$1 billion for something literally no one uses. Web bubble 2.0 can't burst soon enough.
I don't think you know the definition of "literally".
Facebook acquires Instagram
331–340 of 394 posts
Re: Facebook acquires Instagram
#332Earlier quoted context omitted.
Okay, you go ahead and bet on the companies that will pay you a 10x return in ten years and I'll take the 2x return in two months. Will Instagram even exist in 10 years? Who knows? I wouldn't bet on it. BTW, you're absolutely right. The 2x return extrapolates to a return of trillions of dollars over ten years, so there really is no contest at all. It doesn't matter if you run a hedge fund, a VC fund, or a trust fund.…
> It doesn't matter if you run a hedge fund, a VC fund, or a trust fund. A 2x return is a 2x return, and anybody would take it any day. Anybody who wouldn't has no business working in finance. Just because you assign a ten-year time frame to your portfolio does not diminish the return on that investment, so the return on your $50mm is 2x, not 1.1x. This is your key misunderstanding. When the fund starts, you lock up…
Also, if every dollar has one chance to multiply and you take one tenth of the fund and immediately double it at the beginning of its lifetime, that is an outstanding outcome. Just because you can't reinvest the money in that fund does not mean it is lost, it is simply paid out to investors right away.
Anybody who has taken a finance course knows the simple principle that a dollar today is worth more than a dollar tomorrow. It is NEVER better to make a return of equal percentage later in a fund than early. Instead of having $50 million to invest in the original fund in the same companies as before, you now have $100 million to invest in the same companies as before. The fallacy in your logic is that you are hung up on the required return for that single fund.
The only way what you are saying is valid is if by investing that $50 million in Instagram, they missed out on the opportunity to invest in another company that at some point in the future would have returned more. In a window of about two months, I highly doubt that's the case. Again, once you have doubled your money and gotten it back, you can invest it anywhere you like, including the same companies you may have before. But now you have twice as much money. There is nothing magical about that fund that makes its investments more special than another.
Re: Facebook acquires Instagram
#333Earlier quoted context omitted.
Well.....FB is the poster-child of tech exuberance right now. Everybody uses Facebook. Many of those users will likely want to buy the stock - not for any sophisticated investment thesis. But because they want to own what they use. That will likely push up demand for the stock in the short-term, thereby the price. Aside from that, we have never seen a service have 800M users and still growing at the rate that FB is g…
Sorry if I came off crass, my point is that people throw 'stock tips' like this around without care and it's generally bad advice and you have to understand some people reading it may act on it. Someone could read what you wrote and buy stock when your actual reasoning is simply because you think the public are going to get excited and buy the Facebook stock because they use it, along with the big assumptions that a)…
You didn't come off crass...not to me anyway.
I wasn't giving a stock tip. Just stating what I see as the most obvious conclusion.
That being said, if I had a net worth of any significant value that wasn't illiquid, I would probably buy FB stock on IPO and hold it for a few years. I can't see why you wouldn't want to.
They have not really monetized, they have 800M+ users and they are already doing $1B/profit per year. Imagine when they really figure out how to make money.
Re: Facebook acquires Instagram
#334Best quiet period PR stunt ever.
Reminds me of when Google launched the official Google Blog during quiet period, then proceeded to post recipes for chicken on there.
Re: Facebook acquires Instagram
#335Earlier quoted context omitted.
I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times…
100% return in 3 months (it won't close to the end of the quarter) is an annualized 400% return. If you're a VC you took $50M out of a fund put back $100M, now you can make 2 bets at $50M when before you only had one. I don't see any way that this isn't a great deal for the VCs. That being said, this wasn't part of the S-1 and Facebook really has to tell potential investors how this will affect the financials, so pre…
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Re: Facebook acquires Instagram
#336Some of you might find this useful: https://instagram.com/accounts/remove/request/
In
Re: Facebook acquires Instagram
#337Earlier quoted context omitted.
I wonder if the investors (Sequoia, Greylock) knew of the pending acquisition offer from FaceBook when they put forth the 50M investment? If they did, that was the easiest investment ever.
If they did, was it legal?
It might actually be illegal not to disclose that.
Re: Facebook acquires Instagram
#338Earlier quoted context omitted.
Google bought YouTube for $1.65B when YouTube didn't have business model. It was critiqued a lot because of this, but it established Google as a dominant player in video space and it's ripest fruits might be seen in coming years when media consumption moves more and more to mobile. I grant that $1B sounds a lot for Instagram and it is harder to see similar commercial value in photos than in videos. My personal take i…
Trust me, Youtube is very profitable. Major multi-national brands have to pay $100,000's in Google Adword purchases to have their own branded channel. And if you want to change the look of your channel? Pony up another $100K.
YouTube just recently turned profitable in the last two years. It was hugely unprofitable with an unproven business model at the scale at which it was bought.
Re: Facebook acquires Instagram
#339Earlier quoted context omitted.
I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times…
Are you joking? You don't think a 100% gain is good for a 1-2 month timeframe? The most successful hedge funds in the world have money thrown at them if they can average 50% gains over the course of a year. And that is an outstanding year! I realize the economics of hedge funds and VC funds are different in that VC's take a shotgun approach and hope that one out of ten investments makes up for all the losers, but on…
Don't you think that maybe Facebook acquired Instagram because of the latest round?