OK, headline inflation and the god complex notwithstanding…
We’re open to the idea Whatsapp is worth almost $40 a user. Really. You know, something like:
- 450m active users, emphasis on active, many of whom are outside the US (and messaging across borders).
- Rare is the service that lets Android phones talk to iPhones easily, incidentally, or has non eye-stabby group messaging. “Network externalities” as the oleaginous VCs put it in Palo Alto.
- It’s price to users not earnings. Assume first that service will earn $5 or so over from each user, over a typical lifetime of using Whatsapp on current $1 a year pricing. Double or triple the pricing and the return looks better. Throw (oh, we dunno) mobile payments and better still. Now, quite plausibly, throw in 2bn, not 450m, users.
- So sure it’s a momentum trade. And sure, valuation is nuts, but Facebook is mostly paying in its shares, and Facebook shareholders made that valuation nuts. The basic trick here is not new: accrete earnings (users) with stock. Bluntly, Mark Zuckerberg has Lex Luthor-level ambitions — Facebook having LexCorp-level corporate governance. So come along for the ride.
Okey-dokey. But we’re still far from sure we get to more than $40 a user back.
And, all that said — who told China? (Or Korea, or Japan)
Chart via Nomura. And so to the keiretsu effect. Read more
A couple of years ago we had the privilege of attending a closed door session with a well known (former) spook/security type. We shan’t mention exactly who it was, but suffice to say the person in question seemed to know more about what’s what in the world of global security than anyone else doing the public speaking rounds these days.
It was a so-called “access event”, the sort where wealth managers pay organisers to connect them with those who know much more about what’s going on than they do.
The spook in question made clear that he could only comment in a private capacity and in very general terms, but he was nevertheless open to questions. Read more
in exchange for an aggregate of 183,865,778 shares of Parent’s Class A common stock (valued at $12 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share (“Specified Price”)) and $4 billion in cash… In addition, upon Closing, Parent will grant 45,966,444 restricted stock units to WhatsApp employees (valued at $3 billion based on the Specified Price). Read more
We’re glad we kept a screenshot of this moment in stock-market history:
It (ultimately) landed Nasdaq with a $10m fine — the biggest ever for an exchange — and serious egg on its face on Wednesday, after a settlement with the SEC over securities law charges relating to Facebook’s botched IPO. From the release: Read more
If one’s relationship with Facebook required a status, it would probably be “complicated” for most. Like with Netflix and its chief executive Reed Hastings, who could face a civil action over a status update that allegedly violated disclosure rules. Oh, and also for this girl… Read more
The full Citigroup blast against Nasdaq’s handling of the Facebook IPO is well worth a read. (Big hat-tip to NYT Dealbook, click to enlarge)
Hat-tip to Sam Jones — it’s a 7.85 per cent stake (in the ordinary class A shares) by George Soros.
Google spits out about 1,690,000 search results for “facebook lock up expiry”.
It’s not exactly been a state secret that early investors in Facebook could start selling their stakes from today, when 271m shares lurch down the slipway. You could say the share price had been trying to price in this supply in recent days. Another 1.6bn shares will exit lock-up periods from now to early next year. It’s all known about, surely. Read more
Facebook’s second-quarter $1.18bn revenues arrived more or less in line with the consensus of $1.16bn. (It earned 12 cents per share, though made a loss of 8 cents in GAAP terms because of costs related to employees’ shares and the IPO.)
Whoopee. Read more
Another bad day for Facebook shareholders. It looks like the latest plunge — which took the shares below the $30 level — has something to do with the start of option trading this morning. The shares have dropped to new lows, down around 7.9 per cent at pixel time.
Successful or not, Facebook’s IPO has taught us one very important thing over the last two days.
The blogosphere/Twittersphere knows extremely little about greenshoe IPO mechanics. And yet, because who shouts loudest makes the most waves…the idea that Morgan Stanley had “lost face” on the IPO due to its commitment to take on shares at $38 “at a burden” to itself managed to linger around far too long for comfort. Read more
Update after the close: It closed green(shoe) at $38.23 according to Bloomberg data. But not until after a few moments close to $38.00, as seen below earlier…
After an open of $42.05, against the $38 IPO price, Facebook stock quickly reverted to the sale price on Friday — at which level we presume those banks with the over-allotment mandate (MOST, JPM, GS) will have been very busy indeed. Read more
Via the FT Tech liveblog. Winner possibly gets this…
Is life as we know it gonna change after 11am New York time on Friday?
Will Mark Zuckerberg be crowned emperor of the dweebs (just as Napoleon was crowned emperor of the French exactly 208 years ago today) or will he fall flat on his puli sheepdog? Read more
1) It’s a punchy IPO pricing range.
2) Ooh look at the insider seller amounts. Read more
We’re still trying to get our heads round this at pixel time (Yahoo killer?) but here’s the release:
In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a license to AOL’s remaining patent portfolio, which contains approximately 300 additional patents that were not for sale. Read more
Kara Swisher reports that it’ll be for $1bn in cash and shares. From a note posted to Facebook by Mark Zuckerberg:
The California State Teachers’ Retirement System, Calstrs, has called for Facebook to split the role of chairman and chief executive and to appoint a woman to its all-male board for the first time, the FT reports. Calstrs, one of the biggest US public pension funds, is already invested in Facebook through its private equity holdings, and will pick up shares through index-tracking after its IPO. Calstrs’ demand for shareholders to be given voting powers according to the size of their stake will be a tough request to meet, however. Facebook has revealing in filings that Mark Zuckerberg paid nominal sums to other shareholders in agreements to gain enormous voting clout, says NYT Dealbook.
Reuters reports that Google and Facebook have reacted to a court directive in India on Monday warning them of a potential crackdown by authorities if they do not take steps to protect religious sensibilities. The two companies are among 21 that have been asked to block potentially offensive material. The move, off the back of private petitions to the court, have stoked fears over censorship. Last year, a law was passed in India that made companies like Google responsible for user-generated content on their sites, giving them 36-hours to take down content deemed offensive once there has been a complaint. The WSJ reports that the content in question in this case involved images of religious figures. These have since been taken down by Google but only on its localised India domain, making the content still available elsewhere.
Facebook already has so much cash, and so little desire for true shareholder control, that it should really call its IPO off instead of “gratifying” its venture capital backers and employees, the FT’s John Gapper writes in a must-read column. Investors have reacted warily to Facebook’s suggested $75bn-$100bn valuation of 100 times price to earnings, says Reuters. Google emerged on public markets in 2005 with a price 218 times its earnings, but was valued at $23bn at the time. Facebook’s price tag would make it worth 53 per cent of Google’s current valuation, despite the latter company earning 10 times the profit, notes the WSJ.
Facebook launched the process for its highly anticipated stock market debut, filing papers for a $5bn initial public offering that will turn key shareholders into billionaires, most notably Mark Zuckerberg, the 27-year-old chief executive and co-founder, reports the FT. Mr Zuckerberg will retain absolute control over the company. He and his close allies own 57 per cent. Mr Zuckerberg’s own 28.4 per cent stake would give him a paper worth of $22.7bn, based on secondary market trading, valuing Facebook at $80bn. Separately, the FT says Facebook’s figures suggest that its advertising base has yet to develop as far as many of its supporters had hoped – though it has already achieved strong profitability. The WSJ says Facebook’s annual revenue growth is slower than other tech companies who have staged IPOs recently.
The strangest thing just appeared in our Facebook…
IFR reports that Facebook is expected to file the preliminary prospectus for its long-anticipated IPO on Wednesday. It is expected that the offering will raise $5bn, though this could be increased to meet investor demand. Filing now should allow the company to complete the process by May. The coveted lead bookrunner role has gone to Morgan Stanley. Meanwhile the WSJ reports on a surge in the stock prices of social media companies in China where Facebook is blocked.
Facebook’s filing on Wednesday is set to price its initial public offering at some $5bn, but could be increased in response to investor demand, IFR reports. Guiding the IPO will be David Ebersman, Facebook’s quiet but no-nonsense chief financial officer, says AllThingsD. “Facebook is not taking chances with this IPO and wants to make it a blue-chip event,” one source told AllThingsD. Ebersman has pushed to keep banks’ fees in the offering low.
Facebook is expected to submit paperwork to regulators on Wednesday morning for a $5bn initial public offering and has selected Morgan Stanley and four other bookrunners to handle the mega-IPO, IFR says, citing sources close to the deal. Morgan Stanley will take the coveted “lead left” role in what is expected to be the largest IPO ever to emerge from Silicon Valley, with the other four bookrunners being Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan, although the underwriting syndicate could be expanded later, IFR cited the sources as saying. Facebook declined to comment. Getting picked for the IPO is a coup for Morgan Stanley and Michael Grimes, the global co-head of the bank’s technology investment banking unit, says Bloomberg. The group won the biggest share of business underwriting US initial offers by internet companies last year, and taking the lead on Facebook may catapult it to the top of the US IPO league table for a third consecutive year.