Many other articles have pointed out that Facebook is taking a very long-term view in its acquisitions, and I think that both Instagram and (potentially) Waze are perfect examples. They have around $10B to spend from their IPO, and instead of using it on short-term benefit, they're using it to put themselves in what will hopefully be a strong position for long-term growth. Investing extra in social location and in picture-sharing make sense for the long-term, even if there are no short-term payoffs.
This is a fascinating question. There are regulations in place in Europe and being considered in the States, but most of them are solved by opt-in. It appears to me that most people will trade their privacy for savings or other benefits, or for social reasons. Any opinions?
Facebook: Wait Until The Monetization Plan Is Clear [View article]
There are a number of new initiatives underway to monetize mobile in all new ways http://goo.gl/RdntZ including selling music and movies when people read friends comments on them http://seekingalpha.co...
People used to be worried about Google for many of the same reasons.....
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
The founders and earlier (pre-IPO) investors gambled early in the company, and the IPO was part of the pay-off for that gamble. In my opinion that's earned profit, either from their work (founders and employees) or their gamble (early investors).
The IPO-day investors who stick with the stock may profit then. In that case they'll have profited not from pre-IPO success (which they weren't part of) but from post-IPO investing and sticking with it. At that time it wil be profit that they'll deserve, as pay-off for their investment starting IPO-day.
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
ManoLive and others - I'm actually not against investing in Facebook. The second half of my article was an outline of what I think are their competitive advantages over others in the on-line arena. I just think it'll take longer than a day to profit from the investment.
How many readers have sold Apple stock because of an expected short-term down-tick, only to find themselves 2 months later wishing they'd held on? Even when down-ticks happen, solid stocks come back. Will Facebook be one of these? We'll need to wait and see. But a week or two's activity isn't enough to say.
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
"ManoLive" I probably deserve the "idiocy" comment in response to my "whining" title. :-)
But I believe that there's no basis for saying that Facebook shafted its investors, precisely because noone ever has the right to assume that the stock market will give them a guarenteed profit in a few days. It just doesn't work that way. The "people who wanted to buy in early and then sell for a quick profit" have all right to be optimistic, but there's no such thing as free money.
Profits come from one of two things - hard work or gambles that pay off.
I suspect, as do many, that this gamble will pay off within 6-12 months. Amazon and Google are interesting comparisons.
Now excuse me while I go complain about being "shafted" by the state lottery board......
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
"Water Buffalo" and "McClane" interesting observations.
But what about Amazon? High P/E, IPO before they knew how to extract profit from their customers (remember, they were selling at a loss to grow their customer base). Their stock dropped for months after their IPO, but had multiplied by the end of the first year.
Examples do exist, before Facebook, of companies that are priced based on the world's belief that they're sitting on a huge potential. Obviously the clock is ticking for Facebook, but it's not right to think that Facebook's IPO is inherently unprecedented. Amazon seems to have done well since both in stock terms and in business terms.
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
Glad to see all the comments! To answer just a few:
To those who asked if I support fraud or lack of disclosure, no, I certainly don't. But I do think that anyone with eyes and a brain had plenty of indications from analysts before the IPO that the IPO may be overpriced. Hindsight is 20/20, and I don't believe that many people would have made different decisions if a few more drops in the bucket of analysis had raised questions. It's easy to say you would now, but amid all the ferver I think most would have made the same decisions they made (which were already ignoring a lot of question marks).
To those who think that the current price of 32 shows that the IPO was mis-managed, baloney. Market forces are never clear in advance. If the price had gone up to 44 it would have indicated exactly the same difference between market price and IPO price, but noone would have complained. Anyone buying shares was making a bet on what market forces would say.
To those who think that the IPO hurt the company or its employees, think again. This IPO maximized how long the company can operate until it's in the black, and maximized the M&A and other deals it can make in the meantime to reach its potential faster. Employees will be fine since their option strike prices are presumably low, and their jobs are even more secure.
Understanding Facebook's Waze [View article]
Understanding Facebook's Waze [View article]
Facebook: Wait Until The Monetization Plan Is Clear [View article]
People used to be worried about Google for many of the same reasons.....
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
The IPO-day investors who stick with the stock may profit then. In that case they'll have profited not from pre-IPO success (which they weren't part of) but from post-IPO investing and sticking with it. At that time it wil be profit that they'll deserve, as pay-off for their investment starting IPO-day.
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
How many readers have sold Apple stock because of an expected short-term down-tick, only to find themselves 2 months later wishing they'd held on? Even when down-ticks happen, solid stocks come back. Will Facebook be one of these? We'll need to wait and see. But a week or two's activity isn't enough to say.
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
But I believe that there's no basis for saying that Facebook shafted its investors, precisely because noone ever has the right to assume that the stock market will give them a guarenteed profit in a few days. It just doesn't work that way. The "people who wanted to buy in early and then sell for a quick profit" have all right to be optimistic, but there's no such thing as free money.
Profits come from one of two things - hard work or gambles that pay off.
I suspect, as do many, that this gamble will pay off within 6-12 months. Amazon and Google are interesting comparisons.
Now excuse me while I go complain about being "shafted" by the state lottery board......
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
But what about Amazon? High P/E, IPO before they knew how to extract profit from their customers (remember, they were selling at a loss to grow their customer base). Their stock dropped for months after their IPO, but had multiplied by the end of the first year.
Examples do exist, before Facebook, of companies that are priced based on the world's belief that they're sitting on a huge potential. Obviously the clock is ticking for Facebook, but it's not right to think that Facebook's IPO is inherently unprecedented. Amazon seems to have done well since both in stock terms and in business terms.
Facebook Investors: Stop Whining And Be Patient For Profit [View article]
To those who asked if I support fraud or lack of disclosure, no, I certainly don't. But I do think that anyone with eyes and a brain had plenty of indications from analysts before the IPO that the IPO may be overpriced. Hindsight is 20/20, and I don't believe that many people would have made different decisions if a few more drops in the bucket of analysis had raised questions. It's easy to say you would now, but amid all the ferver I think most would have made the same decisions they made (which were already ignoring a lot of question marks).
To those who think that the current price of 32 shows that the IPO was mis-managed, baloney. Market forces are never clear in advance. If the price had gone up to 44 it would have indicated exactly the same difference between market price and IPO price, but noone would have complained. Anyone buying shares was making a bet on what market forces would say.
To those who think that the IPO hurt the company or its employees, think again. This IPO maximized how long the company can operate until it's in the black, and maximized the M&A and other deals it can make in the meantime to reach its potential faster. Employees will be fine since their option strike prices are presumably low, and their jobs are even more secure.