91–100 of 164 posts
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Employees are typically awarded stock options with a non-zero strike price based on the FMV of the company at the time the options grant. Those options very well could end up worthless.
I imagine many of them hedged with options on the open market. [edit] I just learned below that that market just opened, so that strategy must not have been available to them.
There are only two parties hurt by this: 1. The premiere clients of Goldman Sachs and Morgan Stanley who bought into the lie that FB should trade at >100:1 P/E; and 2. Facebook. (1) I don't care about. (2) is the interesting one. You'll note that I don't include the employees in the list of injured parties. They're largely in a lockout anyway (I assume?). Whether it opens at $38 and drops to $30 or starts at $20 and…
Honest question: Why do you think that a share price of $30 is appropriate? Facebook still has a P/E more 6 times that of Google or Apple. To me (I don't understand a lot about the stock market), $30 sounds just as arbitrary as $38.
NOTE: This is not to say I think a P/E of 100 was remotely justified.
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From what I've seen, it was hugely overvalued. Maybe $25-$50 billion, with a share price of $28-$32. Last minute change to $38+ was suicide.
If you wanted to value it at $25-$50B, the share price would accordingly be $12-$24. Remember market cap = total shares * price. :)
More realistically, Facebook should have sold less shares, which would have kept the price at that target. But I guess it couldn't sell less: they had a bucketload of people who wanted to sell, and all the biggest potential buyers had already bought... Lesson learned: don't get talked into secondary market abuse...
I think that the big difference is that Google is a company while Facebook is a product.
In 1 month the price will be back to, or above, the original IPO.
And how much of your own money are you putting where your mouth is on that one? If you're right, you could make a lot of money with that bet.
It's all just hindsight garbage.
There are only two parties hurt by this: 1. The premiere clients of Goldman Sachs and Morgan Stanley who bought into the lie that FB should trade at >100:1 P/E; and 2. Facebook. (1) I don't care about. (2) is the interesting one. You'll note that I don't include the employees in the list of injured parties. They're largely in a lockout anyway (I assume?). Whether it opens at $38 and drops to $30 or starts at $20 and…
>1. The premiere clients of Goldman Sachs and Morgan Stanley who bought into the lie that FB should trade at >100:1 P/E; and
>2. Facebook.
Wrong. FB did crazy volume on the first day at $45 to $38. 580 million shares were traded and the total number of shares in IPO was only ~470MM IIRC. That does not mean that the big clients unloaded all their shares because of shares getting traded multiple times and by HFT, but the really smart ones(most of them I would guess) sold their shares above $38 and some even went short and are making bank now, while the retail investors and other financial companies who bought the first day are left holding the bag.
There are only two parties hurt by this: 1. The premiere clients of Goldman Sachs and Morgan Stanley who bought into the lie that FB should trade at >100:1 P/E; and 2. Facebook. (1) I don't care about. (2) is the interesting one. You'll note that I don't include the employees in the list of injured parties. They're largely in a lockout anyway (I assume?). Whether it opens at $38 and drops to $30 or starts at $20 and…
I agree that Facebook sees mobile as a serious problem, as evidenced by their planned foray into mobile phones, however I think it's a distraction and will be a money pit for them. Much as Microsoft felt they had to get into search to compete against Google (they still don't compete in a meaningful way), Facebook feels they have to compete in the mobile space, but will never be able to execute as well as Apple on hardware or Google on integration with web services. It's very hard to get right, and I doubt very much they have the product design talent and supply chain experience to pull it off consistently and long-term, and it is way off their main area of competence. I'd be very surprised if they do well with a mobile platform given all the challenges it presents - they should work on improving their offerings on the main platforms instead, otherwise they will have 4 Facebook app binaries instead of 3 to maintain, and no obvious advantage as most of the users will not be on their phone.
Mobile is a complement to other devices, and a way of accessing the web, it is not a new segment which is orthogonal to web use - I'd argue mobile has only become popular as handsets became capable of accessing the web fully, and mobile apps may or may not win out over websites for some services, but for websites like Facebook they offer no real advantages save more access to user hardware for uploading pics etc. - something that a website can offer with an API and third party apps. Mobile apps are of course competing with the desktop, and will continue to do so, but not really with websites, they usually complement websites and use their APIs, not replace them.
Facebook's real problem, and real competitor, is the open web.
Facebook has been opposed to opening up from the beginning, and has pursued a very successful strategy of corralling their users, and requiring anyone who wants to interact with the service to sign in and share their info - I'm constantly plagued by their login messages when I visit a page. At some point this walled garden is going to start feeling very restrictive - it only works if there is a continually growing, or at least not shrinking, pool of people using the service - if it feels like everyone is logged in all the time, otherwise it becomes a bit of an echo chamber, infested with spambots and spammy companies like Zynga, and if your friends don't bother to check it any more or post, what's the point?
I suspect as the gloss wears off Facebook, particularly if they make a foray into mobile and waste energy there, it will be harder and harder to keep users inside their bounded version of the web, and competitors without the barrier to entry for readers (sign-in required for all essential services), will come in and capture user interest, as pinterest has for example.
As to their stock price, given their current revenue/profits and potential future profits, I'm astounded anyone still believes it was worth > $20B in today's money.
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> In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did. Google priced their shares based on an auction, I'd say it was priced right. It was also much smaller because it wasn't a bunch of insiders trying to dump their shares at an inflated value. Google sold 19.6M shares, 14.1M of them…
While this is anecdotal, some ibanking friends told me that alot of the traditional wall street banks 'boycotted' google for going w/ a smaller player who did a non-traditional format (auctions) that threatened their business model and that resulted in lower demand (and lower price) for their shares at IPO than would have otherwise been the case.
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>It's 900 million monthly active users This number has always irked me. How many of those are unique? And I don't mean unique accounts, I mean actually unique people . I did some work in the social gaming space. We would routinely discover people with 5, 10, sometimes 20+ Facebook accounts that would be logged in and actively used in order to "game" social gaming mechanics ("add 10 friends!", "log in 10 days in a row…
On the other hand, the vast majority of facebook users aren't out there trying to game social gaming mechanics, so I can't imagine that the overall number of fake accounts could be huge. A million at the most?
Really? Do you have any evidence to support that? Because my experience working with a game that had about 1MM DAUs at its peak was completely different. The analysis wasn't perfect, because it's very difficult to prove there is no unique user on the other end. But there are behavioral queues. And we determined that 1/4 to 1/3 of the accounts playing our game were fake.
Have you spent much time playing these games? They're hyper competitive. So any mechanics which require or benefit a player by having more friends will be taken advantage of. Need 20 friends to advance past a level? It's far easier to make and use 20 Facebook accounts accounts than it is to spam your friends list for people to play, especially if no one on your list actually plays the game. The whole system was designed to promote this sort of activity. That's why I can't understand why people would be shocked at this. The ruse is good for users (more stuff!), good for the games and good for Facebook (more DAUs!).
Again, it's the industry's dirty little secret: nobody has any incentive to tell people that large numbers of people using their game or application aren't even real. That goes for Facebook, Zynga or any small gaming shop anywhere.
Look at companies like this:
http://www.buyilikes.com/20000-likes/
Do you think that they rally 20,000 people to "like" your page? Or do they have a script with many accounts?
The point is, nobody really knows how big of a problem this is. You seem to think it's small; my experience tells me that it's big. Either way, the data advertisers are using to determine spends and ROI is skewed in an undetermined direction.
Edit: Have you ever played World of Warcraft? Do you know how people use characters to store and transfer goods? Depending on the Facebook game, that principle can exist on a very large scale. Except, as opposed to WoW, every storage character is counted as a unique DAU. I would bet my life that any game where an edge can be gained by having multiple accounts has a large multiple account problem.