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Facebook's Value: What's The Price Of A Billion People Watching Each Other?

Discussion in 'Off-Topic Discussion' started by CatfishRivers, May 18, 2012.

  1. CatfishRivers

    CatfishRivers Well-Known Member

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    Facebook's Value: What's the Price of a Billion People Watching Each Other? - Derek Thompson - Business - The Atlantic (click for full article)

    "Is Facebook's IPO the next chapter in the greatest company of our time, or are Friday's buyers total suckers?


    The only intelligent, honest, and true thing to say about this inevitable question is that nobody has any clue. In 1992, a company called America Online had a $70 million valuation after its IPO. A decade later, it was worth $150 billion. A decade after that peak, it is now worth only $1 billion. Online fortunes are built on hyper-active tectonic plates. Mountains of wealth accumulate from flat nothingness, rumble, push up toward the sky, and with alarming frequency, blow themselves up. The Internet is a super-seismic place.


    The AOL of the 1990s and the Facebook of today are both penumbral Internet companies. Both permeated our lives in intimate ways. Both changed the way we interact with friends, receive information, and spend our time. Whereas AOL lived off subscriptions, and was vulnerable to competitors who offered Internet access for free, Facebook's currency is simply attention. Its competitors are, essentially, any company that can distract us more effectively.


    Facebook's greatest asset is its immense capacity to distract us. The best social media companies manage to get 10% of their users to come back each day, according to Foursquare/Tumblr/Twitter/Zynga investor Fred Wilson. Ten percent isn't cool, Facebook contends. You know what's cool? Fifty percent. "The majority of Facebook users stay active and their daily active user numbers are more than half their monthly numbers," Jonah Peretti says, "meaning the majority of people login each day. It is freakin' crazy."


    It is freakin' crazy. If Facebook were merely the widest social network by number of users, dayenu. If it were the deepest social network by the quality of engagement and the quantity of personal detail, dayenu. But it's the widest and the deepest! That sort of thing has to be worth $100 billion, right?


    Right?


    THE CASE AGAINST FACEBOOK


    In 1995, two students launched a website called TheGlobe.com from their Cornell dorm rooms. It resembled a proto-Facebook, letting users create personal pages with a place for pictures and writing. It had members (2 million) and a business plan (sell ads). The day of its IPO, TheGlobe.com's stock price sextupled -- a record pop for its time -- and approached $100. Where is it today? Exactly. "
     
    Last edited: May 18, 2012
  2. CatfishRivers

    CatfishRivers Well-Known Member

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    Facebook stock is trading up 8 percent | HeraldTribune.com (click for full article)

    "Facebook's stock is trading up 8 percent Friday, as investors seek to put a dollar value on the company that turned online social networking into a global cultural phenomenon.


    That means Facebook is worth about $112 billion, more than Amazon.com and McDonald's.


    But as many people looked for a big first-day pop in Facebook's share price, the single-digit increase was somewhat of a letdown.


    "It wasn't quite as exciting as it could have been," said Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital. "But I don't think we should view it as a failure."


    Indeed, the small jump in price could be seen as an indication that Facebook and the investment banks that arranged the IPO priced the stock in an appropriate range.


    Earlier Friday the company's 28-year-old CEO, Mark Zuckerberg, smiled as he rang the opening bell from Facebook's headquarters in Menlo Park, Calif. Surrounded by cheering Facebook employees and wearing his signature hoodie, he pushed the button that signals the opening of the stock market in New York. The morning's events followed an all-night "hackathon" at the company, where engineers stayed up coding software and conjuring up new ideas for Facebook and its 900 million users. "
     
  3. CatfishRivers

    CatfishRivers Well-Known Member

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    Zuckerberg (click for full article)

    "Mark Zuckerberg's fortune dropped $2.2 billion as shares of Facebook Inc. (FB), the world's largest social-networking company, fell below the company's $38 offer price in its second day of trading.

    The shares sank 11.3 percent to $33.90 at 12:37 p.m. in New York, after declining as much as 13.7 percent to $33. Zuckerberg's stake is valued at $17.1 billion. He had ranked 26th on the Bloomberg Billionaires Index on May 18.


    "If you went out and spent on Friday, you're not canceling the order for the Lamborghini just yet," Martin Pyykkonen, an analyst with Wedge Partners in Greenwood Village, Colorado, said in a phone interview. "For the most part, those with a substantial stake still have plenty of value."


    Facebook raised $16 billion in an initial public offering, selling 421.2 million shares for $38 each on May 17. It was the biggest technology IPO in history. The stock was little changed at $38.23 at the close of May 18.


    The IPO suffered from trading glitches on its first day. Nasdaq OMX Group Inc. (NDAQ) Chief Executive Officer Robert Greifeld said a "poor design" in software driving auctions for IPOs caused issues with Facebook's first trading day.


    Moskovitz, Saverin

    Dustin Moskovitz, 27, who started Facebook with Zuckerberg from their dorm room at Harvard University, owns 133.7 million shares of the company's Class B stock worth $4.5 billion, down $580 million during the day."
     
    Last edited: May 21, 2012
  4. CatfishRivers

    CatfishRivers Well-Known Member

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    Market Day - Facebook stock slumps another 9 percent (click for full article)

    By msnbc.com news services

    Investors are still giving Facebook stock a thumbs down.

    "Shares of the social media network, which hit the public markets Friday with a messy stock offering, fell another $3.03 or 9 percent Tuesday to close at $31, 8 percent below the IPO price of $38 and 31 percent below Friday's intra-day high of $45 a share. (Track Facebook's stock price (FB) here.)

    Facebook shares were weakened by doubts over the company's valuation after Reuters reported that Morgan Stanley, the lead underwriter for the company's IPO, cut revenue forecasts for the social networking site shortly before the company went public.

    "When Facebook broke the deal price, it became self-fulfilling that there was going to be additional pressure on the stock," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles, adding that there were still those "who think valuation is way too high."


    Facebook, its investment bankers and the Nasdaq stock market have come under fire for not making sure one of the most anticipated market offerings in recent memory happened smoothly.

    When a stock falls below its offer price so soon after an IPO it is considered a disappointment for the company, particularly when the IPO is the most heavily traded ever and concerns such a high profile company.

    A number of reasons for the stock decline have been offered by observers. Some pointed to underwriters offering too many shares, while others blamed an overly strong IPO price and worries about slowing revenue growth at the social network.

    Nasdaq faces short-term costs from its botched handling of Facebook shares on the first day of trading, but longer-term repercussions could be more expensive as it struggles to restore its image.

    Initially, the exchange said it planned to set aside $13 million to resolve bad trades; even if all of that was used, the cost would be minimal compared with the $387 million in net income it reported last year."
     
    Last edited: May 22, 2012
  5. CatfishRivers

    CatfishRivers Well-Known Member

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    Market Day - Facebook's dream IPO is starting to look like a nightmare (click for full article)

    "The hotly-anticipated Facebook IPO was supposed to be a watershed moment in social media and one of the biggest stock offerings to ever hit Wall Street.


    Instead, the event is turning out to be a major humiliation for Facebook, its underwriters and the Nasdaq Stock Market, where Facebook opted to list its shares (although CNBC reported Wednesday it is now considering a move to the NYSE, though the exchange denied any conversations with the company).


    Critics say the underwriting banks set the price of the offering too high and sold too many shares to the public, and the IPO debacle is raising broader questions from regulators about the IPO process, according to news reports Wednesday.


    In the latest blow to the company, three shareholders filed a lawsuit against Facebook Wednesday, saying its chief executive Mark Zuckerberg and several banks led by Morgan Stanley omitted or misrepresented material information about the social networking leader's business ahead of its IPO. The lawsuit seeks class-action status for all Facebook shareholders, except the defendants."
     
    Last edited: May 23, 2012
  6. CatfishRivers

    CatfishRivers Well-Known Member

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    Market Day - Analysts wonder how low Facebook shares will go (click for full article)

    By Roland Jones

    With its share price hitting new lows daily, professional investors and market experts are beginning to voice concern about the outlook for Facebook stock.


    The No. 1 social network's share price sank even lower Wednesday as nervous investors worried about the company's long-term business prospects.


    Facebook's share price sank 2.3 percent to a new closing low of $28.19 after dropping nearly 10 percent Tuesday. The share price, which has fallen in five of its eight days of public trading, has now fallen 26 percent since it went public at $38 a share May 17.


    Facebook founder and CEO Mark Zuckerberg has seen the value of his stake in the company fall about $5 billion from the IPO value to a current $14.2 billion. Zuckerberg also sold more than $1 billion worth of shares in the IPO, according to documents filed by the company.
    The decline knocked Zuckerberg off a briefly held spot on Bloomberg's runnning index of the 40 richest people in the world.


    The offering, which was marred by trading glitches and has triggered several lawsuits, has been one of the worst performing of any large company, according to data tracker Dealogic.


    Anant Sundaram, a valuation expert at Dartmouth's Tuck School of Business, said he's concerned about Facebook's stock valuation because he thinks the company will face difficulties deriving revenue from its new users overseas, and from its growing presence on mobile devices.
     
  7. CatfishRivers

    CatfishRivers Well-Known Member

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    Nasdaq plans $40 million Facebook IPO fix - Market Day (click for full article)

    "The Nasdaq stock market said Wednesday it will offer cash and rebates totaling approximately $40 million to compensate clients affected by the problems with Facebook's initial public offering.
    A first-day trading glitch marred Facebook's IPO, leading to complaints of slow order confirmations and too many shares offered at too high a price.


    Subsequent lawsuits have alleged that the Nasdaq botched the offering and that deal underwriters Morgan Stanley and others failed to share lowered earnings forecasts with retail investors before the IPO.


    Robert Greifeld, CEO of the Nasdaq, said in a CNBC interview his company has "been embarrassed" by the technical problems that occurred during the Facebook IPO. "We certainly apologize" to the industry, he said.


    The compensation, which is subject to approval by regulators, will see the Nasdaq pay $13.7 million in cash to its affected member firms. The balance would be credited to members to reduce trading costs, with all benefits expected to be achieved within six months for the vast majority of firms, the Nasdaq said in a statement."
     
    Last edited: Jun 6, 2012

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