people's personal details and then selling that information on to companies who use it one way or another? I don't have a FB account - although, I have thought about opening one because so many people have asked me to (more so 2 years ago not so much now).
Will FB be worth <$20 in 2 years? Is that $20 today's money or $20 including inflation? Some people, like BillyT, think the next two years might see a lot of inflation. So$20 would be equivalent to around $12 in today's value.
05-29-12, 10:09 AM #5
Well, it has been the worst IPO in the last 10 years. The stock is at $30, it is getting to $20 much faster than I thought. Sooner or later it should get a bounce, a $3-4 jump, even if just temporary...
Edit: It is already below $29 and still falling... Supposedly $30 was some kind of technical support...
Last edited by Syzygys; 05-29-12 at 01:28 PM.
05-29-12, 04:33 PM #6
05-29-12, 11:54 PM #7
I realize I am in the minority, but I would not be surprised to see a FB price of $9/share. I think $9/share would be a fair price for the stock. People seem to think this stock will grow at 25% per year, and I just don't see it.
05-30-12, 02:31 PM #8
^ I'm with you. I rounded to $10 but think even $8 is a fair price at the moment, given their current business model.
The business was (and still is) clearly overvalued, in my opinion.
The IPO valuation was at a multiple of 100x prior year profit - which is an order of magnitude more than most other companies around.
The last time we saw this was at the height of the dot.com bubble.
They currently make sales of c.$4bn and make $1bn of profits - which while good margin serves to highlight one major issue that they'll face: how do they grow profits sufficiently to give investors a return, at least in the short-term?
At the moment, even if they gave back their entire profit as dividend, this is a 1% return. My current account gives me more than that!
With the money raised from the floatation they're going to need to come up with some profit-making schemes and quickly, before the buzz wears off and the shareprice drops: at a more reasonable multiple of 20 (still high compared to other companies) this equates to $8/share, which I think is still generous.
They've already spend $1bn buying Instagram... which is a free-to-use system and has c.30m users, and is characterised as a company that has "lots of buzz but no business model"... and any growth will undoubtedly be from the same users who also use Facebook.
And how does Facebook make its revenue at the moment: advertising.
Yet it makes 1/10th of Google's, despite having 2x the page-views.
And the difference is clear: Google is like a high-street, and you get advertising depending on which shops you stop in front of, even if it is the library. Facebook is more like a party, where the walls are plastered with adverts.
And now they seem to be heading down the phone market... not just the software, but the actual physical side of the phone market... trying to challenge Apple.
Their concern seems to be that if they don't do it then Facebook will just be another App on someone else's hardware.
Basically I don't think Facebook yet has a business model that equates to anywhere near a $100bn valuation, and it may struggle to ever do so.
Anyone investing now is investing in potential... and hope. And that's never really a good basis for investing.
Anyhoo - $28.17 as at 8:31pm BST
05-30-12, 03:52 PM #9
Even if the phone succeeds, most of their user base will always be on other platforms, and so they'll have to continue to support those and ensure that they're just as good as FB on their own platform - negating any edge for their proprietary platform. It's just silly.
I'd thought they'd come up with some novel way to embed adds in their mobile site, to boost mobile revenues. That would have been a pretty good move. This whole pie-in-the-sky hardware idiocy is just that.
Their problem seems to be that they imagine that Facebook is a technology company that produces value by innovating new tech. They aren't. They're a social network, and their main value and attraction is the existence of their large user base.
05-31-12, 05:37 AM #10
The rolling in cash is also questionable, until we see the quarterly numbers. They did make a nice profit in the last quarter, but we don't know the cost. Running a huge website like that costs a pretty penny, and they had years of unprofitability.
The original IPO price was to be 28-35, but the underwriters went higher seeing the interest. Again, they did well for the company, they raised the most money available, but that is not necessary good for the investors.
A good comparison would be LinkedIn, and FB actually is way better business-wise as LNKD. The valuation of LNKD is almost $100 with a P/E of 600!!! Even users say they only use it 1-2 times a year...
05-31-12, 05:44 AM #11
06-01-12, 03:05 AM #12
Well, they hit a new low yesterday, at $26.83 /share, but then rebounded to close at $29.6/share.
06-01-12, 05:42 AM #13
That rebound was market related, the S&P 500 rallied 20 points (Dow +170 points). Today it should be down again, because the futures are down like hell...
As I mentioned earlier, the original planned IPO range was 28-35, so around here at 28 the price should see some stability...
Last edited by Syzygys; 06-01-12 at 05:52 AM.
06-05-12, 12:30 PM #14
06-05-12, 12:38 PM #15
06-05-12, 12:39 PM #16
06-05-12, 12:45 PM #17
07-31-12, 11:14 AM #18
80% of Facebook clicks are done by bots
Well, that sure didn't help the stock's price, down to almost $22...
"The company said it discovered the problem several months ago in preparation for the launch of the new Limited Run. "We noticed some very strange things. Facebook was charging us for clicks, yet we could only verify about 20 percent of them actually showing up on our site," Limited Run said in a blog post."
Last edited by Syzygys; 07-31-12 at 12:13 PM.
07-31-12, 11:40 AM #19
I'm having trouble being surprised by this. Facebook is not yet the "real deal" and I wonder if its investment model, including other areas of development, are robust enough. Eventually FB will fade. We'll see if they have any other tricks up their sleeves. I wonder what heads will roll from this.
07-31-12, 12:08 PM #20
Facebook's heyday is over. Their IPO was a huge flop and apparently they are not above ANY dirty trick to try and increase their profit in order to save face (pun intended) when it's time to report quarterly earnings.
They have faced tremendous critisim over their abuse of personal information, shady "terms and conditions" and confusing (on purpose) security settings. They are fading fast and will eventually go the way of Enron and other shady, double-dealing companies.
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