Facebook was founded in 2004 with a mission to make the world more connected. It is in the news as the potentially biggest IPO in history as they filed January 12th to go public. I am in the process of writing a book called Trading Facebook: The Cash Flow Clinic. In my research I have found some very good information on the secondary markets. If you are unfamiliar with the secondary market it is where investors buy and sell shares of pre-ipo companies.
Sharepost has valued facebook (FB) at around $38 per share, however on their current implied valuation sheet they show a range from $42-$44 a share. This week the facebook index value according to sharepost has changed and has moved up 13.09% to $93.1B.
I am sure that when priced by Morgan Stanley they will price it lower leaving some money on the table for the institutional clients to reap some nice profits. Where FB goes on day one I am not sure but I will be there ready to trade it up if it goes that direction. I will be watching their financial numbers and base building to take advantage of their move higher or lower. Facebook at this point is not monetizing their unique users well, but they have one hell of a list at over 845 million subscribers.
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Watch for Trading Facebook: The Cash Flow Clinic a book on how to trade facebook the biggest IPO in history coming to a kindle near you soon.
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Estimates are that facebook has about two thirds of the users already on their network. This means those in the US and Europe who are seen as the real potential for revenue. The only growth left is that of emerging markets which don’t have a lot of value in regard to monetization. Facebook is going to need to bring it when it comes to converting the 845 million users (a gold mine) into revenue. They are starting to use more mobile and recently rolled out movies on facebook. Still they are low in regard to their monetization of users ranking way behind Amazon and Ebay. They generate most of the revenue from the facebook ads, we will see how they perform going forward.
OPTIONS
Typically IPOs don’t have options for a long time, however in recent times we have seen options written on new companies within a week. It would not suprise me to see FB options very quickly offered. Remember when options are written there is no volume or open interest thus the spread between the BID X ASK can be large. Insure you look for the best options with tight spreads and high open interest and volume or just watch for my book when it comes out on kindle and get it.
Be Safe and Serene
Vince
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Watch for Trading Facebook: The Cash Flow Clinic a book on how to trade facebook the biggest IPO in history coming to a kindle near you soon.
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Tags: facebook, facebook ipo, fb, how to invest in facebook, trading facebook
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