Facebook IPO fuels Bay Area spending boom

Chase Unperson · #1 Posted **May 17, 2012, 9:29 PM**

http://www.latimes.com/business/la-f...,1193391.story

SAN FRANCISCO — The wait for tables is getting longer at Buck's, a popular breakfast spot for the tech elite and a weather vane for the Silicon Valley economy. Here, like everywhere else, Facebook is the talk of the town.

"Charles Schwab was in the restaurant the other day, and I asked him to hook me up with some Facebook shares," said Jamis MacNiven, owner of Buck's, in the wealthy suburban enclave of Woodside. "He told me even he can't get Facebook shares."

The new tech boom officially gets underway Friday when Facebook Chief Executive Mark Zuckerberg rings Nasdaq's opening bell remotely from the company's Menlo Park, Calif., headquarters, launching the largest initial public offering of stock in Silicon Valley history.

The social media company's projected $100-billion valuation heralds a new era of prosperity in a region famous for minting fortunes.

Wealth has trickled down to employees and investors who cashed in their shares ahead of the IPO on private exchanges. Others are spending in advance of their big payday, fueling an economy that's already humming thanks to the Bay Area's thriving technology sector.

Upscale stores and restaurants are packed. Good luck getting a table at Madera in Menlo Park, not far from Facebook's headquarters. The see-and-be-seen restaurant at the swanky Rosewood Sand Hill hotel is booked solid for lunch almost daily.

Luxury cars are flying off dealers' lots. In San Francisco, San Mateo and Santa Clara counties combined, luxury vehicles accounted for nearly 21% of new car registrations from April 2011 to March 2012. That's almost double the national average, according to automotive research firm Polk.

"I have rarely, if ever, seen the luxury mix this high," said Tom Libby, lead North American forecasting analyst at the Michigan company. "These data clearly show that there is wealth — and a lot of it — in these counties."

Chase Unperson · #2 Posted **May 17, 2012, 9:31 PM**

Awesome news for San Francisco.

This is how trickle down economics was supposed to work. You have a few hundred people that will soon by worth 7-10 figures but 10,000s of Bay Area residents will benefit from waiters to contractors to real estate agents to private schools to luxury car dealers. The party is on!

pesto · #3 Posted **May 17, 2012, 9:37 PM**

Correct. This is the reason that most countries are looking to attract "entrepreneurs". Their ideas create jobs for thousands and occasionally millions of highe, low and moderate talent people.

btw, this is not SF; it's about 30 miles south in Menlo Park/Palo Alto in the former Sun campus, mostly. Closer to Fremont and SJ.

someone123 · #4 Posted **May 17, 2012, 10:37 PM**

Quote:

Originally Posted by Chase Unperson

This is how trickle down economics was supposed to work. You have a few hundred people that will soon by worth 7-10 figures but 10,000s of Bay Area residents will benefit from waiters to contractors to real estate agents to private schools to luxury car dealers. The party is on!

Until a couple of large tech bubble companies implode. Didn't one of Groupon's founders basically explicitly say that he was looking forward to cashing in off of the IPO?

These valuations seem way overboard given not only the meagre earnings of some of these companies but also the huge amount of risk in the industry. Even if you're on top with a website like Facebook your customer base can evaporate very quickly.

From a social benefit point of view we also really don't need to be giving tens of billions of dollars to a website like Facebook.

There are good startups out there though and I am personally benefiting from all this so I probably should not complain too much.

tech12 · #5 Posted **May 17, 2012, 10:46 PM**

Quote:

Originally Posted by pesto

Correct. This is the reason that most countries are looking to attract "entrepreneurs". Their ideas create jobs for thousands and occasionally millions of highe, low and moderate talent people.

btw, this is not SF; it's about 30 miles south in Menlo Park/Palo Alto in the former Sun campus, mostly. Closer to Fremont and SJ.

Menlo park is in SF's MSA, meaning Facebook is as well. Woodside is also in SF's MSA, which means Bucks, the restaurant mentioned in the first sentence of the article, is in it as well. Fremont and SJ are in the San Francisco Bay Area, which is a single CSA. San Francisco is also officially recognized as part of "silicon valley" by SJ's largest newspaper (so is Alameda county). And Charles Schwab, which was mentioned in the article, is located in SF. Another company mentioned in that article, Uber, is also based in SF. Not to mention the article also specifically mentioned San Francisco county, as well as San Mateo and Santa Clara counties.

So yes, it is SF. Will you stop trying to argue that SF has little to do with silicon valley whenever it comes up?

OhioGuy · #6 Posted **May 17, 2012, 11:10 PM**

Times are good for some people in Silicon Valley, but others face potential job losses:

Reports: Hewlett-Packard poised to eliminate up to 30,000 jobs

min-chi-cbus · #7 Posted **May 18, 2012, 1:59 AM**

Good for SF, but you'd be a total sucker if you bought Facebook and held it for the long term! The stock is valuated at something close to 1000 times earnings (P/E ratio) and everybody wants a piece because they know it's overhyped and will FALL once the market controls the price -- the true market.

I want to reiterate though that I AM happy for SF and whatever impact this (still great) company has on the city! I mean, afterall, my immediate family lives there and I want good things for the people of SF and that city.

mhays · #8 Posted **May 18, 2012, 2:10 AM**

True. And I'd NEVER buy something at the height of popularity. Unless you think they'll invent an income model, become the global platform for everything, etc.

A little of the spash will hit Seattle, which at last word was the only other significant engineering center, and where Microsoft stands to gain a billion or so from an old investment.

tdawg · #9 Posted **May 18, 2012, 11:45 AM**

yeah, that 1000 times earnings number is a big red flag for the average investor. still, a lot of people in the bay area are waking up m(b)illionaires this morning.

glowrock · #10 Posted **May 18, 2012, 12:06 PM**

Yeah, there will be a lot of very rich people this morning off of Facebook, and lots of unhappy people who buy that crappy stock at 1000x earnings only to see it crash in the next 6 months down to $10-15/share or so, maybe lower.

Ah well, welcome to Tech Bubble II!

Aaron (Glowrock)

nito · #11 Posted **May 18, 2012, 1:03 PM**

What amazes me is that unlike the previous tech-bubble, there is transparency as to what the main issues were; i.e. companies that were not sustainable, an absence of long-term roadmaps, or precarious ability to consistently generate profits.

Yet we are faced by the likes of Facebook which has yet to overcome the hurdle of how it adapts its advertising platform to smartphones in a coherent fashion, let alone be able to guarantee rocket-like year-on-year growth over several years to even justify the present price. If I was an early stage venture capitalist in the business, I would be laughing, but I really think a lot of gullible people are going to be burnt.

Sadly I think the downfall of Facebook and others will severely retard the development of genuine long-term focused start-ups.

CyberEric · #12 Posted **May 18, 2012, 1:23 PM**

I might be the only person not all that thrilled about this as rents raise all around me. This whole thing makes me nervous.
I love how Silicon Valley is now wherever you want it to, it's like how Hollywood is actually in Glendale.

Gordo · #13 Posted **May 18, 2012, 1:39 PM**

I'm not going to argue that Facebook stock is a good deal, but the P/E is around 100, not 1000 (lower than Amazon's P/E, for example, though that might change by the end of the day).

Chase Unperson · #14 Posted **May 18, 2012, 4:49 PM**

Congratulations Bay Area!

Home to a half dozen new billionaires and over a 1000 new multi-millionaires.

599GTO · #15 Posted **May 18, 2012, 6:54 PM**

Quote:

Originally Posted by Chase Unperson

Congratulations Bay Area!

Home to a half dozen new billionaires and over a 1000 new multi-millionaires.

Most of the new multi-milloniares probably don't even live in the Bay Area. Lot of "new" Wall Street multimillionaires. And many of the people who benefitted aren't "new" multimillionaires, but Silicon Valley and Wall Street insiders who are now even richer.

Chase Unperson · #16 Posted **May 18, 2012, 7:21 PM**

Quote:

Originally Posted by 599GTO

Most of the new multi-milloniares probably don't even live in the Bay Area. Lot of "new" Wall Street multimillionaires. And many of the people who benefitted aren't "new" multimillionaires, but Silicon Valley and Wall Street insiders who are now even richer.

Dude stop being a wet blanket. Multiple news reports report that at least 1000 of FBs 3000 Bay Area employees are now worth over a million. Those people live in the Bay Area and many probably weren't millionaires acting as secretaries and tech support people.

On a different note. Bono made 1.5 billion off the opening today and is now the richest rock star on the planet.

599GTO · #17 Posted **May 18, 2012, 10:08 PM**

Quote:

Originally Posted by Chase Unperson

Dude stop being a wet blanket. Multiple news reports report that at least 1000 of FBs 3000 Bay Area employees are now worth over a million. Those people live in the Bay Area and many probably weren't millionaires acting as secretaries and tech support people.

On a different note. Bono made 1.5 billion off the opening today and is now the richest rock star on the planet.

Nevermind.

1977 · #18 Posted **May 19, 2012, 3:33 AM**

An article about the effects Facebook is having on SF's real estate:

Quote:

The Facebook Effect On San Francisco Real Estate: It’s Very Real
By Julian Hebron, May 17th, 2012

Three weeks ago some clients wrote a $1.25m offer on a 1400 square foot 3-bed, 1-bath house with original kitchen and bath near San Francisco’s Dolores Park. They weren’t even close. There were 51 offers. It sold for $1.4m and closed 8 days after offers were due.

That’s the most offers I’ve seen in 10 years. And a different property that week got 23 offers.

Two weeks ago, another client offered $245k over list price on a 3-bed, 2-bath Pacific Heights condo. One of the other 9 offers was the winning bid in this $1.6m to $1.9m market segment. That was my client’s fourth rejected offer. He’s looking at two properties in this price range this week, and the listing agents are reporting similar demand: about 10 serious buyers circling.

Source and article: http://thebasispoint.com/2012/05/17/...its-very-real/