Facebook IPO fuels Bay Area spending boom

[someone123]

Interesting brief interview with Steve Blank: http://www.theatlantic.com/business/...-grave/257401/

[OhioGuy]

Seems like it's turning into more of a headache now...

Prolonged Facebook slide could hurt Calif budget

California's budget could take a hit if Facebook's stock price keeps sliding.

Gov. Jerry Brown previously estimated the state would generate between $1.4 billion and $1.9 billion over the next 13 months from taxes related to sales of Facebook stock. The estimate was based on a price of $35 a share.

Facebook went public Friday at $38 a share but closed at $31 on Tuesday.

Last week, the nonpartisan Legislative Analyst's Office warned that a number of uncertainties could cause the state's deficit to be several billion dollars higher or lower than the governor's $15.7 billion estimate.

"The potential hit from Facebook's share price is nothing compared to the potential damage from a broader stock slump," Deputy Legislative Analyst Jason Sisney said.

The budget analyst pegged tax revenue from Facebook stock sales between $1.6 billion and $2.1 billion through mid-2013. The higher estimate is dependent on whether voters pass Brown's tax initiative in November.

The Legislative Analyst's Office used Facebook's IPO price of $38 a share and projected it to grow to $45 after six months.

[OhioGuy]

And now this:

Regulators probe bank's role in Facebook IPO

Regulators are examining whether Morgan Stanley, the investment bank that shepherded Facebook through its highly publicized stock offering last week, selectively informed clients of an analyst's negative report about the company before the stock started trading.

Rick Ketchum, the head of the Financial Industry Regulatory Authority, the self-policing body for the securities industry, said Tuesday that the question is "a matter of regulatory concern" for his organization and the Securities and Exchange Commission.

The top securities regulator for Massachusetts, William Galvin, said he had subpoenaed Morgan Stanley. Galvin said his office is investigating whether Morgan Stanley divulged to only some clients that one of its analysts had cut his revenue estimates for Facebook before the stock hit the market on Friday.

The bank said late Tuesday that it "followed the same procedures for the Facebook offering that it follows for all IPOs," referring to initial public offerings of stock. It said that its procedures complied with regulations.

The questions about the role played by Morgan Stanley, the lead underwriter for the deal, add to the confusion surrounding Facebook's IPO. In the most hotly anticipated stock debut in years, the offering raised $16 billion for the social networking company, valuing it at $104 billion.

And this:

Facebook, banks sued over pre-IPO analyst calls

Facebook Inc and banks including Morgan Stanley were sued by the social networking leader's shareholders, who claimed the defendants hid Facebook's weakened growth forecasts ahead of its $16 billion initial public offering.

The defendants, who also include Facebook Chief Executive Officer Mark Zuckerberg, were accused of concealing from investors during the IPO marketing process "a severe and pronounced reduction" in revenue growth forecasts, resulting from increased use of its app or website through mobile devices. Facebook went public last week.

The lawsuit was filed in U.S. District Court in Manhattan on Wednesday, according to a law firm for the plaintiffs. A day earlier, a similar lawsuit by a different investor was filed in a California state court, according to a law firm involved in that case.

In the New York case, shareholders said research analysts at several underwriters had lowered their business forecasts for Facebook during the IPO process, but that these changes were "selectively disclosed by defendants to certain preferred investors" rather than to the public generally.

"The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result," the complaint said.

[599GTO]

Lol

[mhays]

I've read pages and pages about this in the past few days, including forum debates. The piece that could be most important but is rarely mentioned is that Facebook won't dominate forever. Even many detractors seem to concede that it'll dominate market share.

A good rule in investing is to never buy anything that's at the top of its game. Facebook has apparently just started to make money off its vast trove of your (not my) personal data, but its ability to make more off of it is in question, and the competitor thing...

[Jelly Roll]

Originally Posted by mhays

A good rule in investing is to never buy anything that's at the top of its game. Facebook has apparently just started to make money off its vast trove of your (not my) personal data, but its ability to make more off of it is in question, and the competitor thing...

Peter Lynch would probably not agree with you. Granted, I don't use Facebook and would not invest in it but buying the best brand in a market segment is normally a good decision.

[Chase Unperson]

If I worked for facebook, I would sell it all today.

It is hard to imagine facebook being worth anything in 20 years. Things move so fast and fads come and go. Some other new thing on some new platform will take over at some point.

[ocman]

Wall Street is absurd. It's 2 days. You seriously shouldn't buy stock if you're going to panic the next day. At the same time, it's not like anyone who doesn't work at Goldman Sachs is allowed to invest in it anyway.

[599GTO]

Hope it plunges to $10. Serves those idiots right.

[Vlajos]

Facebook is creepy.

[brian_b]

Originally Posted by Chase Unperson

If I worked for facebook, I would sell it all today.

If you worked for Facebook you would have a few more months to wait before you are allowed to sell any of it.

[mhays]

That's a notable point related to price. There's a lot of selling off right now...despite the fact that much of the stock can't be sold yet. A lot of paper millionnaires have white knuckles right now.

[DBR96A]

Is it mean-spirited for me to LAWL?

[iheartthed]

Originally Posted by Chase Unperson

If I worked for facebook, I would sell it all today.

It is hard to imagine facebook being worth anything in 20 years. Things move so fast and fads come and go. Some other new thing on some new platform will take over at some point.

It really depends on how flexible Facebook is and how well it can adapt to change. Will Facebook be more like Apple or Microsoft? Apple's bread and butter isn't made from what it was 20 years ago. However, Microsoft can't really say the same. So if Facebook's business model can evolve then yes it will be a good investment. But the most troubling piece of information in the IPO is that Facebook is unable to generate any revenue from mobile technology, which suggests that they are gonna have a rocky time trying to evolve...

[suburbanite]

For Facebook it's not necessarily about staying competitive and continually releasing new things like Apple (although it certainly wouldn't hurt), it's about finding new revenue streams apart from advertising. Almost the entirety of Facebook's revenue is dependent on advertising, and the amount that companies are willing to pay for online advertising is decreasing every quarter.

By choosing to release more shares than initially thought, they've created a lot of grief for both Morgan Stanley and its customers. Some customers put in orders for almost 5 times as many shares as they wanted, being under the impression that as with most big offerings, they would only receive a fraction of their actual order. Now that there were enough shares to satisfy these orders, someone may be stuck with $200,000 worth of shares when they really wanted $40,000. If they can't come up with the money there will probably be legal action involved.

[Gordo]

Originally Posted by suburbanite

For Facebook it's not necessarily about staying competitive and continually releasing new things like Apple (although it certainly wouldn't hurt), it's about finding new revenue streams apart from advertising. Almost the entirety of Facebook's revenue is dependent on advertising, and the amount that companies are willing to pay for online advertising is decreasing every quarter.

This isn't even remotely true - online advertising is increasing quite rapidly every quarter (see Google's quarterly reports if you need proof of this - remember that Google makes nearly all of their revenue from advertising as well). Every new quarter records are being shattered over online advertising spend - especially until the print advertising industry is 100% dead.

The problem is that Facebook is proportionally losing desktop traffic to mobile traffic, where they have essentially no current ability to sell advertising. Now, the question is whether they can monetize mobile users with advertising as well as other companies (say, phone or OS makers like Apple and Google).

[suburbanite]

Yes, but Google is constantly creating new mediums that it can sell advertising for. Just because a company based around advertising has increasing revenues, doesn't mean companies are paying more to advertise with them.

I'll try and find the specific article, but I definitely recall the tech analyst on CNBC referring to this during their discussion on Facebook.

[Chase Unperson]

Originally Posted by the urban politician

^ Wow, the loud 'thud' when that shit comes crashing down is going to be deafening.

Ahhh you are just a hater. You would put on your cheerleader outfit if Chicago could attract companIes like google, apple, Facebook, twitter etc...

[Chase Unperson]

These median rents are crazy. Median rent across all of SF for a 1 br over the last 12 months is 3000! Holy Guacamole!

[fflint]

According to a May 9th Chronicle article, the going rate for vacant San Francisco apartments averages $2,663 for all size units. Vacant studios now average $2,075 and vacant one bedrooms now average $2,611.

All vacant apartments in SF go for market rate, but rent increases on occupied units built before 1979 are limited to about 3% a year. According to the 2010 Census, 83.7% of housing units in SF were built before 1979 and 67.5% of all units are rental apartments. In short, most San Franciscans are not paying $2611 for a one-bedroom--but those who move into the city during this latest tech boom will have to pony up at least that much.

These 'high highs' of our boom-and-bust cycle are the nature of the beast. This is, after all, a city that was built by a gold rush and enriched by a silver rush.