This is what I don't understand about the $100bn valuation:

- Google is worth $200bn and is far more diverse (less risk), Facebook is a one trick pony (it's a good trick though)
- Everyone gives FB's value from 'potential'. June 2011 Google had 1 billion users and it's already monetised them successfully!

Give me 1 Google share over 2 Facebook shares any day!

Also I'm not sure why people are willing to trade on 'potential'. It's a poisonous word in small businesses/startups, why's it different on the big stage?

the most compelling thing I have heard as a reason to invest over the past 2 weeks of continuous coverage is a number that they just casually threw in the middle of a debate this morning on cnbc: Facebook is responsible for 9% of the total page views on the entire internet.

Thats a ****ing lot. 1 out of every 11 websites or links people go to is some facebook page and people are trending toward heavier usage rather than finding other places to go on the internet.


Also, pretty sure its the biggest IPO ever not the 2nd biggest now that it price at $38. I would also take 1 GOOG share over 2 FB shares any day. Hell, I'd even take 1 over 10 FB shares.

Both FB and Google have been lighting money on fire outside of their core businesses.

Please explain. Because if you are referring to Google VC, that is a tiny fraction of their net worth.

They recently started testing 'Highlighted Posts' where you pay money to have your posts be more prominent in your friend's feeds instead of getting lost...

How is Google diverse? 9x% of Google's money is from Adsense and Adwords. Everything else they have ever tried is losing money or making peanuts.

Facebook has a very captive audience. Can you see FB offering Google's products like email - or search?

Microsoft owns a decent chunk of FB and they will be cashing in on this IPO as well. The two companies are scheming something behind the curtains. I can imagine FB search (backed by MS) supplanting Google search just a bit more easily than G+ supplanting FB.

Every company is always judged by their current financials and by their potential. This is why low risk assets like public utilities make a ton of money but trade at low P/E and higher risk assets trade at high P/E.

I'm certainly no Facebook defender. I don't really care one way or another. I'm just a bit player trying to think of ways to make money off of this.

If you have faith in Facebook's ability to monetize its mobile users, then it's probably a good investment. I'd love to see geographical and age-based user information. I read recently that over 50% of FB users access FB through their phones. I don't know if that's the driving force behind its non-American growth, but a little research into other countries' tech infrastructure should provide some answers. I honestly think FB may have shot themselves in the foot with the news feed; it's tailor-made for mobile users. Most people I know are too busy to spend time on the FB webpage. And I don't know whether BFI frowns on anecdotal information (I wouldn't think so), but my gf is from Iowa and has a large extended family, mostly female. Most of them now access FB solely via telephone. How many people do you know who facebook via computer on a regular basis?

ETA: this is all one step above wild speculation though; by 2p2 standards I'm an uneducated observer.

well thanks for the replies, some new points, but still seems largely "potential for x,y,z" which is what I thought this was all based off of.

Anyway, this will be interesting to watch, for sure.

i'd double check that math

this valuation is of course absurd. for 104b you could buy ford plus gm with 25b left over. those companies made 20b last year, facebook made 2b. they are not growing. this is pets.com.

I don't see many scenarios where the IPO doesn't skyrocket, I just don't. The real value of the company and earnings is one thing, but that'll happen over time. Tomorrow will be a straight momentum play, and it's very different from what you should expect out of the stock price over the course of a year.

Out of 5 people I've talked to, the smallest amount is me at 15k. Girl at work 20k, friend at work 100k, best friend 35k. Everyone looking just to get in.

hard to think all the huge institutional buyers won't take their 10% gain and bail though.

Sure, but that doesn't mean the price won't still be driven up by public demand.

Would it make sense to buy deep out of the money options (both puts and calls) with the expectation that the returns will not reflect a normal distribution? Since the nature of social networking helps stories like the Facebook IPO go viral, I would expect very high variance and kurtosis in the distribution of returns. I imagine Facebook statuses all over the world spreading news about the stock like wildfire in the coming months and see the potential for a wildly unpredictable bubble forming with a violent collapse. What would be the most clever way to play that? Is the price of deep out of the money options assuming a normal distribution and effectively discounting the probability of having fat-tails in the returns?

The whole point of hiring investment banks to do your IPO is so that as much money as possible ends up in your pocket. If a stock has a huge run-up on opening day, that means the investment bank screwed up big time and left money on the table. This is why facebook has raised their IPO price a few times already, based on subscription demand.

Of course they don't want the stock to start nose diving, either. They still want it to look good and raise in price at least a little on opening day. Eventually, they have the other 80% of stock to sell. But they most certainly do not want to have a huge runup on opening day.

Probably not. I dont know what the implied vols are but I'm sure they are crazy high. Market participants know that returns dont follow a normal distribution. Also deep OTM puts are generally overpriced.