Inside Track with Erik Schatzker

Inside Track


Bloomberg Surveillance


This morning, I am doing double duty at Bloomberg — from 7:00 am to 8:00 am, I will be on Inside Track with Erik Schatzker discussing the IPO you are already to sick to death about. Then from 8:00 am to 10:00 am, I will be guest hosting Bloomberg Surveillance with Ken Prewitt and Tom Keene.

Since the IPO cannot be avoided, here are my 10 bullet points:

1. There are enormous differences between Facebook (the company) and FB (the stock). They each face very different challenges.

2. Valuation for the stock is extremely rich — about 28X sales, and 100X earnings (Apple is 3X sales and 10X earnings — ex-$100B cash its even cheaper)

3. Insiders — the smart money — are selling; Anecdotally, I am hearing about lots of retail buyers in the bulge bracket (Merrill/Morgan) channel.

4. Anyone who clicks on a Like button is counted as a monthly user, making that 900 million monthly user number grossly exaggerated.

5. Facebook does a very poor job monetizing users, getting a mere $5 versus $30 for Google and $144 for Netflix.

6. Enormous questions exist as to the efficacy of advertising on Facebook;

7. Facebook mobile offerings have even more limited engagement than web based;

8. Zero penetration in China;

9. What will the arc of Facebook’s adoption cycle be? Next generation users? Consider other sites like AOL, eBay and MySpace whose users eventually went on to the new new thing.

10. Ongoing privacy issues continue to dog Facebook. EU and FTC investigations can cause future problems; User trust Facebook the company much less than Apple, Google, Twitter or even Microsoft.

If you are going to trade this, by all means do so. If you are investors, I would suggest you need to watch the valuation carefully.

Category: Investing, IPOs, Media

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Media Appearance: BTV Inside Track; Bloomberg Surveillance Radio”

  1. Stuart Douglas says:

    IPO today? No, I hadn’t heard.
    I hope it is not one of those over-hyped companies at the peak that will soon fade away. ; )

  2. Mike in Nola says:

    I don’t know who came up with the “Facebook can’t do mobile” meme. Seems pretty lame. All the major platforms have provisions for ads within Apps. They just need to spend a little of today’s largesses on some good programmers.

    This isn’t to say that I have any use for it, or that it is not just another fad.


    BR: they can do mobile, they have not shown the ability to monetize mobile yet

  3. AHodge says:

    saw early part, nice mainly the non FB
    agree with all and add
    1 the company doesnt need any money
    2 only the frends and family venture caps, suppliers and Mark need the money
    3 as per usual they create an artificial shortage just offering a sliver of new stock less than 10% of the float
    4 i cant even find this key # not that i want to, but the genius media ought to
    5 respectable markets like the Dutch insist on a 25% new issue
    6 this was so hot the insiders didnt even wait lockup and sold part now
    7but they will be in whenev lockups over, once again i havent seen that or an analysis in this blah blah
    8 strongly reminds me of the electoral seduction by a candidate, in the excitement you dont even realize y’all are bending over

  4. ews says:

    I get your point about AOL and myspace, but what exactly was the new new thing ebay users went chasing?


    BR: online auctions, which were hot then.

  5. DrSandman says:

    @Mike in NoLa: My only complaint about Facebook on mobile is that I can’t figure out how to uninstall the blinking app off my Android Smartphone! What is this Facebook thing that everybody can’t stop babbling about? I don’t think that I personally know anyone that actually uses it! How is it different than

    ZeroHedge had info on the first (inverse) flash crash on FB: (eu)$50,000/per share!

  6. The risk for buying FB is about the price paid for the shares today, or in the months ahead. Watch from the sidelines and let the major media outlets scream and shout about valuation vs. its great future. There are arguments that are valid for both sides.

    Short term, FB is a big ship that will raise the tide for all stocks, raising the prices. The reasons the tide will run out are clear: PIIGS, US Debt Wall Dec 2012, risk aversion.

  7. James Cameron says:

    Top three headlines on

    Nine Things You Should Know About Facebook’s IPO
    How Mark Zuckerberg Hacked the Valley
    Facebook’s IPO: Who Gets Rich

    Top four headlines on Bloomberg:

    Facebook Set for Debut After IPO Seals $104 Billion ValueQ
    Facebook’s Saverin to Pay ‘Hundreds of Millions’ in TaxQ
    Hewlett-Packard Said to Consider Cutting Up to 25,000 JobsQ
    Facebook IPO Makes Zuckerberg Richer Than Google Founders

    PLUS LIVE TV coverage.

    Top five headlines on WSJ:

    Facebook’s Opening Trade Approaches
    Facebook Priced to Raise Money, Not Hype
    Facebook IPO Remakes Scorecard
    Facebook’s $4,000 Bid

    PLUS STREAMING updates.


  8. subscriptionblocker says:

    Who’s buying this stuff? Is it bought with OPM on margin?

  9. bear_in_mind says:

    I’d much rather sit at the blackjack or Texas Hold’Em table than trade FB; or this market, for that matter.