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back to article Facebook lowballs on initial IPO price

Facebook has filed its initial documents for the most anticipated social networking IPO of the current bubble, surprising some with a lowish estimate of $77bn to $96bn for the company. Shares in the company will be traded under the moniker of FB and are expected to go for between $28 and $35 a share, with an initial stake of 337 …

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JDX
Gold badge

Will we actually be able to buy FB?

Or will they all get snapped up in an instant?

I don't view it a good investment, but buying as they appear and selling the same day is tempting.

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Anonymous Coward

Re: Will we actually be able to buy FB?

> I don't view it a good investment, but buying as they appear and selling the same day is tempting.

Investment? I view it as gambling. Bad gambling. Do you even know what the odds are? At least in a real casino you know what the odds are.

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Meh

Re: Will we actually be able to buy FB?

Of course they'll be snapped up in an instant. That doesn't mean they're gone though; you'll just have to pay more for them. That's how the stock market works ya know...

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JDX
Gold badge

Re: Will we actually be able to buy FB?

It might be gambling but we've seen IPOs of tech stock very commonly show a huge initial jump on launch day, before settling back over the short term.

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Silver badge

Re: Will we actually be able to buy FB?

The trouble is, a considerable portion of the other buyers will be doing the same thing. And a lot of those investors will have a great deal more money than you. Basically you're relying on your ability to judge things better than other people. Like a flock of birds all turning suddenly with you trying not to be the last to move. You don't have to be better than everyone else, you don't even have to be better than 50%, but you'd better make sure you're not much below.

If you think about it mathematically, what you have is a lot of people all throwing money into the pot and all thinking they'll be able to leave with more of it than they put in. Not everyone can be right. What makes you think you know better? Keep in mind that as a smaller investor, for you it entirely comes down to being able to judge when the flock begins to turn. The bigger players, they get to vote on when it turns by virtue of their decisions being noticeable in effect. And they know this.It's not strictly gambling as someone else said, it's just very risky. Risk and gambling are not the same things. Roulette and sky-diving are both risky, but only one is gambling.

Of course the above is only true for investors who are seeking to make money by buying low and selling high. There is another type of investor: those that buy to get dividends from an ongoing and profitable business. However, I leave it as an exercise for others to guess which sort of investor Facebook will appeal to most.

(Note: the putting money in a pot analogy is simplified because in the real situation, the pot exists over a long period of time with many exchanges and new people appearing all the time. The principle is roughly the same.)

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$14 per person, worldwide

Can someone just clarify how it is possible that a single private entity can be worth $14 per person (including every man, woman and child in every developed, developing and 3rd world country)?

I thought a good rule of thumb used to be that a company should be valued at about what it's expected to make in profit over the next 10 years.

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FAIL

Re: $14 per person, worldwide

It can't be. But that's not the point. Witness the people who clearly have more money than sense all working themselves into a frenzy hoping that they can make a quick buck by buying the stock, then flogging it shortly after for a profit to the next frenzied hopeful. They all feed of each others greed-lust until.... well, those that have been paying attention over the past decade and a half know how it ends. Those that have short memories; feel free to join the stampede, just don't be left holding the parcel when the music stops!

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Pint

Re: $14 per person, worldwide

^^^^ What 'Shonko Kid' said ^^^^

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Nev
Stop

Dotcom Bubble Burst V2.0

Watch as the execs from this company (that produces squat) and their bank chums cream fantastical amounts of cash whilst dragging down the NASDAQ and plunging the world into (yet) another financial catastrophe.

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Thumb Down

Rob(b)in' Hood

This bubble will burst, but it won't cause a catastrophe, just a redistribution of wealth from the greedy and/or slow to the smart, quick, con artists (sorry, investment advisors).

Unfortunately there will be a number of pension funds run by the slow lot...

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FAIL

Overpriced

20*earnings would be about $20bn, so this is drastically over-priced by any rational measure.

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"there are also lingering fears that the company might be part of a social networking bubble"

Lingering fears??? This should be very solid alarm! People will never learn, will they? Just how many more years do we want this recession to go on for? Idiots.

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Stop

Yeah

Seems silly to bet a fortune on a business model that could be wiped out by something as simple as more people adopting Adblock.

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"masterminding the recent $1bn acquisition of Instagram"

Having the word "mastermind" in that sentence just seems wrong.

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Mushroom

Perhaps that was a subtle attempt at sarcasm?

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Facepalm

Bad Bad Bad Bad

Everything in my being says this is bad and wrong, and over priced etc.

there is only 1 spark in me that thinks otherwise, and thats the fact we all thought the same about google, and oh were we wrong.... i guess, if FB started branching out like google did, using all that cash for real new dev, then maybe, just maybe it will all work out. (with an extra 13bn i guess you have RnD cash available) the only difference again tho is Google at least has a good revenue stream from advertising etc. FB ive never got the model, data is worth...?!?

im keeping this at arms length, i hope my pension is not investing in this over priced hog that will be dead as soon as the next fad comes along..!

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Silver badge

Re: Bad Bad Bad Bad

Difference is that we all use Google; I've yet to go to a page on Facebook and don't expect to ever have reason to.

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Headmaster

South Sea Bubble ...

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