Posts tagged: ipo
According to WSJ and Mashable, Facebook is raising $10 billion at valuation $100 billion. This is the largest Technology IPO in history.
With 2.5 billion shares outstanding, they stock may open around $40 per share.
This valuation would yield
P/S ~ 25
P/E ~ 67
Is $40 lucrative. One word: buy them all!
My personal forecast is that on the first trading day, the price will shoot to at least twice the opening price.
Compared to recent Groupon’s IPO, Facebook provides more liquidity: 10% (vs. 5%) ~ $10 billion ~ 250 million shares. Facebook doesn’t need the trick of limiting supply like Groupon did.
Why? Groupon has been facing fierce competition from Living Social, and the business model is clouded with concerns on sustainability. Facebook, on the other hand, dominates social network and even web skeleton. Facebook’s barrier to entry include products, communities, vision and management.
There is no question to short-term speculation on Facebook IPO.
My question is: what is Facebook doing with $10 billion it is raising. Apparently, liquidity for founders and investors is never the focus of Mark.
Note on speculation:
Whether you think Facebook is overpriced is irrelevant because even if it really is it will get even MORE overpriced.
Stating the stock is overpriced is NOT equivalent to a SELL recommendation because the stock might be MORE overpriced tomorrow.
In case no opportunity cost, whether a stock is overpriced is irrelevant as soon as you can find a buyer who is willing to buy higher than the price you paid for.