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IPOs - Page 3

post #31 of 87
I said it once and I'll say it again. All...not some of these social networking sites are over valued.
post #32 of 87
Quote:
Originally Posted by Slopho View Post

I said it once and I'll say it again. All...not some of these social networking sites are over valued.

Over valued? Absolutely. But some (read: very few) have value.
post #33 of 87
Quote:
Originally Posted by imageWIS View Post

Over valued? Absolutely. But some (read: very few) have value.

The fact that I said "over valued" means that have some value.
post #34 of 87
Quote:
Originally Posted by imageWIS View Post

Depends on the social network. FB is pretty fucking solid because of the massive potential customer base... consider that every major company in the world with B2C sales has a FB presence. LinkedIn is a whole different story... but still has value.
At the same time, I'm not stating that these two companies should necessarily have the market cap that analyst would give them (when the LinkedIn IPO occurred, most of the people making the valuation had never actually used LinkedIn... facepalm.gif).

The problem is the premium people give it on the potential it has because of it's massive reach upon consumers. I mean look at Yahoo, they are still one of the most visited sites, yet they only command a market cap of 19 bil.

For Facebook their main revenue streams is advertising, and processing $$ for those zygna games and other crap. However the advertising space has become incredibly competitive, and the margins razor thin. Advertisers can take their pick on who they want to advertise with. Google, Yahoo, Facebook and the millions of new companies that sprout up get some VC money and try to be the next big thing. For mobile advertising the same thing, a new company sprouts up every week in every country back by investors.

With google people are searching for something, and ads are all relevant, and people are more likely to click on an ad or record more impressions as they search site to site for w/e they are looking for. With facebook, you go on to connect with friends, you are looking at comments, posting comments looking at pics etc. You aren't drawn to those shitty banner ads on the side. And Suprisingly Facebook's ads are generic. They can pull so much info on people based on their age, their likes, their status updates posts etc. But I look at the ads and they have for me: become a volunteer fireman. =_=

I really think we are in the midst of a bubble forming, with social networking and online/mobile advertising, although everyone compares it to year 2000 and their argument is that these companies have revenue and earnings and nothing like pets.com and the other no business model random websites. Yes they make money, but stock prices for these companies are trading at a huge premium their p/e levels are insane.

At the same time it's dangerous to short off the bat, the momentum of these stocks will cause you to lose all your $$
post #35 of 87
Quote:
Originally Posted by Slopho View Post

The fact that I said "over valued" means that have some value.

Indeed. What I was trying to infer is that some really have no value. Sorry if I wasn't clear. smile.gif
post #36 of 87
At some point these social networking companies become nothing more than advertising companies, with a small technology division. That is really the only way to monetize those sites, there is really no other way to charge for things. At some point there will be a critical mass in advertising and eyeballs where the commodity of space on the interwebz will diminish in value. Beckwiths Law!
post #37 of 87
Quote:
Originally Posted by Beckwith View Post

At some point these social networking companies become nothing more than advertising companies, with a small technology division. That is really the only way to monetize those sites, there is really no other way to charge for things. At some point there will be a critical mass in advertising and eyeballs where the commodity of space on the interwebz will diminish in value. Beckwiths Law!

For most of the sites, yes... however in FB's case they have several revenue streams.
post #38 of 87
Quote:
Originally Posted by imageWIS View Post

For most of the sites, yes... however in FB's case they have several revenue streams.

Take away advertisements, what would their remaining value be?
post #39 of 87
Quote:
Originally Posted by patrickBOOTH View Post

Take away advertisements, what would their remaining value be?

Charging developers for API's (Zynga is a great example). You wouldn't believe how many people play farmville.
post #40 of 87
Quote:
Originally Posted by imageWIS View Post

Charging developers for API's (Zynga is a great example). You wouldn't believe how many people play farmville.

But that is not even half of what the current value is believed to be.

Another thing I don't understand is a lot of these tech companies need for so much capital dollars. It is not like they are a raiload, power plant, etc. What is the need for these dollars, and why pay the cost for all of this capital and dillute your own profits? Sure they need servers, but relative to cash infusions these companies get, servers are very cheap.
post #41 of 87
Essentially, most of a good tech firm's human resources are tied up in R&D desperately searching for the next first mover advantage, as my friends in Qualcomm and Google have told me. Hiring a good software/electrical engineer is not cheap and neither are the associated costs of R&D. The vast majority of things being tinkered with will never see the light of day, but they have to look into the craziest ideas or else look to RIMM for their future.
post #42 of 87
Quote:
Originally Posted by imageWIS View Post

Charging developers for API's (Zynga is a great example). You wouldn't believe how many people play farmville.

...and tell me how that generates revenue.

Edit: That may have come off harsh, I just don't like ZNGA as a company and you have to remember that only 3% of Farmville users actually do these "micro-transactions". I just mean that no one should bank on ZNGA as a huge part of Facebook's success.
post #43 of 87
My broker (Fidelity) offered to get me into several of the IPOs this year at the IPO price, but the hitch is you must hold it for a certain amount of time (IIRC, that Russian search engine that IPO'ed earlier last year would have required I held on for at least 14 days if I got in on the IPO.) I decided to buy and scalp on the open market instead (easy 10% ROI for 1 day).

I am not sure there is some 'body' that sets the price once the stock is available on the open market...wouldn't this price just be a function of supply and demand, as with everything?

I always assumed these prices were due to the usual first hour of trading dumbasses.

(That's the ONLY investment/trading advice I'd feel comfortable giving...NEVER EVER execute a trade during the first hour of trading....seriously...those people are absolutely nuts)
post #44 of 87
Quote:
Originally Posted by Nereis View Post

Essentially, most of a good tech firm's human resources are tied up in R&D desperately searching for the next first mover advantage, as my friends in Qualcomm and Google have told me. Hiring a good software/electrical engineer is not cheap and neither are the associated costs of R&D. The vast majority of things being tinkered with will never see the light of day, but they have to look into the craziest ideas or else look to RIMM for their future.

I don't see how any of this means hundreds of millions of dollars. It seems more itellectual than anything. As somebody who works in one of the most capital intensive industries out there I see a lot of waste and deep pockets. That is it.
post #45 of 87
It is a way for angels, private equity and intial shareholders to monetize their stakes. Then they use the rest as a war chest to buy smaller companies. The price is set, but the reason it opens so wildely in the first few minutes is the "extra" orders the lead firms hold back. Then there are people chasing the dream of owning the "hottest IPO eva!" When it gets to apple levels, short, short and even more short that stock. Apple at least has a product that is valueable!

I didn't think fidelilty and likewise could put restrictions on hold time.
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