Possible Facebook IPO: History reapeating itself?

[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

[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.

[Evan]

The funding I was thinking of was apparently 14 months ago. Jesus time flies sometimes. Anyway, that was $25 million and they had previously raised 12.5 mil, so the total is 37.5 over the last couple years. I was mistaken on the time frame. There was a rumor recently that the 25 mil was raised under "duress" because they desperately needed more servers and they had to sell off 10% of the company to get it. Facebook recently denied that rumor, it was originally reported by the London Times, so make of that what you will.

I think a lot of you are misunderstanding my point. I see a lot of people saying, "yea but last time all these stupid companies went public." Well yea, that's the point. Up until now these web 2.0 (or 3.0 or whatever term you like) companies had been staying private with their super high valuations.

Barron, I think you have a rose-colored view of how good the business models of a lot of companies getting VC funding are, but that's just my personal opinion. If you want me to provide evidence of companies raising way more money than makes any sense to me I can, but I don't think that's the point here.

maxtower, with all due respect, how could you possibly know how much facebook makes in ad revenue. All reports I've heard say that their target market (young adults) are actually performing worse than their already low expectations in terms of facebook advertising.

Hawk, I don't really care what term you use. Call it overenthusiastic investing for all I care.


To reiterate, I am NOT NOT NOT NOT NOT saying we're currently in a stock market bubble. I'm just doing a little bit of guesswork/storytelling to see if maybe we could be HEADED to one.

[DcifrThs]

evan,

i have no certain knowledgeof what is good/bad in terms of VC/PE firms investing. just the ones i've seen (the ones you mentioned, facebook/myspace) aren't like the 1998 events.

that was the point i was refuting.

i think we'll have the 'headed toward the bubble' route cut off as liquidity becomes less readily available. it is certainly possible that we are headed towards some market correction, but bubble i dont think so.

we just happen to have a ton of money available and are stretching for places to put it. as global real yields rise, they'rell be less money and those marginable valuations will be the ones that are first ditched.

Barron

[Evan]

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evan,

i have no certain knowledgeof what is good/bad in terms of VC/PE firms investing. just the ones i've seen (the ones you mentioned, facebook/myspace) aren't like the 1998 events.

that was the point i was refuting.

i think we'll have the 'headed toward the bubble' route cut off as liquidity becomes less readily available. it is certainly possible that we are headed towards some market correction, but bubble i dont think so.

we just happen to have a ton of money available and are stretching for places to put it. as global real yields rise, they'rell be less money and those marginable valuations will be the ones that are first ditched.

Barron

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Myspace and Facebook are a pretty select group of private companies. Another big name private company, Amp'd Mobile, recently filed for Chapter 11 after having raise $360 million. Obviously this is all a matter of personal knowledge/preference, but read Venture Beat for a few days and I'm sure you'll find more than a couple stories that makes you scratch your head.

Edit: and again, I'm not saying Facebook and Myspace are "peack of the bubble" type" companies. That's the whole point. I'm saying this might be the VERY VERY early stages of something similar to that.