
Facebook to File for IPO Next Week  - james-fend
http://mashable.com/2012/01/27/facebook-ipo/
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albertsun
Why is this a link to Mashable when all the reporting work and original
information is from the Wall Street Journal?

[http://online.wsj.com/article/SB1000142405297020457370457718...](http://online.wsj.com/article/SB10001424052970204573704577187062821038498.html)

~~~
amirmc
I can see the Mashable article but I can't see the WSJ article (presumably
because I'm not a subscriber).

~~~
jlarocco
That's odd. I can read the entire WSJ article, and I'm not a subscriber
either. However, if I click links to other articles about half the time I only
get the first paragraph.

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lbotos
As far as I remember the WSJ does some referrer magic that if you have the
right referrer it will let you read the whole article. Otherwise you are
greeted with a subscribe link. This has been my experience in the past.

~~~
davej
Yeah, usually if you google the article's title and enter the site through a
search engine then you can read the full article.

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aresant
Here's why I am going to buy:

Google's Retargeting product drives insanely strong conversions for clients
vs. their traditional adwords.

You're able to re-reach folks that, by arriving on your site in the first
place, have categorized themselves as interested and, as a result, close at a
much higher rate.

Google's recent move to consolidate privacy policies, and in effect, sets of
customer data is going to provide massively better targeting capabilities.

As a result they'll be able to sell the exact same ad-space to advertisers and
yet advertisers will see better results, thanks to better targeting.

In the "bid-for-space" model this will translate to higher ECPM to Goog, to
site owners, etc.

Now, enter FB, coiner of the "Social graph" and consolidator of all the things
and people.

They are doubtlessly working to build and improve their advertising products.

They are going to earmark a lot of that $100b to buy large advertising
businesses, just like Goog bought AdMob etc, that they believe they can
improve ECPMs on.

Is it speculative? Absolutely.

Does $100b already have a lot of this expected upside baked-in? No doubt.

But still, I have seen the future of online advertising and it be profitable.

He with the most customer data wins, and FB has that in abundance.

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nchuhoai
Just out of curiosity, why is Facebook doing this? I'm unfortunately not very
knowledgeable on the field of IPOs, but aren't IPOs usually just needed to
raise money? I always thought Facebook is in a position where it does not need
to raise money, since it gets sufficient revenue, and being public has its own
disadvantages?

~~~
pilom
The founders and everyone else with current equity in Facebook need a
liquidity event. They are all collectively sitting on $100 Billion worth of
value but right now the only way for them to see anything from that value is
to collect their share of the profits (if Facebook is even distributing
profits as opposed to rolling them into future growth spending). The IPO gives
them a chance to actually collect some cash for the value of their shares and
live like the millionaires their tax returns say they should be.

~~~
gfodor
How is this true anymore with secondary markets? Surely the founders and first
employees are all rich by now.

~~~
trotsky
I believe that facebook won't allow current employees to trade on the
secondary markets (though obviously there will be exceptions to that rule). I
also believe that it's been years since facebook has been compensating with
actual stock (since '07?), my understanding is that they take the form of
restricted stock units that convert into stock once the company is public.
This was to avoid breaking 500 shareholders at the time.

I doubt any of those are a primary concern - I think it's much more likely
that since they broke 500 shareholders last year they've just assumed they
would. With a calm, up market it's probably a better time to IPO than recent
conditions. Being able to put $10B in the bank for a rainy day is nothing to
sneeze at.

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untog
It'll be interesting to see what Facebook employees do once the IPO goes
through. There must be a good number that want to break off and do their own
thing, but are sitting on stock they don't want to lose. It'll be interesting
to see what ideas/startups they come up with.

Didn't the same happen when Google IPO'd?

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necrecious
They probably have to wait a bit before selling their shares. So you won't see
an exodus until probably a year or two down the road.

~~~
CyrusL
The lockup is 180 days

~~~
necrecious
for vested shares. I am assuming most will not have all their shares vested
yet.

~~~
rationalbeats
Really?

4 year to vest for most companies here so if you were hired in winter of 2008
into spring of 09 all of those shares will be vested by time the lock up
expires.

That is assuming they file next week go through the 3-4 month quiet period and
revisions to their S-1 and then IPO late spring, maybe June and then the lock
up expires in December 2012.

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gojomo
The S-1 filing will almost certainly contain enough info to allow my bets with
_jacquesm_ and _il_ , that Facebook's revenues would reach $2B/yr by 2014, to
settle (2 years early!):

<http://news.ycombinator.com/item?id=689993>

<http://news.ycombinator.com/item?id=1163144>

Would still be happy to take $200 in Facebook stock instead. :)

~~~
ajkessler
Revenue is (estimated at) already over $4b a year:

[http://www.bloomberg.com/news/2011-09-20/facebook-revenue-
wi...](http://www.bloomberg.com/news/2011-09-20/facebook-revenue-will-
reach-4-27-billion-emarketer-says-1-.html)

~~~
pepdek
This is the IPO PR tour. Similar to Groupon's hype and retreat.

~~~
gojomo
I'll bet you that with Facebook, there's no Groupon-like 50%-restatement. To
be more concrete, between first and final S-1, I'll say no more than a 5%
restatement of revenues in the downward direction. Facebook is not in the same
panicked 'damn the torpedos' rush as Groupon was.

------
RuggeroAltair
Well, honestly I think that buying Facebook shares right now is a high risk
move. While it is possible maybe to forecast some ups and downs in the
immediate following days, if the evaluation actually goes to 100 billions it'd
look scary to me.

I'm not saying that Facebook is dying or that it's gonna die anytime soon, but
I am not able to foresee any significant growth.

The article compared, with sort of negative terms, Facebook's IPO to Google's,
saying that google didn't even impress that much when it went public.

But we all know here, that Wall Street made a mistake with Google, since now
their shares now are worth 5 times as much as they were at the opening.

So, my question is, how can Facebook ever be worth half a trillion dollars?
What should the company do to get evaluated 5 times as much as it is now?

At least with the number of users, it seems to me that they can't be too far
from their natural limits.

Facebook is a company certainly with great minds and ideas, but after all it's
a website, and I'm not sure people will want to stick around for so much
longer on just a website. It seems unfeasible to me that people will stop
using the rest of internet, just doing everything on Facebook.

Sure, they can improve a million things (like a real search in Facebook posts,
or ways of sharing more complicated things, or better off site integration
(which is already pretty good though), but at the same time they can't just
open too much, or people will just start migrating. Yet, if they stay too
close, people will get bored and start migrating anyways.

Sure, they can start having actual physical products and increase their
presence on different markets, but there are lots of tradeoffs for that too.
People won't eventually be happy to have a anything-Facebook.

So, maybe I'm wrong, but I tend to believe that this might be one of the
highest points that Facebook can reach. I'm sure it can still grow, but I
can't expect a growth of orders of magnitudes, it just seems unreasonable.

Maybe it's just that I got bored of Facebook's social life a long time ago and
ended up spending very little time on it, almost using it as an email server
for certain friends. But I certainly don't think that things like timeline can
do this huge difference. To me, timeline is just another improvement (maybe)
to avoid people to get bored after a while. One of the constant and frequent
improvements and changes that every feature/product has to do to feel alive,
but can anyone see any change that could make this company much bigger than
what it already is?

If I were Zuckerberg I would probably sell a bunch of my shares and buy a
bunch of companies, without necessarily integrating them into Facebook, you
never know...

~~~
samstave
My (sure to be wrong) Facebook predictions:

* The Facebook Phone

* The Facebook Netbook

* Major user datamining product sales to global governments

* Acquiring binge (gaming, education (I think they will go for Khan Academy)

* video hosting

* Their own voip platform

Facebook still has a lot of room to innovate, not that they would necessarily
be successful in each iteration. But I would say that the number one thing FB
could do right now to have a major impact is to create an education platform.

If their nearly billion users can all take education throgh the platform that
would be very game changing. Allow users to sign up for classes, watch them,
participate on them and collaborate with other students directly through
facebook - plus have their progress and status tracked and gamefied then we
could see real growth.

As facebook could start absorbing every person on the planet that is newly
born.

Seriously, if facebook didnt buy KhanAcademy and integrate it for this reason,
then I would say they lack vision and are simply the worlds most bloated PHP
website.

~~~
pepdek
I'd like to add to your list of Facebook products. * Facebook Search Engine.

~~~
hackinthebochs
I don't get why people seem to ignore this. If facebook added internet search
to their site they would instantly become the second biggest provider. I would
be very surprised if they weren't already working on this.

~~~
yaix
People go to FB to communicate, they go to G to search. Brands are associated
with products. That's why this G+ thing is a bad idea, it totally waters down
G's brand in search. FB offers Bing on their site, but still nobody uses that.

~~~
hackinthebochs
I don't think this is true for most people. This has been discussed on HN a
few times. While the techie crowd usually has distinct sites for different
purposes, this isn't true for most people. Facebook is the only thing a large
number of people get on the internet for. Portals work at engaging visitors,
it's just a matter of monetizing the eyeballs. Facebook has the engagement
locked down, now they just need to monetize the eyeballs.

FB may have Bing search integrated, but its not in any prominent location.
I've been on facebook for years and have never seen it, not once. Perhaps its
integrated with facebook's people search? The point is, if they put a plain-ol
internet search box on each users homepage it will get plenty of use. With the
plenthora of data they're generating, internet search can be trojan horsed by
way of a history/activity search.

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philwelch
Well, now we get to see their financials. This hasn't been an encouraging step
for other recent IPOs, like Groupon, and at least their business model
involves people actually paying them. Unless Facebook's profitability is much
better, the other shoe's going to drop and things might get pretty rough.

~~~
samstave
There is going o be way too much FB worship in the near future. I expect that
this will be hyped to high hell, and with the insidious Goldman Sachs running
the IPO - I expect their value to be enourmous - regardless of their actual
financials.

~~~
zecho
Wall Street Journal says it's likely going to be Morgan Stanley leading the
IPO.

~~~
samstave
Ah, thanks - I thought it was previously stated that GS was running it - Maybe
that was due to the GS leading the most recent investment channel they had...
I don't recall the details of how that was setup.

------
CyrusL
I took part in SecondMarket's 1/18/12 Facebook auction and was unaware of any
trading being halted for that week.

Does anyone know what normal IPO timelines are? My uneducated expectation is
that shares begin trading something like 3-6 months after filing the
prospectus.

------
pathik
There hardly seems to be much upside left. Most of the potential for
appreciation has already been milked by late stage VCs (DST), Goldman's
preferred clients, and investors on SharesPost and Second Market. This
probably won't be a Google or Amazon. But then, 5 years down the line, who
knows.

------
ArchD
FB is very well-known by virtue of its huge user base. This probably means
that many people from among its user base will consider buying at the IPO.
Whether or not the stock is "correctly price", only a small fraction of that
huge user base enamored with FB needs to buy it at that price for the price to
be supported.

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bproper
And of course, the entire social media sector surges on news of the IPO.

[http://www.streetinsider.com/IPOs/Entire+Social,+Online+Medi...](http://www.streetinsider.com/IPOs/Entire+Social,+Online+Media+Sector+Surging+on+Reports+of+Facebook+IPO+Filing+Next+Week+\(SINA\)+\(GRPN\)+\(QPSA\)+\(RENN\)+\(more\)/7114813.html)

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joelrunyon
Groupon Zynga

Is anyone paying attention? Just because a company has a massive user base,
big popularity, and lots of VCs, doesn't mean it has a great business model.

Sure,you can buy shares, watch them triple in the first 24 and dump them, but
when the dust settles, what really happens?

Groupon is trading at $20.04. It IPO'd at $20. Zynga is trading at $10.05. It
IPO'd at $10.

Good for the VC's, finally getting a return on their money and all, but it
doesn't seem that the companies are really doing much to deserve the hype.

Facebook is presumably making money, and has a crap-load of user-data, but 100
Billion dollar valuation? Maybe based on what people are willing to pay for
it, in the hype to get some of it's stock, but its revenues were 2.5 Billion
last year. A valuation that's 50x their revenues seems a little steep to me -
but again, that could just be me.

~~~
3pt14159
If that scares you look at sales force 5500 p/e and a 15B valuation. For SaaS
software.

Insanity.

(Disclaimer, I have a vested interest in this stock going down.)

~~~
spitfire
I had never looked at sales forces' P/E before. It's at 7700 right now.
Insanity.

------
joejohnson
Does anyone know how long to expect between the filing date and the IPO date?

~~~
r4vik
If they file next week then mid-April would be reasonable for the IPO to take
place

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mkr-hn
I'm looking forward to a good IPO. It feels like the economy is on the rebound
for real, and good news out of this could help.

------
bitsweet
What would the world look like if Facebook IPOs and Apple immediately buys
them out with their horde of cash?

~~~
philwelch
What on earth would Apple do with Facebook? Apple, by virtue of actually
making things people want to buy, has massive profit margins compared to
Facebook, and can more usefully spend their horde of cash on, say, cornering
the market on NAND flash.

~~~
cydonian_monk
To retro-paraphrase your question: "What on Earth would Apple do with NeXT?"

Sometimes it's not about the product, but the people. Maybe the current Apple
board /really/ wants Zuck to run the show. Best way to do that is to buy FB.

I agree with you, though. Apple buying FB would be a not-so-small mistake.

~~~
randomdata
_"What on Earth would Apple do with NeXT?"_

Use their software holdings to become a major success story? I'm sure the
people helped, but Apple wouldn't be anything like they are today without
ownership of NeXTStep. And it was no secret at the time that Apple was looking
for software as they were also courting Be.

------
gersh
What is the history of IPOs for companies traded on private market exchanges?
Does an official IPO give the company a pop?

------
joelmaat
Damn that 2009 job request of mine. I coulda, woulda, and shoulda. Haha.

------
stevenj
I'm long Facebook over the next 20 years or so.

So I'm going to buy shares.

------
senthilnayagam
IPO is inevitable but timing is not right, groupon, zynga, LinkedIn, pandora
are all trading at very low valuations and so is investor sentiment

~~~
byrneseyeview
GRPN: 9.5X sales

ZNGA: 6.5X sales

LNKD: 16.2X sales

P: 8.7X sales

S&P 500: 1.3X sales.

It appears that valuations are very high right now. The stocks are down from
their peaks—-in other words, investors are not at a record level of optimism
about these companies. But a fair assessment is that they've gone from "Wildly
optimistic" to "Optimistic."

~~~
lpolovets
What's interesting is that even the most aggressive ratio among these
companies, the 16.2X, would value Facebook at approximately $60 billion. And
yet, the company is expected to offers shares at a valuation of $75-$100
billion.

~~~
tim_h
The reported $3.8 billion in FB revenue is not an official number. It came
from a CNBC reporter who cited undisclosed sources. Official revenue would
have to be about $6 billion for FB to have the 16x ratio.

~~~
tim_h
Why the downvotes? The parent poster used $3.8 billion to come up with the $60
billion estimate (3.8 * 16.2 is approx 60). Isn't it true that we don't
officially know what Facebook's revenue is? I was merely trying to point out
that 3.8 may not be an accurate number. Then I went on to say approx how much
revenue Facebook would need in order to have a 16x ratio given the current
estimated valuation of $100 billion.

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outside1234
this is great news - end of the hype era and the beginning of the reality and
earnings era for Facebook.

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psychotik
It would be awesome if Apple would spend a small fraction of their cashpile to
buy all outstanding Facebook stock. ;)

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aviherschman
If facebook goes through with this. How would this effect the privacy of their
users?

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zotz
I wonder if the timeline being made mandatory is tied to the IPO somehow.

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mkramlich
I wonder if the timing has to do with Google's recent "hey let's fuck up our
core feature!" (search)

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bilalhusain
for the lazy

tweets - <https://twitter.com/search?q=facebook+ipo>

google results for past 24 hrs -
[https://www.google.com/search?q=facebook%20ipo&tbs=qdr:d](https://www.google.com/search?q=facebook%20ipo&tbs=qdr:d)

