

Facebook to Set I.P.O. Price Range at $28 to $35 - sew
http://dealbook.nytimes.com/2012/05/03/facebook-to-set-target-after-market-close/?hp&pagewanted=all

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tobias3
That would be approx. $94 per active user. I know there have been social
networks which went over the counter at that price before, but looking at them
now I would not touch this stock with a ten foot pole. I certainly can't think
of any way to extract that much money from my account. Ads? I know that this
reflects not the current status but future expectation, but I cannot imagine
any way how Facebook can fulfill those expectations. They have nothing, which
when taken away would make users hurt. Other social networks stand in line.

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runako
Put another way, Facebook is expecting to be able to create $94 of cash for
each of its current active users over the future to eternity, discounted by an
appropriate factor. That doesn't seem outlandish: it's $0.80/mo per user of
value over 10 years. If they add users, it's less. If they add/extend their
product offerings/partnerships/etc., the numbers seem a lot more achievable.

That said, I'm not buying the IPO because it seems fully valued already.

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jstalin
Looks like a stock price of $31.50 would give facebook a P/E ratio of around
60. For comparison, GOOG is 18.5 and AAPL is 14.

More financials are available from the updated S-1:
[http://sec.gov/Archives/edgar/data/1326801/00011931251220819...](http://sec.gov/Archives/edgar/data/1326801/000119312512208192/d287954ds1a.htm)

And it looks like Q1 2012 net income was actually lower than Q1 2011. Oops!

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CyrusL
Oops misread OP

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rob08
That's why its compared to the same quarter last year (Q1 2011) and not
sequentially

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SkyMarshal
Anyone know why FB isn't doing something like Google's OpenIPO for their IPO?

<http://en.wikipedia.org/wiki/OpenIPO>

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nl
It's not at all clear that OpenIPO produces the best outcome for anyone. It
was certainly sub-optimal for Google.

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ComputerGuru
I suppose (judging by the comments here and in previous threads) everyone on
HN w/ a brokerage account will be shorting FB's stock as soon as it comes out,
then?

It's a pretty safe bet that it's being overvalued, but I fear the hype of FB
stock amongst the common man is going to keep the price artificially high for
a little longer than it would normally. Might not be until the release of the
first or second quarter results that people see what a farce it is.

~~~
porlw
I believe that FB is way overpriced, but as Keynes said:

“The market can stay irrational longer than you can stay solvent.”

...so shorting it is still risky.

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pixelcort
In case anyone else as confused about what an IPO road show entails, here is a
description I found: [http://moneycentral.hoovers.com/business-
information/--pagei...](http://moneycentral.hoovers.com/business-
information/--pageid__1960--/global-msn-index.xhtml)

~~~
lanstein
Here is the road show preso: <http://facebook.retailroadshow.com/launch.html>

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jonursenbach
So how can us normals get in on this?

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ChuckMcM
If you mean "How can I buy stock at $25 and sell it right away to the general
public for $35 to $50 on the same day?" Then the answer is, "Sorry, you
can't."

If you mean "How can I create a company that will allow me to sell a future
interest in the company for way more than I put into it?" Well that answer is
"Play the tech startup game."

During the Dot-Com bubble a company often had a 'friends and family' plan
where if you had a family member working there or knew someone you could
participate in some small way in the IPO. I know families that no longer talk
to each other (even now over a decade later) because of that 'opportunity' so
I'd approach it with caution if offered.

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nirvana
Why oh Why is the headline about the stock price? Apple's price is $585ish
right now. Apple is not 10 times more expensive than Facebook would be-- only
a bit more than 5 times as expensive. Facebook's price range is around $86B.

It seems a lot of people want to buy a car for a "monthly payment they can
afford" and car dealers have long sold people terrible terms and terribly
overpriced cars by structuring the "monthly payment" lower so the person
thinks the car is cheaper. Its amazing people fall for this.

Yet people react the same way to stock prices and NYT is putting the stock
price in the headline?

How about "Rather than the $100B expected, Facebook is set to IPO at around
$86B".

And more importantly-- and relevant to anyone who might want to buy the
stock-- what's that work out to as a PE[1]? Doesn't appear anywhere in the NYT
article that I could see.

So, is $86B expensive? Cheap? We don't know.

[1] On a trailing twelve months basis. I'm sure its in the prospectus, and
anybody with financial literacy will look it up before buying the stock, but I
still bet that a lot of people will say "$35? I can afford $35!" or "I've got
$3,500 in my brokerage, I'll buy 100 shares! Can you imagine what those 100
shares will be worth when Facebook catches up to google and is priced at $350
a share?!" I don't think Facebook will be worth $860B+ in the next decade.

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walru
As the phrase goes, a fool and his money are soon parted. Along the same
mindset are people who want to wait for a split to get in. I always chuckle a
little inside when I hear that and then try to educate on why that's not
necessarily a good thing.

Back to Facebook. I haven't looked at the financials, but regardless of what
they are it's safe to say the share price will rise quickly due to the reason
you stated, and that's of course why they did it.

A lot casual investors will see this as a way to fund their child's college
education and jump in as soon as they can, no matter what the mark-up. Who
knows, maybe this is the next MSFT or AAPL. We'll see where everything settles
after the irrational exuberance of the IPO hits. I don't think this will be
another GRPN or ZNGA. Even though they were both rather popular, neither of
them had the number of eyes on them that Facebook does. This is set to be the
most oversubscribed IPO in as long as I can remember.

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gbog
> Who knows, maybe this is the next MSFT or AAPL.

Or the next bubble?

Seriously, if you are young enough there is nothing easier and more compelling
than leaving Facebook, and Facebook cares a lot about having young people. Why
is it so easy to leave? Because youngster do not like their past, they do not
like to see themselves as kids. It took a very long time for me to be able to
look at a picture of my younger self without instinctive rejection. Only when
you are on the "other side" of life that you value past pictures of your life.

Why was Instagram so successful? Some other may hvae said it but still, what
strikes me the most is why so many people did use Instagram app to share pics
instead of Facebook app. It can't be solely based on UI diffs. It is more
because Facebook is perceived as an archive where everything goes if anyone is
interested, a trashcan if you will.

I'll not bet a cent on FB. Moreover, we HN readers should not put all our eggs
in the same bag, our work, interests, knowledge, passions are anchored to
technologies, let's anchor our bank accounts to some other place.

