As I write this, the big IPO of our decade went public today, its such a household name I won't bother to name the company, hint; you’ve already visited it four times today.
I had been deliberating for the past two weeks whether or not to buy some stock on opening day, a day economists and journalists have been hyping—boom or bust—since the announcement two weeks ago. There is a bit of a speculator in me.
In an increasingly dark economic universe, the Facebook IPO is the one happy distraction.
Bankers are poised to take down the world economy (again), thanks to the revelations of risky derivate trading by JP Morgan under the guidance of Jamie Dimon. Greece is about to destroy the Eurozone economy, probably dragging the US down with it. The Dow Jones has been on a downward slide, losing all the ground it gained this year. Is it 2008 all over again?
We so hope not, which is why all bets have been placed on Mark Zukerberg’s social network. After all, wage and capital gains taxes on the newly minted million and billionaires will help to plug California’s budget deficit.
FB is currently valued at 120x the companies earnings (and by the end of the day if all goes well, it could be considerably more), which means it would take the company at revenues today, 120 years to buy itself. In contrast, current Apple stock is valued at 15x its earnings, and Google on its IPO (in 2004) was valued at 80x its earnings.
While Apple, Google and Facebook are probably the top three techs on the tips of everyone’s tongues (say that three times fast), these companies are vastly different in their revenue source, so may not make for a good comparison.
Apple a company that actually makes the gadgets and software that has driven tech for the last 35 years didn’t net its billions until late in its career. The iPod launched in 2005, later iPhone in 2007 and iPad (2009) has driven the six fold increase in apple shares and Apple into becoming the most valuable company in America.
Google was already a search giant when they went public, with revenue growth of over 125% each quarter. Through their revolutionizing Adwords & Adsense—the now ubiquitous