Facebook IPO.....will it be another eircom

Biggins · 16-05-2012 12:17PM

dpe wrote: »

A lot of analysts are suggesting its massively overvalued; 10 times earnings would be considered reasonable for a "tech" stock, FB is valued at 25 times.

Problem with Facebook is that the more they try to monetise it, the worse the user experience gets. At the moment they're relying on the fact that loads of advertisers redirected their online above the line (e.g. banner ad) spend into Facebook over the last couple of years, because they were following the eyeballs, and they've now realised that FB ads are no more responsive than banners were, and actually worse at brand building, and as a corporate you can do loads of stuff on FB essentially for free anyway, but what happens to the user is that their newsfeed stops being about their friends and fills up with corporate spam instead. The more things you "like", the more noise in the feed, the less useful it gets.

The targeted advertising algorithm they use is as dumb as rocks as well. I constantly get ads for things like scuba diving and exotic travel which reflects my life 4-5 years ago, but not now (two kids under 2). Facebook can't seem to handle that at all.

So overall, no, I wouldn't go near this IPO.

Very well said and broken down.

seamus · 16-05-2012 12:26PM

To put it in the most simplistic terms I can, I wouldn't go near facebook because I can't see myself still using it in twenty years time. Its popularity will dwindle and fade as other services plug the gaps and do things better than facebook does them.

There are a lot of comparisons with "Google is still huge", but they're not the same.

I can still see myself using google in twenty years time unless someone develops a better search engine. Google effectively provides a road network for the internet. Facebook is just a big skyscraper on that network.

I wouldn't go near this IPO unless I had a few grand to burn and I was willing to take a punt on getting in early and then selling on for a small profit in a couple of months.

But my gut tells me that the IPO is the point where facebook shares will be the most valuable they are ever going to be.

smash · 16-05-2012 12:31PM

dpe wrote: »

The more things you "like", the more noise in the feed, the less useful it gets.

It is quite difficult to infiltrate a filter bubble organically on facebook. There are a lot of companies out there trying to do it and they charge a fortune for their services. Their API's don't work and the main reason is that people go to facebook for a social experience, not to buy or search for products. Twitter thank god haven't jumped on the facebook way of thinking.

Sergeant · 16-05-2012 12:37PM

I'd be very wary of investing in a company that considered it good practise to spend over $1 billion on a camera app used by hipsters to take ironic polaroid-style photographs.

superluck · 16-05-2012 12:38PM

StockTradingMaster has a good response to why it's bad investment.

https://www.youtube.com/watch?v=sej8vVg5iq8

Felexicon · 16-05-2012 01:07PM

OSI wrote: »

OK, let's put it this way. Why would you spend money advertising on Facebook, when you get better results for cheaper from Google Ad Words?

OK well if thats the case why would people use Google Ad words when they can create a facebook page for free and have no advertising fee.
Ads on Facebook are viewed by a wider spectrum of society

Seachmall · 16-05-2012 01:09PM

Felexicon wrote: »

OK well if thats the case why would people use Google Ad words when they can create a facebook page for free and have no advertising fee.
Ads on Facebook are viewed by a wider spectrum of society

Ads on Google are directed straight at your target market, regardless of how niche that target market may be.

Nothingbetter2d · 16-05-2012 01:17PM

as i have adblock plugin for firefox and chrome i NEVER see any of facebook's ads.

adblock users is growing in numbers too.

smash · 16-05-2012 01:29PM

Felexicon wrote: »

OK well if thats the case why would people use Google Ad words when they can create a facebook page for free and have no advertising fee.
Ads on Facebook are viewed by a wider spectrum of society

You pay for ads on Facebook, you don't pay for a Facebook business page. But Google's targeting is more accurate and is linked to searches. Facebook's targeting is linked to hobbies and activities.

Stiffler2 · 16-05-2012 01:30PM

I hate facebook and I hate Bono
Let's hope facebooks share price falls 100% as will Bono as he owns half of it ( may not be accurate )

dpe · 16-05-2012 01:36PM

Felexicon wrote: »

OK well if thats the case why would people use Google Ad words when they can create a facebook page for free and have no advertising fee.
Ads on Facebook are viewed by a wider spectrum of society

You can create the nicest Facebook page in the world, but it doesn't mean anyone visits it. You now have the situation where brands routinely spend advertising money to tell people they have a Facebook page (some advertisers don't even bother including their own URLs in ads in favour of FB), which is nice for FB, and it does have the advantage that you can more easily gather user-data on FB than you can on your own site, and its cheaper to "engage" with potential customers than building your own forums/chat etc; but if you're less interested in "engagement" and more interested in say, money, you'll spend money on PPC ads on Google. You'd have to be insane to invest all your marketing eggs in one Facebook-shaped basket, but you could spend all your money on PPC and nothing else and get results (I wouldn't recommend it, but you could).

This isn't a Google-love-in btw, I'd rather there was real competition for effective advertising as Google have far too much power, but unfortunately PPC on Google works more effectively (if you do it right) than pretty much anything else

titan18 · 16-05-2012 01:46PM

Advertising isn't how Facebook will make money, it helps but it's not their target. It's the data they have collected that's driving their valuations, and if they can find an effective way to monetize that properly, their profits will go through the roof.

Also, depending on the company, Facebook acts as a great distribution channel. Look at Zynga now, which is mostly as a result of the platform Facebook provided for them.

No company can survive on advertising, it's why Google have branched out instead of relying on AdSense, and if Facebook can find a way to make money without it, it becomes a much harder thing to kill

Felexicon · 16-05-2012 01:49PM

OSI wrote: »

Ads on Facebook are not viewed by a wider spectrum.

Well at least you validated your point with facts :rolleyes:

Seachmall · 16-05-2012 01:54PM

Felexicon wrote: »

Well at least you validated your point with facts :rolleyes:

Google has twice the number of unique hits every month than Facebook has total users.

Felexicon · 16-05-2012 01:58PM

Seachmall wrote: »

Google has twice the number of unique hits every month than Facebook has total users.

Cool. Didn't know that.
I still think a wider section of people would take note of ads on facebook. Just my opinion. Not saying you're wrong

smash · 16-05-2012 02:13PM

Felexicon wrote: »

I still think a wider section of people would take note of ads on facebook. Just my opinion. Not saying you're wrong

If you go to google to search for a hotel and there's sponsored ads for a hotel booking site they will get more clicks and noticed more than an ad on someone's FB page which is there just because they go on holidays once a year.

Nailz · 16-05-2012 02:24PM

Information leads to knowledge, power and money. And Facebook has lots of it, they won't fall without a fight. Too many organisations find Facebook to be more useful than any other media, Microsoft didn't invest $240 million for a measly 1.6% for nothing.

Capt'n Midnight · 16-05-2012 02:33PM

seamus wrote: »

I can still see myself using google in twenty years time unless someone develops a better search engine. Google effectively provides a road network for the internet. Facebook is just a big skyscraper on that network.

I wouldn't go near this IPO unless I had a few grand to burn and I was willing to take a punt on getting in early and then selling on for a small profit in a couple of months.

As someone who started with Gopher and then used Altavista and still misses the keyword 'near' I'd move if a better engine comes along.

Anyone remember geocities ?

Eircom was good for a quick splash and dash too, facebook may be too, but like I said unless they find a way to commercialise it without spam it will grow in size because of the network effect but may not grow in profitability.

http://www.cio.co.ke/news/top-stories/Digital-life,-Kenya-findings

In contrast to Global internet use, Social Media is far more relevant then e-mail in Kenya. According to the findings, 36 % of Kenyans use Social Media, as compared to the 17 % that use e-mailing. 56 % of Kenyans visit Facebook on a daily basis, 21 percent use Google, 7 % are on twitter as well as on YouTube.

16-05-2012 02:34PM

Nailz wrote: »

Information leads to knowledge, power and money. And Facebook has lots of it, they won't fall without a fight. Too many organisations find Facebook to be more useful than any other media, Microsoft didn't invest $240 million for a measly 1.6% for nothing.

How much did microsoft spend developing and promoting the zune?

Meesared · 16-05-2012 02:44PM

RobbieTheRobber wrote: »

How much did microsoft spend developing and promoting the zune?

Not that much actually, considering it was never launched outside the US and Canada (the hardware anyway)

Capt'n Midnight · 16-05-2012 02:48PM

http://www.bbc.co.uk/news/business-18086426

Facebook says it will sell 25% more shares than first planned in its flotation in response to strong demand.

The move comes one day after the social networking giant said it would raise the price of the shares by 21% to between $34-$38 a share.
...
The company could add even more shares to the sale as there are more than 60 million additional shares that could be sold to cover excess demand.

Also

The new shareholders will not have much say in how the business is run.

The shares on offer are "A" shares, which carry one vote per share, as is normal.

But the current owners' shares are "B" shares, which carry 10 votes each.

They will control more than 96% of the votes after the public listing, with founder Mark Zuckerberg holding just under 56% of the voting power of the company.

*gets popcorn*

smash · 16-05-2012 02:53PM

Sell 100bn worth of shares... still keep 96% control.

Ok then.

Gurgle · 16-05-2012 02:58PM

Felexicon wrote: »

I still think a wider section of people would take note of ads on facebook.

I would have thought the opposite.
My logic:
Ads are there to help the company get your money. Either
a) money you're planning to spend on a product or service which you're currently looking for or
b) money you didn't plan to spend but may decide to when you learn about the product or service.

If I want to buy something, and I'm looking for it on the internet, I'm not going to Facebook, I'm going to Google.

If I'm just looking for funny pictures on Facebook, I'm not reading the ads.
If something in an add does happen to catch my attention, I'll probably google it

.

Based on the results of my test sample of 1, b) makes no money.

seamus · 16-05-2012 03:07PM

Capt'n Midnight wrote: »

*gets popcorn*

So it's a money-generation exercise and nothing more. Effectively ceding the minimum amount of power over the company possible in return for $18bn.

That actually stinks of desperation to me - what do they need the $18bn for?

16-05-2012 03:09PM

seamus wrote: »

So it's a money-generation exercise and nothing more. Effectively ceding the minimum amount of power over the company possible in return for $18bn.

That actually stinks of desperation to me - what do they need the $18bn for?

Same thing the mods here need money for, Hookers and coke, oh and Bono needs new shades

smash · 16-05-2012 03:12PM

seamus wrote: »

That actually stinks of desperation to me - what do they need the $18bn for?

There's a few non profit making apps they want to buy.

CruelCoin · 16-05-2012 03:12PM

The company is currently valued at around $100 for every account.

Complete fantasy that the company can have a worth at anything approaching this.

At the IPO there will be a sudden and sharp rise in share price, followed by the mother of all crashes.

summerskin · 16-05-2012 03:15PM

CruelCoin wrote: »

The company is currently valued at around $100 for every account.

Complete fantasy that the company can have a worth at anything approaching this.

At the IPO there will be a sudden and sharp rise in share price, followed by the mother of all crashes.

I agree. In fact I just posted on facebook about it.

k.p.h · 16-05-2012 03:18PM

Buying shares in Facebook is akin to burning money..

Nailz · 16-05-2012 03:18PM

RobbieTheRobber wrote: »

How much did microsoft spend developing and promoting the zune?

It's irrelevant how much they spent on Zune, two completely different circumstances based on two completely reasons for spending, Zune was a service and software launch by Microsoft which was mainly intended as a directly sourced revenue stream.

Microsoft invested in Facebook, a Web 2.0 social network which was already established and software was already fully functional, anyone who thinks they're going to be involved in software development, or even as capital investors, are kidding themselves. They're there for one reason, one reason only, and that's for the use of Facebook's data. The two cases don't even compare, they can't compare, both are based on two totally different intentions all together.

If Microsoft actually wanted to pull huge capital gains from Facebook and possess a huge share bracket, I'm sure it wouldn't have happened, Facebook's intention was never to sell the organisation, not Zuckerburg anyway - although it may well happen sometime. That's probably why Microsoft had to pay a far higher price-per-share ratio than when Google and Yahoo! attempted to buy it, but Microsoft bought enough to get what they wanted out of it anyway. I'm sure they are happy.

Facebook IPO.....will it be another eircom

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