

Facebook raises $1.5 Billion at $50 Billion Valuation - siddhant
http://techcrunch.com/2011/01/21/facebook-raises-1-5-billion-at-50-billion-valuation/

======
JacobAldridge
From the release - _Facebook "expects to start filing public financial reports
no later than April 30, 2012."_

TC interpretation - _"Clearly, it looks like Facebook plans to IPO no later
than April 2012."_

My understanding (worth sharing, if I'm correct, as I think TC's surety in
their statement is misleading) is that Facebook can report publicly for as
long as they like without having to go through an IPO and list.

While they're unlikely to do so indefinitely, I don't think their statement
means that "Clearly" they'll be doing an IPO in the next 15 months.

~~~
danielayele
they'll probably register the securities/file an S-1 by April but won't
actually hold a sale of new shares until Augustish (Google followed the same
timetable in 04).

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alex1
So, Facebook has now raised, like, $2.3 billion in VC? Isn't that some sort of
record?

~~~
trotsky
For sure. At least as of about a year ago the record was somewhere around 1.3B
total for Clear. So not only did they break the record for total investment,
but they also raised more in a single round than anyone else had ever raised
in total.

Curious that when breaking all the records they don't even have a explanation
for why they're doing it. Perhaps they think the funding environment is going
to change for the worse.

------
corin_
_Under the transaction’s terms, Facebook had the option to accept between $375
million and $1.5 billion from the Goldman Sachs overseas offering, at the
discretion of Facebook. While the offering was oversubscribed, Facebook made a
business decision to limit the offering to $1 billion._

 _One has to wonder if the fact that Goldman excluded U.S. investors from the
round had to do with Facebook not raising the full $1.5 billion (which would
push the total investment to a whopping $2 billion)._

They quoted a statement saying it was "oversubscribed" and that, had Facebook
wanted to, they could have chosen to take $1.5b from it... and then analysed
that to mean that they were unable to raise $1.5b. What?

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kmfrk
Isn't Zuckerberg getting very close to getting his share control to the point
where he doesn't retain a ~50% stake along with his staff[1]?

[1]: [http://www.businessinsider.com/chart-of-the-day-who-owns-
fac...](http://www.businessinsider.com/chart-of-the-day-who-owns-
facebook-2011-1)

~~~
lyime
He doesn't need more than 50% common stock to retain control of the company.
Facebook has different classes of stock. Zuckerberg has more than 50% of
voting rights based on ownership of certain classes of stock.

~~~
rst
FWIW, the Ford family used to have an even more favorable arrangement for
their shares of Ford Motor Company. The family preferred shares were the only
ones with voting rights; the publicly traded shares got dividends, but didn't
have voting rights at all. They revamped this arrangement ten years ago, but
the family "class B" shares still have disproportional voting rights. See
[http://www.time.com/time/magazine/article/0,9171,823982,00.h...](http://www.time.com/time/magazine/article/0,9171,823982,00.html)

~~~
r00fus
IIRC, isn't this the case with Google as well (with the triumvirate holding
1/3 each of the voting shares)... the public shares aren't voting shares at
all.

~~~
jwegan
I am familiar with the stock market, but I am far from a sophisticated
investor. One thing I always had trouble understanding is what is value of
holding shares in a company like Google? You have no voting power, no
dividends, and an event like liquidation or sale of Google is very unlikely
and would only happen in the case of a serious problem (which would have
caused the share prices to fall drastically). So what is the tangible value of
holding a share in Google (other than the fact other people also want to own
this item that to me seems to not have any intrinsic value)?

~~~
JacobAldridge
That depends on whether you're looking for primarily an income or an equity
outcome (and yes, both would be nice, but most businesses are far better at
focusing on and delivering one, not the other).

Most traditional blue chips deliver regular, well-sized dividends. Their stock
price (and therefore, as an investor, your equity value) will largely move
with the markets. You don't buy them for out-performing equity growth or a
liquidity event, but rather for the regular profits they share as dividends.
FWIW, I think Microsoft has an option to become one of these companies,
instead of chasing rapid shareprice growth.

The comparison is buying for equity, where you hope to buy low and sell high.
Dividends aren't a priority - and since they often amount to cents per share
and you're chasing share price growth measured in multiples, dividends are
almost irrelevant to your success measurements.

As you point out with Google, their share price could already be considered
high. I don't know what their dividend plans are for the future, but that
(plus growth more in line with the market, maybe a little ahead) is a
"tangible value" of holding their shares.

jwegan - I know I've probably oversimplified that for you since you have
familiarity, but I thought it worth spelling out for other HN readers with
less awareness / experience. Hope it didn't seem condescending.

------
kno
Is Facebook a billion burning machine?

~~~
kmfrk
It may not necessarily be a matter of burn rate; they may be trying to do what
Groupon did and spread abroad and compete in areas where they aren't the
primary social network like Russia (and Brazil?).

You'd think they already have enough money, though ...

------
faramarz
So how does the average Joe get in on the IPO action?

~~~
alnayyir
>How does the average Joe get in on the shorting action

FTFY

I am chomping at the bit to short them so badly.

~~~
rst
Unfortunately, the strategy's not a lock even if you're right on the
fundamentals; quoth Keynes, "the market can remain irrational longer than you
can remain solvent."

Concretely: If a parade of idiots bid up the price for no good reason
whatever, the price is still going up, and you're still at risk of a margin
call because of it.

(Accounts with short positions are (quoth investopedia[1]) typically required
to own securities worth at least as much as the shorted shares, and typically
30-40% than that. If the value of the shorted shares goes up, you can be
required to give the broker more cash to meet this margin requirement, or
close out the position immediately at a loss. So, if a stock is getting bid up
by crazed fools, and you think it's the next Enron, you can still go broke
shorting it _even if you're right_ , unless the crazed fools come to their
senses before you run out of money to cover the margin requirement.)

[1]:
[http://www.investopedia.com/ask/answers/05/shortmarginrequir...](http://www.investopedia.com/ask/answers/05/shortmarginrequirements.asp)

~~~
alnayyir
That depends entirely on how it's structured. There's other ways to short a
stock indirectly that don't involve equity or margin calls.

You're quite right though. (Keynes quote)

No reason you can't work actively against them and publicize their lack of a
sustainable revenue model compared to similarly valued companies while you
maintain the position.

Nobody said you had to be silent while your money is on the table. I'd happily
work against them.

