Facebook is not worth $33 billion • Hacker News Board

Re: Facebook is not worth $33 billion

#51

Post by pclark » Thu, Sep 23, 2010, 4:18 PM UTC

Andrew_Quentin wrote: post #17

ulf wrote: post #3

"Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m going to go out on a limb and say you’re unlikely to ever do." This is a strawman. If they wanted to make money right now they would. But they also observed many examples of turning-the-faucet-on gone wrong, especially with the whole privacy issues, that they are…

what exactly are they waiting for? They have half a billion users. You know, that is more than America and Russia together, or comparable to the entire population of the geographical Europe. They can only go down hill from here I think. Therefore, personally I certainly would not wait. The truth is really that they do not know how to monetize themselves effectively

No offense but have you taken more companies public than:

* Marc Andreessen

* Jim Breyer

* Peter Thiel

because they are some of the directors on the Facebook board, and I think they know their stuff.

Re: Facebook is not worth $33 billion

#52

Post by Retric » Thu, Sep 23, 2010, 4:19 PM UTC

mrtron wrote: post #21

ulf wrote: post #3

"Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m going to go out on a limb and say you’re unlikely to ever do." This is a strawman. If they wanted to make money right now they would. But they also observed many examples of turning-the-faucet-on gone wrong, especially with the whole privacy issues, that they are…

Facebook makes a sizeable amount of revenue now. Why does everyone talk about them like they don't make a dollar?

To be worth 33 billion they should be pulling in ~1.5 billion in profit a year with a reasonable expectation that they will increase over the next several years OR they are going to make significantly more than 1.5 billion a year fairly soon. I suspect FB could start making 1 billion a year fairly soon, but suggesting they are going to be make 3+ billion each and every year within 5 years seems like a significant stretch.

Re: Facebook is not worth $33 billion

#53

Post by jfager » Thu, Sep 23, 2010, 4:21 PM UTC

For a little more context, a 33B valuation is ~1/5 Google's current market cap, 1/8 Apple's, 1/6 MS's, 1/4 Oracle's, 1/2 Disney's, 1/2 Amazon's, 2x Yahoo's, 15x AOL's, etc.

It would make Facebook the 79th largest company in the US, and 226th in the world. It would be right behind the likes of DuPont, Dow, eBay, Metlife, Time Warner, and Target, and right ahead of the likes of DirecTV, Lockheed Martin, Texas Instruments, Dell, Fedex, and Nike.

Re: Facebook is not worth $33 billion

#54

Post by danieldon » Thu, Sep 23, 2010, 4:21 PM UTC

spolsky wrote: post #5

I hate to leap in with what seems like an ad-hominem attack on the 37 signals, but their utter and complete misunderstanding of all the basics of business is starting to grate on me, and I'm wondering if it has anything to do with Chicago. Is the problem that they're sitting there in a city without any other Internet industry, stewing in their own witty ideas, listening only to the adoring comments they get from the…

    Is the problem that they're sitting there in a city 
    without any other Internet industry

orbitz, groupon, careerbuilder, peapod, everyblock, skinnycorp, grubhub, the onion, ars technica, to name a few

Re: Facebook is not worth $33 billion

#55

Post by sspencer » Thu, Sep 23, 2010, 4:22 PM UTC

edw519 wrote: post #33

dhh wrote: post #18

Earlier quoted context omitted.

1. Thanks for the word correction, updated. 2. Publicly traded companies have instant liquidity on many more shares, which makes using "last share sold" an meaningful metric. 3. When only 3% of the money a company is supposedly worth has been moved around, it's a poor indicator of what the other 97% would go for. 4. They haven't figured out how to make much profit yet. And it's still questionable whether they will. M…

It's weird, it's like in Chicago they don't have multiplication or something. Oh, and New York smells. (take that!) Two of my heroes dragging discourse on hacker news into the toilet. What's the world coming to?

Agreed, kind of depressing that neither appears to have anything better to do.

Re: Facebook is not worth $33 billion

#56

Post by zacker » Thu, Sep 23, 2010, 4:22 PM UTC

Google IPO'd with a market cap around $23.1B which went up to $33B very quickly: http://www.google-ipo.com/

Google's revenue in 2004 was $3.1B: http://bit.ly/bOQZeZ

Facebook's revenue for 2010 is rumored between $1.2B and $2B: http://techcrunch.com/2010/03/03/facebook-revenue-2010/

VC investment rounds and secondary market transactions are probably not the best way to price a company, but they seem to be in the ballpark.

Re: Facebook is not worth $33 billion

#57

Post by GavinB » Thu, Sep 23, 2010, 4:23 PM UTC

spolsky wrote: post #41

dhh wrote: post #18

Earlier quoted context omitted.

1. Thanks for the word correction, updated. 2. Publicly traded companies have instant liquidity on many more shares, which makes using "last share sold" an meaningful metric. 3. When only 3% of the money a company is supposedly worth has been moved around, it's a poor indicator of what the other 97% would go for. 4. They haven't figured out how to make much profit yet. And it's still questionable whether they will. M…

2. That's just not correct. Spend twenty minutes talking to anyone who trades in bonds or equity before you make assumptions about what liquidity you need to get a good price... it's not much. Facebook trades all the time on sharespost, certainly enough to be liquid and to reach a market price. Google itself only has a tiny fraction of the shares available to the public (10% if I remember correctly) and far less than…

http://www.sharespost.com/companies/facebook

I think the simple summary of your point is this: Things are worth what people are willing to pay for them, not what other people think they should be willing to pay for them.

Facebook is worth $26 billion. That doesn't mean that buying it at a valuation of $26 billion is a good investment. Worth and my estimation of what it will be worth in the future two are different things.

Re: Facebook is not worth $33 billion

#58

Post by mrtron » Thu, Sep 23, 2010, 4:23 PM UTC

nadam wrote: post #31

seldo wrote: post #13

Earlier quoted context omitted.

A dime per user is nice and all, but they need to make 20x that for a billion dollars in revenue. That's still only $2 per user, but a lot harder.

My gut feeling is that Facebook is somewhat overvalued at $33billion. (This is $66 for their average user.) But I don't think it is overvalued by orders of magnitudes and I think the 37signals article is very demagogue.

People are horrible at taking variables like growth into account.

It isn't 66$ per user. It is 33billion/expected number of total users over the lifetime of facebook.

So if you throw in rough estimates of 2 billion facebook users and give them a decade of profiting from an average user...3$ per year per user.

Re: Facebook is not worth $33 billion

#59

Post by jacquesm » Thu, Sep 23, 2010, 4:25 PM UTC

pclark wrote: post #38

jacquesm wrote: post #32

Earlier quoted context omitted.

Google at least has a business model, I can't say I can actually detect one in the case of facebook. As for netscape, yes, in part it was a lost (or destroyed, more likely) opportunity, but at the same time even if they had continued to be successful their valuation at the time was right up there with far future science fiction.

How can you "not detect" a business model for a company that has revenues of over a billion dollars? seriously?

Yes, seriously.

I can't make soup of it. What's their intention long term, everything seems to be in anticipation of what they're really going to do.

In all the time that I used facebook (haven't used it in months) I had a very hard time figuring out how they were making money on or off me.

It can't be the ads I never clicked and it wasn't the subscription fee I never paid.

Re: Facebook is not worth $33 billion

#60

Post by mtrn » Thu, Sep 23, 2010, 4:25 PM UTC

In the past, FB's focus was almost solely on growth and they making planet-scale progress. If you reach some natural border in growth, you can throw your resources on sales, ads and novel revenue models, we haven't seen before.