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The Companies Worth Less Than Facebook

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Re: The Companies Worth Less Than Facebook

#21

Post by fleitz »

dstein wrote: post #8

It's important to note that stock valuations are derived from the expected future profitability of a company. Stock is a claim on future profits. Compared to a company like Halliburton, who has to build billion-dollar oil rigs before they make any profit, a technology company like Facebook is a lot more lucrative and thus its stock can inflate quickly if the profits expand faster than costs. And generally technology…

According to their PR they have found such a business model and are now profitable.

Re: The Companies Worth Less Than Facebook

#22

Post by muhfuhkuh »

ijuhyftgreduy wrote: post #17
muhfuhkuh wrote: post #14

Earlier quoted context omitted.

Isn't that simply debasing the value of all internet and software technology companies, then? None of them are older than BMW, and none of them make engineered steel products. Yet, I'm very sure that more people use Facebook and, say, Windows, than own a BMW.

But the people that use facebook pay facebook $0 The people that use BMW pay BMW $50,000 Lose money on every customer but make up for it in volume is not a sustainable business model

Somehow I highly doubt facebook is losing all that much money, hence their valuation.

They're making it up on volume ad sales.

Re: The Companies Worth Less Than Facebook

#23

Post by magicalist »

dstein wrote: post #8

It's important to note that stock valuations are derived from the expected future profitability of a company. Stock is a claim on future profits. Compared to a company like Halliburton, who has to build billion-dollar oil rigs before they make any profit, a technology company like Facebook is a lot more lucrative and thus its stock can inflate quickly if the profits expand faster than costs. And generally technology…

while stock valuations and expected future profitability are usually correlated (to some extent), if a company isn't paying dividends, wouldn't it be much more correct to say that stock valuations are derived from the expected future valuations of that same stock?

Re: The Companies Worth Less Than Facebook

#25

Post by jerf »

fleitz wrote: post #21
dstein wrote: post #8

It's important to note that stock valuations are derived from the expected future profitability of a company. Stock is a claim on future profits. Compared to a company like Halliburton, who has to build billion-dollar oil rigs before they make any profit, a technology company like Facebook is a lot more lucrative and thus its stock can inflate quickly if the profits expand faster than costs. And generally technology…

According to their PR they have found such a business model and are now profitable.

"profitable" != dstein's "powder key scenario".

I will totally believe they are profitable, I do not believe that right this second they are bringing in enough to justify a $50B valuation on that ground alone.

Re: The Companies Worth Less Than Facebook

#26

Post by arctangent »

fleitz wrote: post #21
dstein wrote: post #8

It's important to note that stock valuations are derived from the expected future profitability of a company. Stock is a claim on future profits. Compared to a company like Halliburton, who has to build billion-dollar oil rigs before they make any profit, a technology company like Facebook is a lot more lucrative and thus its stock can inflate quickly if the profits expand faster than costs. And generally technology…

According to their PR they have found such a business model and are now profitable.

History will tell whether this purported business model works out quite as well as their PR department promise.

As an aside, this article of Charles Ponzi makes for great reading ;-)

http://en.wikipedia.org/wiki/Charles_Ponzi

Re: The Companies Worth Less Than Facebook

#27

Post by netcan »

fleitz wrote: post #20
noelchurchill wrote: post #3

I wonder what the Fortune 500 would look like if people were to guess at which companies were more valuable than others.

That's pretty much what the stock market is and also the Fortune 500. It's all people guessing as to the future guesses of what a company is worth.

I guess the OP's comment should be reworded "people who haven't put their money in it"

Re: The Companies Worth Less Than Facebook

#28

Post by netcan »

nhangen wrote: post #5

I won't buy this until FB goes public and we see how it fares in an open market. Though I won't argue against the current valuation, I'm not sure I believe it yet.

Facebook shares are being traded quite a bit now. YOu could call it a semi public market.

Re: The Companies Worth Less Than Facebook

#29

Post by fleitz »

netcan wrote: post #27
fleitz wrote: post #20

Earlier quoted context omitted.

That's pretty much what the stock market is and also the Fortune 500. It's all people guessing as to the future guesses of what a company is worth.

I guess the OP's comment should be reworded "people who haven't put their money in it"

Thats the great part about a public market. Anyone may speak as long as they put their money where their mouth is. (Or conversely put their mouth where their money is, aka. talking your book)

Re: The Companies Worth Less Than Facebook

#30

Post by sorbus »

netcan wrote: post #28
nhangen wrote: post #5

I won't buy this until FB goes public and we see how it fares in an open market. Though I won't argue against the current valuation, I'm not sure I believe it yet.

Facebook shares are being traded quite a bit now. YOu could call it a semi public market.

"Public," in this case, I believe, includes the need for them to disclose earnings reports.
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