

Zuckerberg IPO Haul Could Top $24 Billion - kunle
http://blogs.wsj.com/digits/2011/11/28/zuckerberg-ipo-haul-could-top-24-billion/

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ColinDabritz
Facebook has over 800 million active users. (from
<https://www.facebook.com/press/info.php?statistics> )

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.

~~~
firefoxman1
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.

~~~
kunle
I wonder what google's user equivalent value would be (vs FB's $125)

~~~
catch23
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.

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linuxhansl
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.)

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Bud
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.

~~~
rwmj
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.

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firefoxman1
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?

~~~
rationalbeats
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.

~~~
firefoxman1
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?

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whyenot
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.

~~~
anamax
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.

~~~
beatle
Billionaires (like Larry Ellison) borrow money against his stocks. No tax, no
hassles.

~~~
anamax
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.

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GFKjunior
That is an absolutely insane number for Facebook.

~~~
boyter
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.

~~~
flyt
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.

~~~
code_duck
> 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.

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1010100101
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.

~~~
catch23
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.

~~~
jyu
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.

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suivix
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?

