1/15/11

First Facebook at 50 billion, and now Groupon talks about a potential IPO of 15 billion has got me thinking, are we seeing another wave of overoptimism that will just come crashing down? How can a company such as Groupon be worth that much with such an easily replicable business model? They have first mover advantage, but 5-10 years down the line the first mover advantage can easily be wiped out.

Compared to Apple's 351 billion valuation 15 billion sounds kind of weak, but the point Cohan brings up is that Apple sells products. This got me thinking, is this that important for a company to have value? or can a company based on a low cost model also have huge value?

http://www.bloomberg.com/video/65908232/

Interesting to see Lloyd go visit Groupon himself in trying to stir up IPO talks. To me it seems that the banks don't want to touch this stuff, rather just earn the fees (Goldmans investment in facebook to me is nothing but a fee generator by passing it on to clients).

What do you monkeys think?

If you could buy a share of Groupon valuing it at 15 billion, would you?

Comments (17)

1/15/11

Facebook has a reasonable valuation. It's pretty much a social network monopoly, whereas Groupon is grossly overvalued due to the fact that it's business model is being replicated for every niche market. The only way it can grow is by buying these competitors; however, it'll eventually start to run into problems with acquisitions that I think could bring the company down. At $15 billion, I would short the shit out of Groupon.

Financial Modeling

1/15/11
1/15/11

Facebook has a reasonable valuation. It's pretty much a social network monopoly, whereas Groupon is grossly overvalued due to the fact that it's business model is being replicated for every niche market. The only way it can grow is by buying these competitors; however, it'll eventually start to run into problems with acquisitions that I think could bring the company down. At $15 billion, I would short the sh1t out of Groupon.

1/15/11
HarvardOrBust:

Facebook has a reasonable valuation. It's pretty much a social network monopoly, whereas Groupon is grossly overvalued due to the fact that it's business model is being replicated for every niche market. The only way it can grow is by buying these competitors; however, it'll eventually start to run into problems with acquisitions that I think could bring the company down. At $15 billion, I would short the sh1t out of Groupon.

But you would go long Facebook???

Ever heard of Myspace? They had multi-billion dollar valuations as well.

As soon as Facecrook goes public I'm loading up on puts.

1/15/11

I think matching and AI based web sites will see a big spike in the next couple of years (Groupon matches location by deals, and facebook ads by interests), before taking a hit. Another example may/may not be Art. sy (a start up which got some hype last year) who is trying to encyclopedia the visual art world. Yet, if anyone is familiar with the i2 technologies crash (or any other dot com bust), then a lot of this is just hype with really good UI.

1/15/11

i don't think FB has a reasonable valuation...profits are meager and i don't believe their growth story

1/15/11

Don't forget Pandora, Zygna and LinkedIn all queuing up behind

ambition is a state of permanent dissatisfaction with the present.

1/15/11

First off, Myspace and FB are two totally different sites. Myspace was a fad. Boomers are on FB. They weren't on Myspace.

Either way, I don't think this is a tech "bubble" 2.0. FB, Twitter, Pandora, LinkedIn, Zygna, GroupOn, are all legitimate businesses, each with a solid user base and potential source of revenue. This isn't like 1999 where firms had no business plan and were being sold at 100X sales. The term "bubble" is thrown around a lot, and I think it should be used with more caution. Housing was a bubble earlier this decade. Tech stocks in the late 90's were a bubble. Comparing a rising interest on Wall Street and in the financial fress (who are always hungry for a story) for IPO's of Web 2.0 companies to a bubble is a bit of a stretch.

I personally think all US equities are overvalued. However, I would not say they are in a bubble by any means.

The biggest bubble of the last year is people trying to find the next bubble. Gold bubble, treasury bubble, Web 2.0 bubble, commodity bubble.

looking for that pick-me-up to power through an all-nighter?
1/15/11
<span class=keyword_link><a href=//www.wallstreetoasis.com/finance-dictionary/what-is... rel=nofollow>LIBOR</a></span>:

The biggest bubble of the last year is people trying to find the next bubble. Gold bubble, treasury bubble, Web 2.0 bubble, commodity bubble.

+1

1/15/11
<span class=keyword_link><a href=//www.wallstreetoasis.com/finance-dictionary/what-is... rel=nofollow>LIBOR</a></span>:

I personally think all US equities are overvalued. However, I would not say they are in a bubble by any means.

The biggest bubble of the last year is people trying to find the next bubble. Gold bubble, treasury bubble, Web 2.0 bubble, commodity bubble.

Except that there will be no burst of your so-called bubble. And anyone who doesn't think gold is a likely bubble has not noticed that gold has only been above this level, when adjusted for inflation, for a VERY short amount of its life.

1/15/11

Facebook is valued at somewhere around 50 times their revenue. It's not sustainable in the least.

1/15/11
JSinNOLA:

Facebook is valued at somewhere around 50 times their revenue. It's not sustainable in the least.

No it's valued at 25x. I would go long Facebook because it's not merely a social networking tool like Myspace, but a full-on platform for digital interaction. The number of features that Facebook has such as Chat, Games, and soon Mail, ensures that the user is always connected and using the applications while Myspace never had such interactive features. Also, Facebook has a much better UI and now has an efficient profile layout. It's almost doing the same thing that Google did back when it was first starting out. The main difference is that people were slightly skeptical of Google, thus giving it a lower valuation at the same revenue point as Facebook.
If Facebook can find a way to monetize more aspects of its website, which I believe is certainly possible, then the 25x revenue valuation isn't far-fetched

1/16/11
HarvardOrBust:

No it's valued at 25x. I would go long Facebook because it's not merely a social networking tool like Myspace, but a full-on platform for digital interaction. The number of features that Facebook has such as Chat, Games, and soon Mail, ensures that the user is always connected and using the applications while Myspace never had such interactive features. Also, Facebook has a much better UI and now has an efficient profile layout. It's almost doing the same thing that Google did back when it was first starting out. The main difference is that people were slightly skeptical of Google, thus giving it a lower valuation at the same revenue point as Facebook.
If Facebook can find a way to monetize more aspects of its website, which I believe is certainly possible, then the 25x revenue valuation isn't far-fetched

Thats the problem I have with facebook. Right now its basically an advertising platform a la Google. The problem I see with this is that I dont know many people who go on facebook to search for things and click on ads like that, whereas on google you are searching for something and so the ads are a natural extension.

In addition, I dont see many monetizing strategies open to facebook without alienating people (such as subscription fees).

1/16/11
HarvardOrBust:
JSinNOLA:

Facebook is valued at somewhere around 50 times their revenue. It's not sustainable in the least.

No it's valued at 25x.

This is up for debate because they haven't clearly stated their revenues.

1/15/11

Debt Management Plan
Except that there will be no burst of your so-called bubble. And anyone who doesn't think gold is a likely bubble has not noticed that gold has only been above this level, when adjusted for inflation, for a VERY short amount of its life.

1/17/11

Really not one post on Goldman's news today? How they totally miscalculated how much of a stir they would make?

Or is this all about apart of the master plan to force an IPO by 2011....

7/3/11
Add a Comment