Zuckerberg IPO Haul Could Top $24 Billion(blogs.wsj.com)
blogs.wsj.com
Zuckerberg IPO Haul Could Top $24 Billion
http://blogs.wsj.com/digits/2011/11/28/zuckerberg-ipo-haul-could-top-24-billion/
41 comments
That's just simply valuing each user by dividing Facebook's estimated valuation by the number of users. I'm sure Facebook will not only continue to improve their revenue to constantly please the pencil pushers, but is it so crazy to value each user at $125? Remember, that's not revenue; it's just value per user.
Most public companies trade for at least 12 times their earnings. Google is 20x earnings and their market cap is $190 billion. Your math would be assuming that Facebook will have $0 in assets and will be trading with a P/E of 1. Earnings of $6.25 per year, per user (at 800 million users) justifies a $100B valuation at a 20x P/E with $0 in assets and no expected future growth.
Most public companies trade for at least 12 times their earnings. Google is 20x earnings and their market cap is $190 billion. Your math would be assuming that Facebook will have $0 in assets and will be trading with a P/E of 1. Earnings of $6.25 per year, per user (at 800 million users) justifies a $100B valuation at a 20x P/E with $0 in assets and no expected future growth.
I wonder what google's user equivalent value would be (vs FB's $125)
if all 7B people in the world used google, each one would be worth $27. If google only had 800M users like facebook, each one would be worth $237.
So maybe FB stock is actually undervalued if one thinks that Facebook provides an equal amount of value compared with Google.
So maybe FB stock is actually undervalued if one thinks that Facebook provides an equal amount of value compared with Google.
Me too. It doesn't look like Google discloses their worldwide user count. It's got to be over a billion.
Seeking Alpha had some good analysis on this earlier in the year. http://seekingalpha.com/article/245326-is-facebook-already-o...
TLDR: Facebook's value should probably be closer to 11 Billion rather than 100 billion.
TLDR: Facebook's value should probably be closer to 11 Billion rather than 100 billion.
By the "fuck it, we're doing 5 blades!" principle, I predict that Facebook market cap will balloon to $1Trillion, and Zuck will spend a few minutes in the exclusive $200B-and-up club before HF trading automata crush him down to a merely-immortal $5B or so.
Like any other site's stats, that '800 million' is significantly inflated. As an anecdote, I know several people who have at least three accounts. It's disingenuous how companies rarely acknowledge that accounts do not have a 1:1 correspondence to individuals. I think that should be taken into account when speculating about revenue.
This particular number counts monthly active users. Your friends with three accounts would have to be active on the site at least once a month in each account for them to be counted in this total.
Yes, that's correct. I'm not referring to inactive or throwaway accounts. Many people I know have an account for a business, separate to their personal account, and some have multiple accounts to keep their work friends separate from personal lives, and they use each account frequently.
So now it's a $100bn? Wasn't it 60bn a few weeks back...
It seems like folks are outdoing each other by proposing higher and higher valuations.
At this rate Facebook will be worth more than the US GDP soon.
I can't wait for the day they actually have to post revenue numbers.
(Don't get me wrong, what they did is pretty cool from a technical viewpoint, but those numbers are insane, and only designed to make a few insiders and many investment bankers rich.)
At this rate Facebook will be worth more than the US GDP soon.
I can't wait for the day they actually have to post revenue numbers.
(Don't get me wrong, what they did is pretty cool from a technical viewpoint, but those numbers are insane, and only designed to make a few insiders and many investment bankers rich.)
If he gets $24 billion, can he afford to hire some engineers who can fix all the obvious glaring bugs? Facebook has a terrible time figuring out what messages and notifications are new, and which ones I read a month ago, for instance, especially in its iOS apps.
Also it'd be nice if when I scroll down it didn't autoload the exact same set of messages that I've just read.
If one was to buy some Facebook stock on a secondary market, would those shares be converted into public shares when the company IPO's? And if so, would you have to abide by the IPO rules like the minimum hold time?
I was watching Bloomberg West the other day and they were talking about the people who bought Groupon shares on the secondary market at like 30 or 32 a share and that it must really suck to be them because they have to hold for the 180 days.
Ouch, there goes that idea. Though it might be worthwhile to buy into shares on the secondary market now and sell really soon before the IPO date once the initial offering value is officially announced and solidified. That should shoot secondary market shares up to match the public offering price right?
That number is so large, it's hard for me to wrap my mind around it. For some reason I keep thinking about the fact that California plans to close 70 state parks in order to save $11 million. That is 0.045% of 24 billion.
CA's 2011-2012 budget is just under $86B. Cutting parks to save $11M is saying that there's $86B of other spending that CA thinks are more important than those parks.
Note that Zuckerberg will never see the majority of that money. He can't liquidate without taking the price and even if he does, he'll lose a lot to taxes. (CA has no capital gains rate.) Instead, he'll donate a huge fraction to some foundation.
Note that Zuckerberg will never see the majority of that money. He can't liquidate without taking the price and even if he does, he'll lose a lot to taxes. (CA has no capital gains rate.) Instead, he'll donate a huge fraction to some foundation.
He can use it though as collateral to get real money.
Billionaires (like Larry Ellison) borrow money against his stocks. No tax, no hassles.
Do you really believe that someone would loan $1B backed by $1B in stock gains that haven't been taxed?
Yes, you can borrow against stock, but the lender won't give you full value because the stock can go down and they will account for the taxes on unrealized gains.
Not to mention that lenders do want their money back. At some point, stock will have to be sold to cover your expenses (including interest on your loans) and that's going to result in taxes paid.
Yes, you can borrow against stock, but the lender won't give you full value because the stock can go down and they will account for the taxes on unrealized gains.
Not to mention that lenders do want their money back. At some point, stock will have to be sold to cover your expenses (including interest on your loans) and that's going to result in taxes paid.
That is an absolutely insane number for Facebook.
Totally agree. Considering companies like BMW and Toyota are only worth 20 billion I fail to see how Facebook (even with the hype) can be considered so valuable. I know which one I would rather own if offered the choice.
Does every person in the world have a BMW? Could every person that doesn't have one be a potential customer for BMW?
Facebook has the potential to be a database of every human in the world with extensive metadata about those people's friends, interests, and a minute-by-minute record of their every activity and action in the virtual and real world.
How much would advertisers pay for access to that anonymized data? How many services can leverage it to build transformative, long-term businesses? How many more "arab springs" will the world see as even more connect and share the human experience with each other in richer, more meaningful ways?
Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. Pretending that there's no long term value in that platform is short sighted.
Facebook has the potential to be a database of every human in the world with extensive metadata about those people's friends, interests, and a minute-by-minute record of their every activity and action in the virtual and real world.
How much would advertisers pay for access to that anonymized data? How many services can leverage it to build transformative, long-term businesses? How many more "arab springs" will the world see as even more connect and share the human experience with each other in richer, more meaningful ways?
Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years. Pretending that there's no long term value in that platform is short sighted.
> Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years.
If you replace Facebook with 'the internet', I'll go along with that. You're way too confident in this single company. Facebook is well positioned in the internet, but they're not everything and never will be.
If you replace Facebook with 'the internet', I'll go along with that. You're way too confident in this single company. Facebook is well positioned in the internet, but they're not everything and never will be.
>> Facebook in 2011 is small beans compared to the effect it could have on our species over the next hundred years.
Hmmm... I was under impression that Tech companies work at best for 15-20 years and some other company with newer/better technology beats them.
Hmmm... I was under impression that Tech companies work at best for 15-20 years and some other company with newer/better technology beats them.
You should really try to answer your questions. It may turn out less impressive than you imagined.
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It's all about the short term, as the article makes clear.
The biggest winners will be those who can cash out quickly. Goldman and some overseas investors.
Long term I think the Facebook _data_ will be sold and resold (licensed) many, many times. It may end up with a company (or companies) that today does not exist. The legacy of Facebook will be the data. We told some antisocial nerd who our friends are. And he sold us out.
Facebook the entity will probably fade away, probably by being acquired. The value is the data. They just managed to get an enormous amount of personal private information for free.
It's an amazing thing to have 800 million people give you their email address, a list of their friends and possibly additional personal info. Certainly there is potential value there. But that itself does not a business make. In my opinion. We'll see what happens.
The biggest winners will be those who can cash out quickly. Goldman and some overseas investors.
Long term I think the Facebook _data_ will be sold and resold (licensed) many, many times. It may end up with a company (or companies) that today does not exist. The legacy of Facebook will be the data. We told some antisocial nerd who our friends are. And he sold us out.
Facebook the entity will probably fade away, probably by being acquired. The value is the data. They just managed to get an enormous amount of personal private information for free.
It's an amazing thing to have 800 million people give you their email address, a list of their friends and possibly additional personal info. Certainly there is potential value there. But that itself does not a business make. In my opinion. We'll see what happens.
Honestly, I don't think there's that much value in the data. Most of the big social gaming companies probably have most of that data anyway from scraping the social graph -- if money is in the data, they haven't been mining their data properly.
There is a ton of data that advertisers would pay a lot to get Facebook data to their display campaigns. For brand media buyers, hitting their target demographics just got much easier. For performance advertisers, imagine the possibilities if you could hit the female population of ESPN easily instead of being forced to buy all of ESPN inventory. Well there's probably better examples, but my tired mind can't fathom the upcoming advertising battles with Facebook data in hand.
Agreed. But whatever value there is, it's in that data. And those gaming companies needed to scrape Facebook to get it.
There's more value to create for whoever manages to monetise the data. But will it be Facebook? Or will it be someone else? Doesn't seem like that will matter for an IPO. An IPO will benefit certain large investors regardless of what happens to the company long term. And they will cash out quick.
There's more value to create for whoever manages to monetise the data. But will it be Facebook? Or will it be someone else? Doesn't seem like that will matter for an IPO. An IPO will benefit certain large investors regardless of what happens to the company long term. And they will cash out quick.
It will be interesting to see how stricter data protection laws play out. The EU will make a new data protection directive in 2012/2013, and other new laws like in Singapore or HongKong are more influenced by the EU standard than by US standards - because otherwise they may not get outsourcing work from EU. But I still agree that the facebook data is likely to be very valuable...
One of the EU ideas is to give the user a right to "export" their personal data. If there was a functionality where it took you 1 click to recreate all your facebook-data on "SocialNetwork2.0" the switching costs would seem to be very low. I sometimes feel that network advantages are overestimated. Here in Germany we had the facebook clone "StudiVZ" a few years ago, and practically all students were members. Nowadays Facebook dominates here too and many new students don't bother joining "StudiVZ" anymore.
One of the EU ideas is to give the user a right to "export" their personal data. If there was a functionality where it took you 1 click to recreate all your facebook-data on "SocialNetwork2.0" the switching costs would seem to be very low. I sometimes feel that network advantages are overestimated. Here in Germany we had the facebook clone "StudiVZ" a few years ago, and practically all students were members. Nowadays Facebook dominates here too and many new students don't bother joining "StudiVZ" anymore.
Agree.
I can remember the issue of the EC's database directive from as far back as the early 1990's. It was one of the issues we studied.
At that time it seemed somewhat tenuous to apply it to what was happening on the nascent www.
For the most part it seemed no one was ostensibly collecting personal data and building sensitive databases of personal info. It was just a possibility we discussed.
Needless to say things have changed.
I can remember the issue of the EC's database directive from as far back as the early 1990's. It was one of the issues we studied.
At that time it seemed somewhat tenuous to apply it to what was happening on the nascent www.
For the most part it seemed no one was ostensibly collecting personal data and building sensitive databases of personal info. It was just a possibility we discussed.
Needless to say things have changed.
Zuck has talked about this publicly: He foresees Facebook.com fading, and Facebook's social graph to the be the thing that powers every quasi-social activity on the internet.
I think the time is ripe for someone to do to facebook what google did to yahoo.
The technology is out there, believe me. Making it super user-friendly is another matter.
There is a better way to do social networks, I believe. But at present I can only demonstrate it with the command line. The user interface is just not there.
We all know Zuckerberg put a lot of effort into user interface. And he did a very good job with that. That is no coincidence.
There is a better way to do social networks, I believe. But at present I can only demonstrate it with the command line. The user interface is just not there.
We all know Zuckerberg put a lot of effort into user interface. And he did a very good job with that. That is no coincidence.
We should talk offline.
Does this implicitly mean that top investors or analysts don't expect Google+ to take any market share from Facebook within the next few years?
With a $100bn valuation, that would be $125 per user.
But hey, there's room for growth right?
Let's be generous and give them everyone in the world, recently about 7bn potential users total. That's $14.29 per user.
It's hard to imagine a business model that can leverage that kind of money per person on average, much less with all the people who are inaccessible for various reasons.
It's going to be interesting to see where they go with this.