Facebook Attempt to financial analysis
Good afternoon, dear community! In my article, in general, I do not discover anything fundamentally new, but rather just want to analyze the current financial situation of the most popular web resource based on open and accessible sources (including those articles that were on Habré).
The Facebook project, the undisputed leader among social networks, almost daily beats its own records in terms of the number of both users and attracted investments. The level of capitalization of this company has already brought it to one of the first places in the United States, making Facebook one of those colossi on which the well-being of the global economy depends. And if the legs of this colossus turn out to be clay, not only its direct investors will have a hard time. Let's try to figure out what Facebook is like from a financial point of view.
From the very beginning of its existence, the project attracted the attention of venture investors and in the summer of 2004 received the first half-million investment from Peter Thiel, the famous “business angel”. A year later, Facebook got a second investor - Accel Partners, which gave another $ 12.7 million to the social network. This deal marked the beginning of an investment boom around Facebook and similar Internet projects - they began to appear like mushrooms after the rain (just recall the popular Russian networks VKontakte "and" Classmates ", which reproduced Zuckerberg's business ideas in the CIS). Six years later, Facebook has a market capitalization of over $ 75 billion.
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The incredibly rapid increase in the value of Facebook causes experts to fear that the dotcom crisis (companies whose business model is built solely on the Internet) can repeat, which happened in early 2000. Then the peculiar fashion for them attracted huge investments into the industry. But, despite the powerful flow of money, “dotcoms” often did not have a verified business model that would accurately predict the sources and sizes of profits in the medium and long term. The main source of profit was the increase in the market value of the company and its subsequent resale to other investors. This short-sighted policy led to the emergence of firms with an extremely low price-earnings ratio. The collapse of the New York Stock Exchange and panic among investors in March 2000 ravaged a huge number of “dotcoms”: having lost access to investments and not having sufficient profits to cover expenses, they were forced to declare bankruptcy. This crisis became the first harbinger of the global financial crisis.
The current situation around Facebook is very similar to the situation a decade ago. Although Facebook claims a steady increase in the number of users and an increase in advertising revenue (last year they were $ 1.8 billion), the price / earnings ratio continues to raise concerns. So, in 2010 it was about 100. For Google, this figure is 24, for Microsoft - 13, for Apple - 19. At the same time, Facebook’s market capitalization exceeds the capitalization of industry giants like Boeing (53 billion), General Motors (59 billion), Ford (62 billion). Such a large value of this indicator may indicate that the company is highly overvalued.
Fuel to the fire adds Facebook investment policy. It seems that the company is demanding with all its might a public offering of its shares (IPO) on the New York Stock Exchange, which will necessarily include its detailed financial audit and, moreover, will oblige owners to submit quarterly and annual financial reports to the Securities and Exchange Commission . Of course, sooner or later, a public offering is inevitable, since in the USA there is a rule that a company that has reached a certain amount of investment is obliged to hold an IPO and submit reports no later than 120 days after breaking the rule. Facebook is approaching this milestone.
It seems that the owners of Facebook have decided to remove the last “cream” before the public offering of shares. Earlier this year, it became aware of the deal between Facebook and Goldman Sachs, the essence of which is to organize a closed auction between Goldman Sachs customers for the remaining shares in Facebook. The minimum bid now is $ 2 million, and after the end of the auction investors will be selected who have offered the highest rates - the remaining shares will be sold to them. After that, investor contributions will be frozen for up to two years. It is difficult to say now how much it will be possible to gain from this auction, but by the beginning of 2012, thanks to such massive injections, the market capitalization of Facebook may well double, exceeding the amount of $ 150 billion. . If its cost turns out to be too high, panic is quite likely among investors, and the “dot-com” story can happen again. In any case, this crisis will affect not only the Internet business, but also other sectors of the economy.
However, there is a more optimistic view of the current situation. Sales of advertising on the resource continue to grow and, according to forecasts, in 2011 they can reach $ 4 billion. Of course, these revenues are not enough to fundamentally improve the existing indicators, but Facebook’s management still has at least a year to clean up its business model. During this time, they can create new sources of profit, thereby making Facebook’s public offering one of the biggest upsurges in financial history.
The Facebook project, the undisputed leader among social networks, almost daily beats its own records in terms of the number of both users and attracted investments. The level of capitalization of this company has already brought it to one of the first places in the United States, making Facebook one of those colossi on which the well-being of the global economy depends. And if the legs of this colossus turn out to be clay, not only its direct investors will have a hard time. Let's try to figure out what Facebook is like from a financial point of view.
From the very beginning of its existence, the project attracted the attention of venture investors and in the summer of 2004 received the first half-million investment from Peter Thiel, the famous “business angel”. A year later, Facebook got a second investor - Accel Partners, which gave another $ 12.7 million to the social network. This deal marked the beginning of an investment boom around Facebook and similar Internet projects - they began to appear like mushrooms after the rain (just recall the popular Russian networks VKontakte "and" Classmates ", which reproduced Zuckerberg's business ideas in the CIS). Six years later, Facebook has a market capitalization of over $ 75 billion.
')
The incredibly rapid increase in the value of Facebook causes experts to fear that the dotcom crisis (companies whose business model is built solely on the Internet) can repeat, which happened in early 2000. Then the peculiar fashion for them attracted huge investments into the industry. But, despite the powerful flow of money, “dotcoms” often did not have a verified business model that would accurately predict the sources and sizes of profits in the medium and long term. The main source of profit was the increase in the market value of the company and its subsequent resale to other investors. This short-sighted policy led to the emergence of firms with an extremely low price-earnings ratio. The collapse of the New York Stock Exchange and panic among investors in March 2000 ravaged a huge number of “dotcoms”: having lost access to investments and not having sufficient profits to cover expenses, they were forced to declare bankruptcy. This crisis became the first harbinger of the global financial crisis.
The current situation around Facebook is very similar to the situation a decade ago. Although Facebook claims a steady increase in the number of users and an increase in advertising revenue (last year they were $ 1.8 billion), the price / earnings ratio continues to raise concerns. So, in 2010 it was about 100. For Google, this figure is 24, for Microsoft - 13, for Apple - 19. At the same time, Facebook’s market capitalization exceeds the capitalization of industry giants like Boeing (53 billion), General Motors (59 billion), Ford (62 billion). Such a large value of this indicator may indicate that the company is highly overvalued.
Fuel to the fire adds Facebook investment policy. It seems that the company is demanding with all its might a public offering of its shares (IPO) on the New York Stock Exchange, which will necessarily include its detailed financial audit and, moreover, will oblige owners to submit quarterly and annual financial reports to the Securities and Exchange Commission . Of course, sooner or later, a public offering is inevitable, since in the USA there is a rule that a company that has reached a certain amount of investment is obliged to hold an IPO and submit reports no later than 120 days after breaking the rule. Facebook is approaching this milestone.
It seems that the owners of Facebook have decided to remove the last “cream” before the public offering of shares. Earlier this year, it became aware of the deal between Facebook and Goldman Sachs, the essence of which is to organize a closed auction between Goldman Sachs customers for the remaining shares in Facebook. The minimum bid now is $ 2 million, and after the end of the auction investors will be selected who have offered the highest rates - the remaining shares will be sold to them. After that, investor contributions will be frozen for up to two years. It is difficult to say now how much it will be possible to gain from this auction, but by the beginning of 2012, thanks to such massive injections, the market capitalization of Facebook may well double, exceeding the amount of $ 150 billion. . If its cost turns out to be too high, panic is quite likely among investors, and the “dot-com” story can happen again. In any case, this crisis will affect not only the Internet business, but also other sectors of the economy.
However, there is a more optimistic view of the current situation. Sales of advertising on the resource continue to grow and, according to forecasts, in 2011 they can reach $ 4 billion. Of course, these revenues are not enough to fundamentally improve the existing indicators, but Facebook’s management still has at least a year to clean up its business model. During this time, they can create new sources of profit, thereby making Facebook’s public offering one of the biggest upsurges in financial history.
Source: https://habr.com/ru/post/115762/
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