Possible Facebook IPO: History reapeating itself?

[Evan]

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Does the fact that certain companies are public while others not at certain times have any impact on anything?

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I have no idea what you are asking.

[hawk59]

If you read the version of Securities Analysis that was written in the 1930's you'll see Ben Graham write that "the end of bull markets can be seen when a wave of inferior companies sell their stock to the public." And that statement obviously could have been written in 2001 or any other bull market. I honestly don't know the merits of Facebook going public, but if it has $500mm in revenues then it is still not approaching what was going on 8-10yrs ago when you had crappy websites with a few million in revenues and huge losses going public and getting valuations in the hundreds of millions or more.

Could be that this time around the froth isn't in IPO's; we could very well look back in a few years and look at the froth being in LBO's and private equity and there may be a certain deal that stands out as being the sign of the top.

[technologic]

i've read an article somewhere that facebook internally values their own company at 8 billion with projected revenues reaching $1b in 2010 or so...which may be why they're not selling.

but they're definitely not the beginning of the end...facebook is generally a scaleable business and the costs of running it can't be spectacularly high...i can't imagine that they're not raking in the cash big time. and with their expansion of the 65 companies ready to launch their applications, i can't see it not getting more engrained in our everyday lives on the internets. they also have a ton of stuff that they're experimenting with and not collecting revenue yet for.

[Evan]

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facebook is generally a scaleable business and the costs of running it can't be spectacularly high...i can't imagine that they're not raking in the cash big time.

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Common opinion is that they're certainly not raking in the cash. They raised more venture capital recently.

[maxtower]

I have no idea how a website as successful as Facebook is could need venture capital. What do they need funds for?
Ad revenue could easily pay for servers bandwidth and an army of programmers.

[technologic]

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facebook is generally a scaleable business and the costs of running it can't be spectacularly high...i can't imagine that they're not raking in the cash big time.

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Common opinion is that they're certainly not raking in the cash. They raised more venture capital recently.

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source? and what is the capital used for?

[SanONeill]

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facebook is generally a scaleable business and the costs of running it can't be spectacularly high...i can't imagine that they're not raking in the cash big time.

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Common opinion is that they're certainly not raking in the cash. They raised more venture capital recently.

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Do you have a source for this? I know they took on VC when they were first growing super fast to help cover costs but I haven't heard of any recent rounds.

[DcifrThs]

Evan,

it was a good thought, but i think you're sticking to your guns too strongly in the face of strong evidence against your initial hypothesis.

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I can't predict the future but this story I've concoted does start to sound a bit like 1998 all over again.


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i think this is too strong a term.

i think more reasonably, P/E companies & VC companies have been awash with liquidity in the recent past and found some good business plans in which to invest some of that cash. myspace, facebook et.al. are the result of public contagion effects (luck) favoring the prepared (good business plans/company ideas w/ scalable businesses).

compare that to tons of compuglobalhypermeganets with no revenues, no business plan, no office, no employees, and no toilet paper going public week after week (hyperbole)

i think we are right now witnessing investor demand for tech companies that have caught the eye of good VCs & PE firms. the signs of a bubble just aren't there.

there are instances/occurances that could very quickly & harshly decimate the prices of risky assets, but none that i can think of trace their roots back to taking some tech companies public with not overly outlandish valuations.

can you provide evidence counter to my argument? feel free to critique my thoughts above and let me know if i've missed anything.

thanks,
Barron

[hawk59]

I also think the term bubble is thrown around too much, if you look at real bubbles(the .com boom being the latest one) people lose almost all their money and have no prospect of gaining it back. That was true with .com stocks, tulips, south sea shares, etc...There's nothing going on today that can be compared with real bubbles. There's always going to be excess somewhere but bubbles don't come around too often.

[MrBlue]

I think if we start looking away from Facebook and at some of the other startups we start to see some strange valuations.

I'm still wondering how PhotoBucket got bought out at a reported $300 million. I can't figure out how MySpace plans to make enough money to cover the cost.

StumbleUpon is another strange one for me. I can't really figure out how StumbleUpon is worth ~$50mil to eBay. I've never once seen an ad for stumbleupon. Then again, eBay could be acquiring the technology for other uses.

Digg with a ridiculous 200mil valuation which is at least 65x rev and 400x earnings. Of course this reported by Business Week so it's probably full of [censored].

Of course YouTube's successful exit at $1.6bn made me scratch my head. Who really clicks those ads at the lower right corner?! But Google may have other plans.

And then there are all the crazy startups I read daily on TechCrunch that get funded for multiple millions. Some into 2nd and 3rd rounds of VC money.

So far none of these companies have been peddled to the public. So if the VC want to throw their money around then so be it.