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Is facebook really worth $10billion?

Discussion in 'BlackHat Lounge' started by berrycorp, May 29, 2009.

  1. berrycorp

    berrycorp Guest

    ok... i have been thinking bout this a bit... and thought i would get your opinion on this!

    a company got 2% stake in facebook at something like 200mil making facebook worth $10bil... here is the news story...

    Code:
    http://www.bloomberg.com/apps/news?pid=20601085&sid=aEDJht80MfdM&refer=europe
    now... facebook is yet to turn profitable..... and i dont see much growth happening... i see a more downside risk to that asset than a upside growth...!

    anybody can explain why somebody would be so stupid to pay $10bil for something that does not make money and is in a field where things change so fast...

    i mean look at things... 4-5 years back it was myspace... 2 years back it was facebook.... now its twitter...

    why did that company get such a high valuation? am i missing something? i am confused... the numbers just dont add up!
     
  2. ismokedu

    ismokedu Newbie

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    Well advertisers must pay a hefty price to advertise on Facebook. I am also sure that many different agencies pay Facebook to get access to people's personal details listed on their Facebook. You may think that is a joke, but I can almost guarantee that any government affiliated agency will pay to get information that is listed on Facebook, since many people on Facebook use their real details.

    And also don't forget maybe 7-8 years back Xanga...of course it's another internet fad, but I believe it is much more professional looking than Myspace, and will have a better longevity than Myspace.

    And for the record fuck Twitter, Twitter is complete bullshit, and a waste of time. It should only ever be used by older people 40+ to pretend they are cool on the internet.
     
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  3. therat

    therat Regular Member

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    thing is facebook IS Growing rapidly - it is the ultimate social medium.

    It is growing exponentially around the world in fact and Dwarfs myspace in ease of use, applications and overall "fun"

    The only reason it is not profitable right now (which is amazing I know) is because it is still working on maximizing implementation and revenue with their ad system as well scaling servers and overall efficiency.

    I know microsoft had it valued at 12 bill not too long ago and in a few years once it goes public a 10 bill valuation and 2% stake is going to turn out to be a great investment
     
  4. berrycorp

    berrycorp Guest

    when you are running a company of that size you have to declare all incomes from all sources... and they are yet to turn profitable!

    i do know that they have huge DB's.... but if they even think of selling that they will land in big time trouble... its not possible according to me.... at that level!
     
  5. crashed

    crashed Jr. VIP Jr. VIP Premium Member

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    If you control the data you control the price, just imagine the personal details they've got on their 100 million users. The police would kill to have such information!
     
  6. berrycorp

    berrycorp Guest

    the valuation that microsoft gave was only 2bil....

    and i think its not worth more.... and you got the thing partially correct...

    i belive they are hyping the price of the company before going public so that everybody can exit with a nice amount in hand... and everybody on the street pays for that....

    i will only put in that kinda money if a stock is going to go public and i want to hype the price!

    the worst part in that $200mil deal is that they even dont get a board seat! wtf!
     
  7. premiumsource

    premiumsource Senior Member

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    Personally, I'd pay for only 4 years of profits plus any capital (buildings, vehicles, computers, etc). Pretty much any business is valued that way. Usually 3 years of profits plus capital.
     
  8. berrycorp

    berrycorp Guest

    ya.. thats why i found this valuation crazy!

    even in the stock markets u dont get more than 15-20 price over earning multiple...!

    $10bil is actually kinda crazy...!
     
  9. c0ntenth|ef

    c0ntenth|ef Power Member

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    i remember when the fox network guy bought myspace i was like waaa :O didn't think it was worth that much but then tho someone who invested in them it might be
     
  10. premiumsource

    premiumsource Senior Member

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    Yep, it's a bubble that will eventually burst. That's why Warren Buffet never invests in companies like Facebook since after all is said and done, there's nothing to it, it's all imaginary basically.



     
  11. steelballs

    steelballs BANNED BANNED

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    To value a business in billions is actually a new ploy to keep one girl on the office
    PC working out how many ZEROS 000000000000000000000000000000000000000000000000000000000000000000000000000000000000's
    to add to the end of the company balance sheet!
     
  12. berrycorp

    berrycorp Guest

    umm... i wont mind investing in something like google that makes money and i know will be around forever coz they will be there till the internet lives... but this facebook thing is a true bubble!

    had it made some money things would have been diff...!

    and i like warren buffets theory when it comes to investing: never buy something you dont understand and if you buy something you should be happy to hold it for the next 20 years too!

    he is very practical....!

    but dint the bubble bust with recession?? i thought the bubble was gone.... are we still in a bubble cycle in online property's? strange!
     
  13. premiumsource

    premiumsource Senior Member

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    I think we still are.

    Google is an exception though but I don't know about forever. I'd give them a few more years but that's it.

    He didn't even invest in Microsoft even though Bill is one of his best buddies. :rolleyes:

    Anyway, it will definitely be interesting to see what happens with FB and the likes.



     
  14. seikooc

    seikooc Regular Member

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    15-20 PE ratios are in the market... Even higher, much higher... You have to determine at what stage of growth the company is in.... So if there is a high growth potentials then the P/E will/should be higher.

    Look at yahoo or baidu... yhoo has an eps of .01 giving it a P/E of 1400... I know that is a crazy example but that is like saying that a stock that has negative earnings should not be traded.... BIDU has yet to show a profit so can't determine P/E since earnings are negative, yet the stock is trading at multiples...

    All it indicates is that the street believes that their is great potential in those stocks.... They also get a controlling interest when they buy such a big block of shares.
     
  15. zabra

    zabra Newbie

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    Well, facebook makes most of its money through people advertising on the site.

    If you've ever tried to advertise on facebook you will find out in the first 10 minutes why they aren't profitable.

    Facebook literally doesn't want your money. They make it so hard for you to run an advertising campaign and they even LIMIT your daily spending limit.

    This is what happens when you hire a bunch of drunk interns, put a gorilla in charge of management, and declare yourself a company.
     
  16. keith6andco

    keith6andco Regular Member

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    This is a classic example of a corporate tax write off - you know - where "i didn't make any money therefore I don't have to pay tax this year - what do you think ? - I don't know - am assumoing this is what it must be given their unprofitability
     
  17. yourstruly

    yourstruly Newbie

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    Microsoft valued Facebook at 15 billions. An advertising deal was attached with it wherein Microsoft can sell ad inventory of facebook.
    Facebook has more than 230 million users. Apart from it they have nifty things like FB cconnect. The executives at Facebook claim that 1 billion a year revenue is easy pie. (They are at 450 million this year) If they monetise it heavily their revenues will be much more.
     
  18. berrycorp

    berrycorp Guest

    ummm...... on second thoughts.... if u think deeply.... if i ran microsoft.... i'd give the kinda val they getting just coz i want the users data so that i can optemize my search engines better ... so that they can give better results.....

    google gives the kinda results it does coz of the database of all the people it has! now microsoft is not able to make the results relevant coz it has no DB!

    so its kinda acceptable! this has been running around in my mind for quite long... this is the final conclusion that i have in my mind... what do u think?
     
  19. yourstruly

    yourstruly Newbie

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    Yes absolutely. Microsoft gave that valuation because of the ad deal.
    Facebook's running costs is huge since the number of photos uploaded every day is around 30 million. They should offer users premium membership in the lines of smugmug.
     
  20. berrycorp

    berrycorp Guest

    if i owned facebook..... i would require a lot of balls to make the photo part paid... since all my competitors are offering it free....

    i would rather sell out gradually and hand over the white elephant to somebody else... and thats exactly what the owner is doing!

    totally makes sense!