Facebook to File for IPO Next Week - Thoughts?

palmera · Post by **palmera** » Fri Jan 27, 2012 10:33 pm

source: http://mashable.com/2012/01/27/facebook-ipo/
This seems semi-speculative, but still, the question remains:
Would you buy Facebook stock?

dragoncar · Post by **dragoncar** » Fri Jan 27, 2012 11:01 pm

Depends on the price of course!

palmera · Post by **palmera** » Fri Jan 27, 2012 11:10 pm

at what price would you buy when it's in the market?

flyer2009 · Post by **flyer2009** » Fri Jan 27, 2012 11:14 pm

I am not. I don't like to use the "bigger fool" approach, so I look for value and I still don't understand how facebook makes money. I can't visualize the people who click on the dumb banner ads and whether that is sustainable. Gaming is promising but I am not sure if they make any money from that. Does anyone else know their revenue sources?

palmera · Post by **palmera** » Fri Jan 27, 2012 11:21 pm

"people who click on dumb banner ads" is how Google earns 90% of its revenue and is what keeps me gainfully employed.

dragoncar · Post by **dragoncar** » Fri Jan 27, 2012 11:22 pm

http://lmgtfy.com/?q=facebook+revenue+sources
Ads don't all have to be dumb. Given the number of eyeballs Facebook has, they can eat Groupon's lunch, charge for "official" pages (what company does not have a Facebook page at this point?), etc.
I don't generally invest in individual companies, but if someone offered it to me at a trailing P/E of 10, I'd do it

Mirwen · Post by **Mirwen** » Fri Jan 27, 2012 11:43 pm

Nah, I think FB has peaked already. I predict that in a couple more years it will be like myspace.

flyer2009 · Post by **flyer2009** » Fri Jan 27, 2012 11:45 pm

@palmera - I am glad banners make money for you! If one believes wikipedia, Google's click-through rate is 8% and Facebook's is 0.04%. Google is a giant and does other things like sells search appliances, so I don't know how comparable the two are.
@dragoncar - looks like the other source is "Facebook credits" but it is only 11% of the total revenue.
Things like linkedin and google I can understand, facebook not so much.
I apologize if I am taking this too far off topic.

palmera · Post by **palmera** » Fri Jan 27, 2012 11:56 pm

@flyer2009 is it really hard for you to understand that Google's revenue comes primarily (90%) from sponsored search ads and ads on their content network? This is a fact, not up for debate.
I work at a communications agency with an entire 20 person division devoted to running PPC ads for top tier corporations. I work with Google reps every. day. That's what I mean when I say gainfully employed.
Facebook makes money from sponsored ads. NOW do you see the comparison? (!)
Just wow.

tac · Post by **tac** » Sat Jan 28, 2012 12:13 am

I will say also that FB ads seem to be better/better targeted. I don't think I have ever clicked on an ad that has shown up in, say, my gmail inbox. FB frequently has ads for things that I might have a serious interest in, and I do occasionally click them. I don't know if I am typical, but if I am, I am surprised that FB's click through rate is so much lower.
I probably would not buy the stock, at least not at IPO. The fact that it's hyped and that everyone's been waiting for a Facebook IPO for years means that there will likely be a buying frenzy and the price will totally inflate. That is pretty typical for IPOs...hype, high initial price, flop down by the end of the day or over the next week/month. Maybe after a couple of weeks when it comes back down to earth. I have a friend who is into trying to buy "hot" brands right at IPO time and so far she has taken a hit consistently.

dragoncar · Post by **dragoncar** » Sat Jan 28, 2012 12:35 am

I don't think I've even seen a Facebook ad, but it's not a "punch the monkey" variety, right?

palmera · Post by **palmera** » Sat Jan 28, 2012 12:56 am

tac: I attribute the lower FB CTR to the fact that Google searchers are "looking" for something, and are therefore already in action mode. FB users aren't, they're just surfing, browsing, creeping. The FB ads are more attractive though.

JasonR · Post by **JasonR** » Sat Jan 28, 2012 1:16 am

JohnnyH · Post by **JohnnyH** » Sat Jan 28, 2012 2:54 am

Here's what the chart will do:
/\

Spartan_Warrior · Post by **Spartan_Warrior** » Sat Jan 28, 2012 3:20 am

LOL @JohnnyH
Agreed.

m741 · Post by **m741** » Sat Jan 28, 2012 5:45 am

There's money to be made in Facebook, if you exit at the right time.
I wouldn't touch it with a ten foot pole, though. Too much hype. Same with Groupon.

dot_com_vet · Post by **dot_com_vet** » Sat Jan 28, 2012 8:25 am

The scary (maybe good) thing is that ad revenue would go to zero if ad-block plus was simply rolled out to the masses.
I think Google has realized ads will be obsolete and has been branching out in many directions with paid services the last few years. We spend over $100/year between Google Voice and Docs just in our household. I haven't bought anything from an online ad.
Facebook has data on users it can sell and games. I still have a hard time fathoming how they make enough to pay their electric bill. I doubt the stock pricing will have little to do with reality.