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Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

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Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#31

Post by cfront »

qq66 wrote: post #24
cfront wrote: post #21

Earlier quoted context omitted.

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

Yes, diversification is smart. But you're trying to use this general idea to explain a specific decision that is clearly a matter of timing.

You could claim that everytime an insider at any company sells the majority of his stock he is diversifying. But that's not really looking at what the real reason is. There is a reason that "now" is the "time to diversify". And it's not just because diverisification is generally smart investing.

I guess Facebook represents something for a lot of HN commenters. When Facebook starts it's decline it signifies some larger problem.

It was a tremendous success, some people made many millions from Facebook. So what's the problem if the fad dies down and it all goes south eventually?

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#32

Post by batgaijin »

aasarava wrote: post #25

Everyone keeps focusing on Facebook as an ad platform, and pointing to the difficulty in monetizing mobile via ads. But I'm betting Facebook is on the brink of rolling out a digital wallet. They already act as an authentication/identity service with hundreds of millions of users. If those users linked their FB accounts to their bank accounts, they'd be able to buy anything on any integrated website that they log into…

They waould want NFC control to leapfrog, so I'd bet on a FB phone and apps for others

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#33

Post by saraid216 »

cfront wrote: post #21
qq66 wrote: post #18

Would you expect him to do anything else? Invert the question: if you had $500 million cash, would you spend it all on Facebook stock? Or Google stock? Or any one stock? Even for company insiders who really believe in the future of their company, it isn't prudent to hold more than a small fraction of a billion-dollar fortune in one stock, from a purely rational perspective. Of course, the public expects irrationally…

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

> Why can't people just accept that Facebook is a fad?

I actually made the prediction that Facebook would be where MySpace is--forgotten and irrelevant by the mainstream--by 2006. I was wrong.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#34

Post by jfb »

mikeryan wrote: post #23
cfront wrote: post #21

Earlier quoted context omitted.

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

It's fad, not a solid company. I'm pretty bearish on Facebook's stock, but there's nothing here to indicate its just a fad. This is a company with over a billion dollars in revenues per quarter with a pretty consistent 15-25% profit margin. Is it the next Google? Its looking more and more like its not, but that doesn't mean its going to be the next Yahoo! either.

Facebook would be unbelievably lucky to be the next Yahoo! -- sure, they're dead meat now, but that just means its easy to forget what a success Y! used to be.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#35

Post by xpose2000 »

cfront wrote: post #21
qq66 wrote: post #18

Would you expect him to do anything else? Invert the question: if you had $500 million cash, would you spend it all on Facebook stock? Or Google stock? Or any one stock? Even for company insiders who really believe in the future of their company, it isn't prudent to hold more than a small fraction of a billion-dollar fortune in one stock, from a purely rational perspective. Of course, the public expects irrationally…

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

Facebook a fad? Think of it this way...

The social web is just as important as search on the web. The web will always have search engines, and it will always have social networks. Google took over where Excite and Altavista left off. Facebook took over where MySpace and Friendster left off.

Google controls the majority of the social search market. Facebook controls the majority of the social network market.

So you might be saying, that's nice, but Facebook can't monetize it's users!

Have you ever looked at Google search results lately and noticed that nearly 1/2 the screen above the fold could be ad space? Don't believe me? Search for "iphone".

Yet we all think nothing of it. We've accepted it as users of Google.

Imagine if Facebook found a way to get it's users to ACCEPT ads. Start small, like Google and gradually increase it over time to what it is now.

That doesn't sound far fetched does it?

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#36

Post by cfront »

saraid216 wrote: post #33
cfront wrote: post #21

Earlier quoted context omitted.

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

> Why can't people just accept that Facebook is a fad? I actually made the prediction that Facebook would be where MySpace is--forgotten and irrelevant by the mainstream--by 2006. I was wrong.

Only as to the year. Give it time. They have a lot of money to spend so the decline will be slow and they will not go down without making lots of noise and buying out lots of potential successors. But the decline is beginning. Sooner or later Facebook believers have to accept this.

I'm excited about the decline because it means the rise of something better. Continual improvement. When one door closes, another opens. But I recognise that many others do not share my optimism. Facebook represents something to them, I guess. I can't quite understand it.

Facebook is one step along the path. It was a fad that drew a remarkable amount of attention and participation. The internet just keeps growing. We are in its infancy.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#37

Post by tatsuke95 »

qq66 wrote: post #24
cfront wrote: post #21

Earlier quoted context omitted.

Is this some sort of extreme cognitive dissonance? Why can't people just accept that Facebook is a fad? It does not mean the world is going to end. It's a fad, not a solid company. We went through this before 12 years ago. Eventually the market figures it out. Move on. That's what Thiel is doing. More fads are around the corner. Investors will keep falling for the same old tricks. Gates and Ellison are very poor comp…

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

He dumped his shares at half the IPO price. Say what you will about diversification, it doesn't represent much faith in the future growth of the company. You don't "diversify away" from a good investment.

So, if you believe that Thiel is a savvy investor, then it's hard to be bullish in Facebook.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#38

Post by phaus »

grandalf wrote: post #2

I'm going to buy when it gets closer to $10 per share. Half the world uses Facebook every day so let's not pretend it isn't an awesome business with utterly massive potential.

Facebook may stick around for years to come, but I disagree that it's an awesome business. Unless oriented towards professional profiles (like LinkedIn), social networks are a terrible idea. Just because everyone likes something, doesn't mean it it's in their best interest. Facebook is just a voluntary invasion of privacy. Right now most people are either using Facebook to post memes and soft core pornography that they find elsewhere, bitch about how their lives are more difficult than everyone else's because they have a job(try not having one for a while), or to stalk their current / former significant others.

I myself prefer more direct and personal forms of communication like Skype, Instant Messaging(Facebook Chat is merely adequate), phone calls or email. Unfortunately, I am saddled with Facebook because everyone I know has abandoned all other forms of communication.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#39

Post by cfront »

aasarava wrote: post #25

Everyone keeps focusing on Facebook as an ad platform, and pointing to the difficulty in monetizing mobile via ads. But I'm betting Facebook is on the brink of rolling out a digital wallet. They already act as an authentication/identity service with hundreds of millions of users. If those users linked their FB accounts to their bank accounts, they'd be able to buy anything on any integrated website that they log into…

Well, this sale of 20+ million shares doesn't exactly stand as a vote of confidence for the upcoming Facebook Wallet (TM) does it? I tried to tell him to contact you before filing his intent to sell with the SEC but he wouldn't listen. Hey, what does he know? The Facebook experts are here on HN.

Re: Peter Thiel Sells Majority Of His Facebook Shares In Deal Planned Pre-IPO

#40

Post by cfront »

tatsuke95 wrote: post #37
qq66 wrote: post #24

Earlier quoted context omitted.

Not sure how I can explain it any further than I already did, but diversification is smart regardless of what company you've founded. Even if you've created a company which cures cancer, educates the world's children, and solves global poverty at a 40% profit margin, once you have 100% of your multi-billion dollar fortune tied up in it, it's time to diversify.

He dumped his shares at half the IPO price. Say what you will about diversification, it doesn't represent much faith in the future growth of the company. You don't "diversify away" from a good investment. So, if you believe that Thiel is a savvy investor, then it's hard to be bullish in Facebook.

And it's not slowly selling in over an extended period, a schedule of planned sales. It's the lion's share of his holdings, over 20 million shares, in one shot.
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