Facebook IPO?

[Nightfly]

I know it's all the rage to talk about the Facebook IPO this week (will probably have been released when you read this)...but is anyone here actually going to try to buy any stock in Facebook? BTW no, I don't plan to myself, and wouldn't even if I had access to the shares before they went to the public. I think it's frothy. But just wondering what others on this forum thought about it, esp. in light of General Motors pulling paid ads from FB...

[bjl584]

No. The odds are not on my side. Something like 90% of IPO's can be purchased for cheaper 6 months from the initial offering.

But, to me, Facebook seems more like a fad than it does a longterm business model. Eventually, people will find something else to do with their time online or otherwise. The "coolness" of Facebook will fade eventually.

[disneysteve]

No way. First off, 90% of shares are only available to mega-investors and institutions. Of the other 10%, many of the brokerages that will offer them have requirements on who can buy them. With Ameritrade, you must have at least $250,000 in your account. With Fidelity, you must have at least $500,000 in your account.

Despite all of that, even if I could buy it, I wouldn't. Very, very few IPOs maintain their issue price. They shoot up really fast, as facebook will almost certainly do, and then once the initial buyers have made their money, the price drops back down.

I have bought an IPO or two in the past, but after the initial frenzy passed and the price was below issue price, though I have no intention of buying facebook at any point or price.

[YLTL_Dan]

I just wrote a new article on the "Is Facebook the next Apple" conversation. In short, I won't buy it now and these are some of my reasons:

In the article, I talk about how Apple took twenty years before they even managed a decent return for investors. They became an 'overnight success' after building their brand and following for a long time. So instead we should compare it to Google.

I heard a great comparison of these two companies (Google and Facebook) this morning on Good Morning America. The financial guy basically said if you want to buy dog food, you go to Google and type in dog food and purchase it. People go to Google to buy things. However, he said Facebook was more like the dog park where people go to hang out. You can put dog food ads at the park, but it's not real likely many of them will translate into sales.

Facebook has done some amazing things and has changed the way we live. However, they have a long way to go before they can be compared to the new Apple or Google as a worthy investment for my portfolio. They need to prove they can monetize their business and hit the high expectations Wall Street has set for them.

[disneysteve]

You can put dog food ads at the park, but it's not real likely many of them will translate into sales.

I read yesterday that the click through rate on facebook ads is 0.051%.

I know I have never clicked on a facebook ad. Of course, I've never clicked on an ad on any other website either. Never have, never will. As far as I'm concerned, it is all spam. I don't go to the site for advertising. I go to the site for whatever purpose the site happens to be for.

[JoshuaHeckathorn]

I'm already bored with FB. I used to logon at least once a day, and now I might logon once a week. Ads perform poorly for most advertisers and I'm skeptical they'll be able to continue growing revenues. Look at Apple's growth in China...amazing! Will FB ever grow in China? Never...

[EEinNJ]

The smart money is already heading for the exits. Buying into this is for suckers.

If the media is asking the question "Is Facebook a fad?"- well, they're usually a half-beat late. Most of the anecdotal news I hear is people are bored with it, leaving, concerned about privacy issues- and the ads are ineffective.

How could a company that makes 1 billion a year be worth 100 billion in market cap?

[YLTL_Dan]

I read yesterday that the click through rate on facebook ads is 0.051%.

I know I have never clicked on a facebook ad. Of course, I've never clicked on an ad on any other website either. Never have, never will. As far as I'm concerned, it is all spam. I don't go to the site for advertising. I go to the site for whatever purpose the site happens to be for.

NPR had a great article about a small business in New Orleans who used Facebook ads. When they got their ad demographics right, they actually received quite a few new "Likes", but they haven't seen it translate into new business and stopped advertising.


NPR Article

Pizza Delicious Bought An Ad On Facebook. How'd They Do?
by Steve Henn and Zoe Chace

- May 16, 2012

Michael Friedman and Greg Augarten sell New York-style pizza in New Orleans. Their operation, Pizza Delicious, is a takeout window between Piety St. and Desire St. They're only open two nights a week. If you're in the know, you can call them up and order a pie.

Business has been good, and they're about to buy their own place. So for the first time they're considering paid advertising. They'd been thinking about advertising on Facebook but didn't know how to proceed.

[disneysteve]

NPR had a great article about a small business in New Orleans who used Facebook ads. When they got their ad demographics right, they actually received quite a few new "Likes", but they haven't seen it translate into new business and stopped advertising.

I know I'm not the typical American but I just don't find that advertising has any great influence on my spending patterns. I'm not going to run out and buy something because I saw a commercial.

I do like the Groupon concept, though, and we've used it a few times to try new places. My wife and I have dinner reservations tomorrow night at a place I bought a Groupon for, so that works for me.

However, if we don't like the place, we won't go back. I've read that places who do Groupon and similar programs haven't really seen an increase in business as a result. Folks come once, eat for half price and never come back. It ends up costing the place money to participate.

[bjl584]

I know I'm not the typical American but I just don't find that advertising has any great influence on my spending patterns.

The majority of the regulars here on the forums are probably the same way.

I too, like you, never click on the ads when I go to a website, and I usually don't pay a lot of attention to commercials on tv or radio.

I don't have a Facebook page, but the people that I do know that have them seem to be slowly weaning themselves a way from it and finding other things to do with their time. A lot of people are reluctuant to share personal information, especially as once high school and college kids find themselves grown up and looking for a job. The collection of pictures of you at Spring Break half naked and high was a great laugh for all your Fratenity buddies back in college, but not so much for a potential employer.

[Nightfly]

I'm like some of you other posters: I used to be on FB quite a bit after I first created my page about three years ago. For me, it's been a good way to keep in touch with friends and family - like e-mail on steroids. However, I've noticed in recent months that my usage is really dropping off and I'm jumping on a few times per week (instead of every day), and then I'm out after browsing for a couple of minutes. I don't think I've EVER clicked on an ad. I post nowhere near as much as I used to. The privacy concerns haven't helped, either. FB might have a presence for many years to come, but yeah - I think the "coolness" factor is fading. Wouldn't buy the stock at all, and after today's mediocre performance - I'm not the only one who feels this way.

[kork13]

In a feat of over-hyped enthusiasm, Facebook barely managed to stay positive in its first day of trading.

Personally, no way I would want in on an IPO. You really know quite little about most companies at their IPO, and in the specific case of Facebook, there's just way too much question of "what next?" Sure it's big right now, but so was MySpace. Perhaps the company really is worth over $100B right now. But it's not intrinsic value, just popularity.

[SeanH]

The reason that facebook didn't go negative on day 1 was because the underwriters kicked in money to make sure it didn't fall below the $38 mark. The WSJ provided a pretty solid explanation of how they did it. In addition, they demonstrated pretty thoroughly that the smart money has already been made.

[kork13]

The reason that facebook didn't go negative on day 1 was because the underwriters kicked in money to make sure it didn't fall below the $38 mark. The WSJ provided a pretty solid explanation of how they did it. In addition, they demonstrated pretty thoroughly that the smart money has already been made.

I suppose I should have added that tidbit about the underwriters...

Yea, totally right about the "smart money," at least for now. As with Groupon, Zynga, and some of the other high-profile IPO's of late, I personally expect Facebook will settle lower, then hold moderately steady for a while. Of course, it could also go the course of LinkedIn, which over the last year has more than doubled it's IPO. So FB is by no means doomed, but its stock is definitely up in the air at the moment.

[shocker]

If you have discipline FB it's open season to make a killing right now. I don't want to sound like I'm barging but I'm up 6 figures with only shorting this turd. I think once it bottoms out it will be a decent long term hold.