Ok folks, it's not often that I issue a rank do not buy statement on an S-1 (in fact, since starting the Ticker I can't recall ever doing it) but this is one where I feel I need to.
I'm basing this on one, and only one, criteria -- the rate of acquisition of new accounts is slowing.
That's all I need to know and it should be all you need to know -- the company filed the S-1 as soon as they detected this slowdown in December.
In addition participation is narrowing; there were 1.74 users monthly per daily user in 2011, but 1.86 a year prior.
These are potential signs of leveling off. The deal with almost-certainly price assuming a ridiculous price to sales and price to earnings multiple, which means that the growth numbers must be maintained as the P/E/G ratio will be in the stratosphere.
If it's not you're going to get your head cut off.
Further, upon reading the S-1:
The company identifies no particular need for the capital; it has cash. This strongly implies that the only reason to IPO is for the insiders to monetize their position. Why, if it's rapidly growing in value and there is no meaningful risk to that value vaporizing (and nobody knows better than top management if this is the case!) would the company do this now?
All of the direct payments revenue are for the purchase of "virtual goods" (e.g. things on Farmville); there is no actual hard good or service delivered in exchange for money. That's not shopping, it's pretty close to burning money. How long will that furnace keep operating?
I don't buy the ad revenue model. This is not Google and it does not have to be very intrusive into your experience before people leave. If they leave, Facebook is dead. Advertising is 85% of their revenue. When have you become aware of -- or purchased something -- based on a Facebook ad? My answer: Never.
Facebook is a fad. Myspace anyone? Sure, there's apps and all this other stuff, but at the end of the day.... it's a fad. Tastes change, often quickly.
The primary means of creating value for advertising and marketing purposes is through mining the data. But that's in direct conflict with people's desire to not have their data taken and used for this sort of purpose. The balance between making money off what people share with their "friends" and stepping over the intrusiveness line to the point that people feel exploited is a fine one, and not necessarily known in advance. The execution risk here is very high and the company and its image is less open about this fact than it is about what looks like a warmed-over version of the "Hacker's ethic." Eeeeehhhhhh.....
The mobile environment currently has no advertising. The PC-based environment, since the latest changes Facebook made to the layout, is (in my opinion) hideously slow and nearly unusable -- and I have both a ridiculously fast Internet connection and an 8-way multiprocessor computer. For people with less how responsive is it if I find the performance annoyingly bad?
There is a disclosure in the S-1 that they are using leasing facilities that are not on the books. I strongly dislike all off-balance-sheet activity of any sort.
This is not a company that will actually be publicly owned and it will pay no dividend. Zuckerberg will retain full control of the board and all corporate matters as he will have a majority position even if all the other shareholders vote against him. Since the company also intends at present to pay no dividend you are buying on one thing and one thing only -- the premise that in the future some greater fool will pay more for the shares you buy in the IPO.
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2dogs
Posts: 2941
Incept: 2009-03-25
Land of the Lost
Quote:
the rate of acquisition of new accounts is slowing.
Yep. Know many people who've lost interest in it. It's waning.
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You can't defeat the combined effects of massive voter fraud, the Free **** Army, and the entire bought and paid for media complex. This nation is done.
I just never understood the appeal of Facebook, and I always get infuriated when people look at me like I have a penis attached to my forehead whenever I tell someone that I'm not on it.
Yes, it's definitely a fad that will die off soon. There is just nothing advantageous about it, when you can just text someone as an alternative.
Mezzmor
Posts: 1175
Incept: 2008-10-09
Off the grid
Well, as someone who completely underestimated Google's cash machine at their IPO, I will tell you my personal track record hasnt been worth two ****s since 1997 when it comes to picking winners at the IPO. So take that into consideration with my post.
That being said, what was that saying we used to throw around in high school, "I wouldnt hit that with your dick?"
Yeah, I think that fits here.
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Once the "Progressive" and the "educated" have completely destroyed the country, the logical, the wise, and the experienced will rebuild it.
Facebook's mobile apps are generally atrocious as well; aside from the fact that people get bored of the attention *****s that populate the site i think its weakness in the mobile space could be its undoing.
There is no chance i would touch this IPO, unless perhaps i knew that GS et al were going to be retaining a sizable chunk (chances are then they would underprice and pocket the rewards).
Punch_rockgroin
Posts: 1922
Incept: 2008-12-31
Pacific NW USA
When I installed the mobile client on my Android phone, I noticed that Watchdog would tag it several times a day for excessive CPU usage. That was while it was running in the background. Why so much resource usage, I wonder?
"No one in this world has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby." H.L Mencken
My rationale for being inclined to buy the FaceBook IPO would be that Obama will shortly issue an executive order mandating that every Amerikan create a FaceBook account and keep it updated so that Big Brother will know what we are doing.
Visualcsharp
Posts: 343
Incept: 2009-12-19
Round Rock, TX
I'm not a trader, but it seems to me that with the condition the world is in, isn't it likely there will be an "irrational exuberance" event with this IPO? Won't folks jump in because they view it as an opportunity to be wildly optimistic (read: greedy)? Who knows, maybe something as stupid as a Facebook IPO can become the black swan everyone's been looking for.
More bread and circuses for the masses. I work with companies that obsess with social media and I ask them to show me actual sales from social media "interactions" or "thumbs up". I get blank stares.
I'm a sales rep that meets face to face, telephone, email, place product in hand.
Me to 16 year old daughter: Do you still use Facebook as much as you used to?
16 year old: Oh, heck, no, I use Twitter way more. Most of my friends use Twitter because it's way easier and you only follow and are followed by your "real" friends, not everyone you know, and you get judged a lot less. Some friends don't have Twitter - yet - but it's way easier. I'll use Facebook to post something long, like song lyrics, and pictures, but I don't go out there more than once a week unless something big is happening. I'm a twitter gal now.
'Nuf said because when you're losing the tech savvy teens, you've lost. P.S. She told me I'm not allowed to follow her on twitter because that's where she complains about me - hmmmmm..... What does she think I would use it for?!
Yep. Know many people who've lost interest in it. It's waning.
Hence, the timing for the IPO.
Designed for a few to pull down a fortune in this specific brief opportunity window of time before it augers in. Zuckerberg knows damn well where it's headed, waiting not one minute more to get what can be gotten before it becomes a modern day 'pet rock'.
I know of many who have stripped their profiles down to near nothing due to the hacking paradise the place has become. Facial recognition programs running rampant through the profiles seeking to match up information through brute force processing to do identity theft on a grand scale.
It's turned into a digital sewer and lots and lots more people realize it every day.
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"The Spinning Cyclone Of Deflation Is Fueled By Deficit Spending. An efficient asset destroying storm powered by the printing press". - Me
When the Nazi's broke every law when coming to power, people in later years were asked, how were they allowed to do it? The answer was easy: They Simply Did It.
Most of my friends use Twitter because it's way easier and you only follow and are followed by your "real" friends, not everyone you know, and you get judged a lot less.
Well, just like 'savingsaretheway' mentioned above, I also never understood the appeal of providing all my personal info for anyone to mine...esp. the government. I never opened a FB account and I never will. Besides the constant changes I hear about ("Timeline"? WTF is that? Surely something to encroach on your privacy even more) there is just no need for it in my opinion. Read "is Facebook sharing your face with the cops?" on PC World:
Next up, dumping Google with all their changes to their privacy policies. I need a new search engine that won't aggregate data on a whim, sending me "targeted ads" and such. I think even Bing has to be better than Google at this point - although I've tried ixquick (anon search engine) their search results leave a lot to be desired.
Reading "Is Google Evil?" makes me think none of these companies can be trusted, they can just change their policy when the mood suits them. So whatever the promise today, don't bet on it being the case tomorrow.
