Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Forget $3B In Revenue: Things "Don't Look Good" For Facebook

readwriteweb.com

Post reply on HN
Print view View original

31–40 of 83 posts

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#31

Post by veyron »

gph wrote: post #25

It's always amazed me that a company's outlook can look bad even though they're profit/revenue is growing, just because said growth isn't as big as it was in the past. I can sort of see why from an economics perspective, the stock price is based on profit growth projections and if those projections don't hold up the price will naturally drop. But it still seems crazy that we continually expect and pressure our public…

The question you have to ask is how they are making money. If it costs 2 dollars to make a dollar in revenue, then you are actually losing money.

There's no guarantee that they will continue to make money if they tone down their spend (for example, reducing ad spend), which is why the revenue / profit quality matters.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#32

Post by tatsuke95 »

scylla wrote: post #27
tatsuke95 wrote: post #22

Earlier quoted context omitted.

> "You could scrape together at least this much about any public company" Point to another public company that has a P/E ratio as high Facebook that is missing earnings estimates. Nobody is claiming the company is going to fall apart tomorrow, but if growth is slowing already then they certainly aren't worth $100BB, or anywhere close. I don't know how bad this really is, and we are still in a shaky economic climate.…

SalesForce is public and has P/E of 9500. http://finance.yahoo.com/q?s=CRM The reason they don't miss earnings is that the expectation is so low. It doesn't matter, they're the 'cloud'.

That number is wonky from today's earnings report.

According to GAAP rules, CRM's EPS was negative, so their P/E is undefined.

http://www.google.com/finance?q=NYSE:CRM

http://www.webpronews.com/salesforce-earnings-company-beats-...

Probably not the place for this, but I wouldn't touch CRM with a ten-foot pole. Read through the earnings report and look at all the fancy, non-GAAP accounting tricks they use, like booking deferred revenue. Remember when Zynga played those games? Pretty shady, in my opinion.

But, I'm no expert.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#33

Post by [deleted] »

pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

[deleted]

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#35

Post by mmaunder »

pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

It does raise the question "What is Facebook's Killer business model?". They have defaulted into ads because that's what Google did and that's what works for many other businesses. But I've never clicked on a Facebook ad and I don't know anyone who has unless it was research. I'm seeing highly targeted ads based on my interests and demographic and I just don't click because I'm too busy social networking. Whereas with Google my intent is "search" and so I occasionally click.

After recently starting to use them again I'm blown away at how useful and engaging the app is. But the revenue just seems to be hobbling along considering their scale.

They've tried so many models and none really stuck like AdWords for Google. Long term I just don't see the same kind of revenue growth that companies like Google and Amazon have had and continue to have. For any investor in public companies that's kind of terrifying when it's not clear how revenue will grow.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#36

Post by pron »

gph wrote: post #25

It's always amazed me that a company's outlook can look bad even though they're profit/revenue is growing, just because said growth isn't as big as it was in the past. I can sort of see why from an economics perspective, the stock price is based on profit growth projections and if those projections don't hold up the price will naturally drop. But it still seems crazy that we continually expect and pressure our public…

The reason for that is simply that expectations are already factored into the stock price. If expectations aren't met then the stock is overvalued.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#37

Post by pg »

tatsuke95 wrote: post #22
pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

> "You could scrape together at least this much about any public company" Point to another public company that has a P/E ratio as high Facebook that is missing earnings estimates. Nobody is claiming the company is going to fall apart tomorrow, but if growth is slowing already then they certainly aren't worth $100BB, or anywhere close. I don't know how bad this really is, and we are still in a shaky economic climate.…

Facebook hasn't missed any earnings estimates. This is just a rumor, reported by a company I've never heard of, that they might. You can presumably find rumors of that type about almost any company.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#38

Post by ryanwaggoner »

rhizome wrote: post #5
mikehuffman wrote: post #3

I would not be surprised if the government directly began to subsidize facebook, just for the incredible amount of personal information they could mine. Another scary thought is a company like equifax, buying into facebook.

They're called the Carlyle Group and they bought in nearly at FB's beginning. EDIT: Looks like the Google News Alert has reached Carlyle Headquarters. Expect silent downvotes.

I downvoted you, because:

1. You didn't provide any source for this (and I can't find anything online to back it up; granted I only searched for a few minutes). Facebook isn't listed in their portfolio, for example: http://www.carlyle.com/Portfolio/Alphabetically/item8774.htm.... And I couldn't find any mention of the Carlyle Group in the Facebook S-1 filing, either. You could be right, but I'd like to see the evidence.

2. The Carlyle Group is a huge private equity firm that owns all or part of hundreds of companies around the world. Suggesting (without any evidence) that they own these companies as some shadowy method to share private data across them is ridiculous. Your edit makes it even more clear that you're more interested in some kind of conspiracy theory than the obvious truth, which is that the Carlyle Group either didn't invest in Facebook or did so because they thought they'd make good money. And if they invested early, like you say, then they were right.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#39

Post by viscanti »

ChuckMcM wrote: post #16
pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

That was my response as well, so they generate a slightly less ginomous net revenue and that is a problem how exactly. Looking at worst case numbers it looks like Facebook will be close to 'accumulating cash' mode at the outset. That is a pretty good thing. Now it would be nice to get some more visibility into their execution against advertising system changes but this reads more like a 'place' piece where the author…

The biggest reason Facebook has a 100 Billion valuation is because people expect ad revenue to grow rapidly. If there are signs that's slowing down now, before they even go public, it has a huge impact on their valuation. 100 Billion is a very generous valuation, even if you expect Facebook to have tremendous growth, it's an outrageous valuation if you expect them to stay the same (or shrink).

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#40

Post by rhizome »

ryanwaggoner wrote: post #38
rhizome wrote: post #5

Earlier quoted context omitted.

They're called the Carlyle Group and they bought in nearly at FB's beginning. EDIT: Looks like the Google News Alert has reached Carlyle Headquarters. Expect silent downvotes.

I downvoted you, because: 1. You didn't provide any source for this (and I can't find anything online to back it up; granted I only searched for a few minutes). Facebook isn't listed in their portfolio, for example: http://www.carlyle.com/Portfolio/Alphabetically/item8774.htm... . And I couldn't find any mention of the Carlyle Group in the Facebook S-1 filing, either. You could be right, but I'd like to see the evide…

Thanks for the reply. I'll try to look up connections, but for right now it seems to be impossible with Google SERPs including Facebook mentions of Carlyles the world over. That is, search for anything "facebook" on Google and you'll get a million FB pages due to the word "Facebook" in every page title.

Sigh, Google.

Post reply on HN