Facebook IPO
Facebook's announcement of an IPO this week hit the news like a storm. Goldman Sachs is valuing the company at $50 billion while some estimates have said that it may reach a value of $100 billion by the time trading begins.
Facebook is an 8 year old company. It reportedly made a profit of $600 million in 2010. It is estimated to have made a $1 billion profit for 2011.
For such a young company, is it really potentially worth $100 billion? While Facebook's subscriber growth has been really impressive, you have to wonder if such valuations really makes sense.
I believe there's a strong demand in the retail side for Facebook shares. Some friends I know started asking me if I knew any stock brokers when they heard Facebook is going public. I'm pretty sure that the IPO would be successful. However, maintaining such high valuations is another issue altogether. Perhaps once Facebook officially becomes a public company, we can begin to see their inner workinga and see how they really work. Only then can one really evaluate whether you're buying a company at fair value.
With all the new IPOs by Groupon, Zynga and now Facebook, my big question is, are we seeing the makings of another tech bubble?
Facebook is an 8 year old company. It reportedly made a profit of $600 million in 2010. It is estimated to have made a $1 billion profit for 2011.
For such a young company, is it really potentially worth $100 billion? While Facebook's subscriber growth has been really impressive, you have to wonder if such valuations really makes sense.
I believe there's a strong demand in the retail side for Facebook shares. Some friends I know started asking me if I knew any stock brokers when they heard Facebook is going public. I'm pretty sure that the IPO would be successful. However, maintaining such high valuations is another issue altogether. Perhaps once Facebook officially becomes a public company, we can begin to see their inner workinga and see how they really work. Only then can one really evaluate whether you're buying a company at fair value.
With all the new IPOs by Groupon, Zynga and now Facebook, my big question is, are we seeing the makings of another tech bubble?
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