I think tech valuations have gotten out of hand over the past 6 months, I think we can place blame squarely on Facebook. Groupon, Gilt, RueLaLa, Twitter etc. are all receiving massive amount of Angle, Round A, B, C, D financing and their revenue streams aer being looked at too far in the future to be viable (what happens if the gov’t is given the right to shut off internet service – which they already have – then what happens to these revenue streams?). Facebook was recently valued at $65b. http://www.cnbc.com/id/41892971 How do I short Facebook, there is no way that this company can be worth $65b unless they come up with some sort of incredible way to monetize their userbase.
ASSet_MANagement Wrote: ------------------------------------------------------- > How do I short Facebook, there is no way that this company can be worth $65b unless they come up with some sort of incredible way to monetize their userbase. You could start by looking at sharespost/second market - then find someone who’ll lend you shares. I’d be careful about trying to short given the market. My 2c.
Groupon may be even more overvalued than FB in my opinion. They have literally no barriers to entry and Living Social is just as good, if not better. I too would love to short the $hit out of these companies but have a feeling they will continue to rise for a while. I think it is the VCs that are pushing these valuations higher so they can get exit their investment and get a huge return. m
What is it with FB going to revolutionise email? Isn’t that called instant messenger? No one with a proper job uses FB. I’d love to short it too based on business model. Shorting momentum & hype is a dangerous thing.
Demonstrate enough demand and Goldman will be more than happy to quietly setup a vehicle to short Facebook. They love being on both sides.
higgmond Wrote: ------------------------------------------------------- > Demonstrate enough demand and Goldman will be more > than happy to quietly setup a vehicle to short > Facebook. They love being on both sides. This. Goldman was selling MBS like hotcakes in '06-'08 and 2 doors down was shorting the $hit out of it at the same time.
I hear Chad is out trying to line up angle financing for AF. Thinking about 60 degrees.
Not really sure if there is a tech bubble. Emerging markets have a couple of hundreds of million potential Facebook users just waiting for internet.
Why do you feel the valuations are really high considering their profits aren’t publicly released? Regarding monetization, judging by Fbook’s job descriptions it seems like it is a big priority, especially considering the stream of Google execs that have joined the firm.
On fundamentals, I’d short it too, but with Google at $194b, a $65b valuation doesn’t seem so insane given its status as runaway market leader in social media. However, these don’t trade on fundamentals as public companies, let alone private, and the market can be irrational a lot longer than you can remain solvent. Still need to find a better way to monetize though, as I’ve yet to click on an ad from Facebook and will go to Google or Amazon when looking to make a purchase, but growth potential + monopoly in the hottest trend besides cloud computing can push it to the moon. Remember when Microsoft and Digital Sky acquired stakes valuing Facebook at the astronimical $15b and $10b, respectively? Groupon should have sold for $6b, they don’t have near the barriers to entry nor command any brand loyalty.
I wouldn’t short it just yet. You have no idea how long this $hitride will last for…better to wait for some more time or stay out of this frenzy altogether.
How bout QuePasa?? Que paso!!
wake2000 Wrote: ------------------------------------------------------- > How bout QuePasa?? Que paso!! hahaha no way, I pitched that this morning.
shorting a bubble is the fast-track to blowing your brains out… as overvalued as they may seem, i wouldn’t want to lose a maximum of infinity% (who knows how hot a bubble can get when money is cheap) at the chance of making 95%. who knows, FB could fetch of valuation of 300B in future, maybe 1T, remember the tech bubble when companies that actually had no possible way of making money were valued in the billions. well it wouldn’t be that crazy for a profitable company to be valued in the trillions. i do think it is overvalued, but take a look at most junior rare earth metals or junior copper companies, they are a true definition of overvalued.
I don’t think tech bubble is anywhere near of burst, simply because research in engineering (on the software side) is way ahead of what is available on market, as hardware matures, software matures with higher exponent. There is a reason why tech names often develops in bubble, the reason being non linear growth. The growth doesn’t depends much on company’s equity, and it’s hard to predict future of technology, a sudden innovation can turn around the game on upside, and lack of innovation can turn the company upside down because competitors will. You really can’t predict who will innovate, and in cases you see a predictable trend, you get firms like google, apple etc. I think it’s the time for whole valuation theory to be re written for software firms (at end all such bubbles are software), because you can distribute software infinitely with no cost at all, neither it’s necessary for a useful software product to be anyway correlated with amount of money invested, though money invested can fuel the growth. In the end, when you get a failed valuation theory (just taking about software), people tend to gamble and wish to hit the jackpot, it’s like reverting back to 30s when everything was random, and people like Benjamin Graham came out with innovations in valuation theory and things came back in order. They didn’t had business structures that exist now, so the whole framework of valuation for new age companies needs some innovation, what we use today is age old theory with age old assumptions for age old businesses.
Moreover a bubble explodes, when situation really becomes hopeless, until then people bank on track record of companies for their ability to innovate and turn things around. So a bubble burst is when you can say that the firm is so shitty that even innovation can’t save it now and valuations need to come down, till then trade stories.
Agreed, wouldn’t short now, but the hype is too overblown. $65 billion? Come on, I think we’re too used to reading insanely huge numbers. $65 billion is SO MUCH MONEY. They would have to somehow extract $130 dollars from EACH AND EVERY user assuming no ad revenue. Lets be liberal and assume they generate 10 billion a year in ad revenue, that means $110/user. I know Farmville is popular, but it’s not THAT popular.
ASSet_MANagement Wrote: ------------------------------------------------------- > Agreed, wouldn’t short now, but the hype is too overblown. $65 billion? Come on, I think we’re too used to reading insanely huge numbers. $65 billion is SO MUCH MONEY. They would have to somehow extract $130 dollars from EACH AND EVERY user assuming no ad revenue. > Lets be liberal and assume they generate 10 billion a year in ad revenue, that means $110/user. > I know Farmville is popular, but it’s not THAT popular. Don’t get me wrong - I’m strongly in agreement with you, but just to play devil’s advocate. From the recent sharespost auction: “SharesPost’s affiliated broker-dealer has completed its auction of 80,000 shares of the Class B Common Stock of Facebook Corporation. The response of the SharesPost community to the auction was substantial and the auction as signifcantly oversubscribed.” Seems like there’s strong demand. Additionally, have you seen this development? Could be a solid step towards monetizing the user base: http://mediamemo.allthingsd.com/20110308/youtube-netflix-hulu-meet-facebook/?reflink=ATD_yahoo_ticker IMO, the key factor to keep in mind is that you don’t get paid on valuations, you get paid on price. Tilson’s NFLX short is a good example - he could’ve been 100% right, but that didn’t matter.
…they get 30% of each FB credit spent iirc.
LPoulin133 Wrote: ------------------------------------------------------- > IMO, the key factor to keep in mind is that you > don’t get paid on valuations, you get paid on > price. Tilson’s NFLX short is a good example - he > could’ve been 100% right, but that didn’t matter. I think that’s a great point. Tilson got his face ripped off shorting Netflix. While I agree with him on all his points on why NFLX was overvalued, he was shorting a business that has had pretty good fundamentals and has been run efficiently.