

Facebook IPO grows by 25% - quant
http://finance.fortune.cnn.com/2012/05/16/facebook-increases-ipo-size-again/

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mrich
Many of the large investors (Accel, DST) selling more shares, valuation of
$100 billion for a $1b profit company? Bubble about to pop, smart money is
getting out.

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loverobots
To be fair, Acel, DST and others are really small investors, compared to
Fidelity, Barclay's, BOA and the likes. Plus, Accel's and DST's business model
is to score and more or less get out at the IPO.

~~~
wtvanhest
Loverobots is 100% correct,

Accel Parters = $6B Assets Under Management (AUM)

DST = (Not sure about AUM, but they have about $1B in Facebook which is a
relatively large amount, but they only invested $200m which is a very small
amount compared with large mutual funds.)

Compared that to large asset managers and you can see they are very small:

Go to page 23, Accel would be ranked around 480 on the list with just $6B
under management. (the numbers listed on that table are in millions, top asset
managers have multi trillion dollars under management.)

[http://www.towerswatson.com/assets/pdf/2942/PI500-Analysis.p...](http://www.towerswatson.com/assets/pdf/2942/PI500-Analysis.pdf)

Also it is worth noting that the companies he mentions like Fidelity are
experts at valuing publicly traded companies where Accel etc. are experts at
finding small, rapid growth companies.

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oskarth
How can a small-timer realistically bet on FB not being worth its price?
Certainly some actor is betting on that they will fail. Is there a Facebook
Fail Fund around?

~~~
rudiger
You won't be able to short sell Facebook when it first goes public, but some
time later you'll be able to when the stock is easier to borrow.

Facebook options (specifically, put options) will be listed at the end of the
month, but those are likely to be overpriced due to underlying volatility. You
might want to write call options instead of buying put options, but that's
also a risky strategy.

~~~
wtvanhest
_You might want to write call options instead of buying put options, but
that's also a risky strategy._

I don't know the original poster, but I would guess by the way he/she is
asking that question that they probably do not understand markets well enough
to take on the risk of writing a call option.

~~~
oskarth
You are right that I don't fully understand the implications, all I know is
that such products are extremely dangerous unless you compose them carefully
(iron butterfly, straddle, collar! - whatever that implies). Truth to be told
it's not something I'm actively considering.

I just thought that there ought to be a bear fund/product which is positioned
against companies like Facebook and Groupon - the question is how easy it's to
be a part of it if you don't have 10M+ cash and have regular contact with GS
or what have you.

~~~
wtvanhest
My comment wasn't directed at you in the sense that you should know, rather I
was pointing out that writing call options is not for someone looking for a
way to short Facebook who is not a sophisticated investor since writing a call
option has a theoretical unlimited risk.

Any regular stock broker could help you set up an account and advise you on
how to “bet against” companies being actively traded as long as you are
allowed to in your specific country.

GS and other investment banks are required for much more complext trades than
betting against companies. Usually trades involving illiquid markets.

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sek
This is a very bad sign, Facebook expects a big drop in his valuation and they
can't raise money that cheap for a long time. The big question is, do first
time investors know that Facebook has no confidence in it's own stock.

Does anybody know what happens when Facebook can't sell for it's initial
price? There is a real chance, 16Billion and a lot of analysts think they are
overvalued.

~~~
loverobots
I think (not a pro at this) all those shares have already been sold via IPO
road shows to pension funds, banks, hedge funds and other investment houses.
In fact, I read they wanted even more shares than FB offered to sell
("oversubscribed.")

So no major surprises. I doubt they just pick a number and just hope to sell
$16 Billion

~~~
sek
What happens when these institutional investors lose Billions in a short time?
There will be lawsuits over lawsuits.

If Facebook drops over 20% this year, shit will hit the fan.

They don't wan't to take the blame, but have no power inside Facebook either.
I wonder how they react, Zuckerberg can get powerful enemies here.

~~~
beagle3
Are you aware of a recent case where an institutional investor representing
"dumb" money (e.g. Pension funds) was successfully sued for bad investments? I
am not.

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gouranga
Losing it all is the only endgame I can see from that. Price will bomb rapidly
especially with all the bad press.

I'm really not confident about this.

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loverobots
Considering that FB is profitable and that it has a decent war chest, it looks
like FB is taking advantage of fools.

Smart move though, having $10+ billion in the bank must feel nice and leave a
lot of room to maneuver.

 _Personally, I don't think FB is worth $100+ billion. Maybe $30 to $40
billion._

~~~
jonknee
... Considering that the new shares are not being sold by The Company but by
the existing investors, you are not at all correct.

> More specifically, certain insiders are selling more. Venture capital firm
> Accel Partners, for example, has increased its number of shares being sold
> in the IPO from 38.19 million to 49 million. DST group from 26.25 million to
> 45.66 million, while its Mail.ru affiliate has bumped its number from 11.27
> million to 19.6 million.

~~~
nextparadigms
So the early investors are treating it like a ponzi scheme. they need to make
the valuation ever higher based on speculation of future value of Facebook.

~~~
stanleydrew
This doesn't really have anything to do with valuation. There isn't any more
or less equity being created. The early investors are simply deciding to sell
more of their existing shares.

