The Google IPO has landed and let the speculation begin. Discussion of the company’s valuation, its ad plans and even The Zuckerberg’s affect on stock price is streaming across the internet. Here’s just a bit of the chatter around the big blue “F.”
Lee Spears and Brian Womack @ Bloomberg
Facebook Inc. may command a valuation more than five times higher than Google Inc. as it seeks to raise $5 billion in the world’s largest initial public offering of an Internet company. The social-networking company, which filed for the IPO yesterday, may be valued at as much as $100 billion in the sale, two people with knowledge of the matter said last week. At that level, the company would trade at 26.9 times 2011 sales, compared with about 5 times for search-engine operator Google, whose market value has jumped eight-fold since its IPO.
Omar El Akkad @ The Globe and Mail
More than half of Facebook’s 845 million monthly active users have also used the company’s various mobile products, such as Facebook apps for the iPhone, BlackBerry and Android-powered phones. In of itself, that’s positive news for the company, given that social media users are increasingly moving from desktops and laptops to smartphones and tablets. The problem is, Facebook derives the vast majority of its revenue from third-party ads. And when it comes to its mobile offerings, the company has no ad strategy to speak of. “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results,” the company stated in its regulatory filings.
Peter Cohan @ Forbes
Why is Facebook over-valued? Unfortunately, Wednesday’s late-day filing did not reveal any details about how many shares it would sell to raise the placeholder amount of $5 billion. But — as I discussed in a Wednesday TV interview – Facebook stock looks poised to be grossly over-valued when it starts trading in a few months. How so? Assuming Facebook is valued at $75 billion, compared to Google, its Price/Sales ratio of 20 is 305% higher than Google’s 5. And Facebook’s P/E of 75 is 285% higher than Google’s 19.5. But if Facebook was growing faster, the P/E of 75 might not be so bad. Unfortunately, its revenue growth and net income growth has slowed down over the last three years. Revenue growth slowed from 186% between 2008 and 2009, to 154%, to 88% in the last year. And net income growth slowed down from 165% between 2009 and 2010 to 65% in the last year.
SearchEngineWatch.com
Facebook’s 2011 advertising revenues were $3.1 billion, up 69 percent from the year before, according to the Menlo Park, CA-based firm’s S-1 filing today for its initial public offering. Facebook, which has increased its ad units per page from four to seven in the last two years, appears to have benefited greatly from those particular moves. According to the filing, the primary reason for the jump in ad revenue was a 42 percent lift in the number of ads delivered, as well as an 18 percent hike in the average price per ad delivered. Total revenue for last year was $3.7 billion, Facebook’s filing said, representing a near doubling of 2010’s revenue of $1.97 billion. Games developer Zynga helped generate 12 percent of Facebook’s revenues last year.
Peter Pachal @ Mashable
Revenue from Zynga games contribute 12% of Facebook’s bottom line. Facebook said it made $3.71 billion last year, so almost $500 million of that came from Zynga, which includes both users buying virtual goods and services within the games via Facebook Payments as well as “direct advertising” that Zynga bought. Facebook also pointed out that Zynga’s worth even more to Facebook than the numbers say, since the users playing games mean more pages get served to those users, and in turn more ads. In the filing, Facebook pointed out the risk involved in having such an interdependent relationship with Zynga. “If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected,” the document says.
Given how big Facebook has become in the minds and plans of the ad industry, how will the IPO affect that perception? Post your thoughts in our comment section.
