This is an update to our first three Facebook forensic analyses, two of which released before the actual Facebook IPO (search the :downloads section for the first two documents). The updated valuation for Facebook (which has actually has an increase in terms of value now that we have more information to deal with) is available to download for all paying subscribers (FB Q4-2012 Analysis & Valuation Note - update with per share valuation). I'm available to discuss this with professional and institutional subscribers via phone or Google+. Click here to subscribe or upgrade.
As of the writing of this addendum, Facebook is trading at $31.10, not even a year after debuting at $38.This utter disappointment and gutting of the Muppets is exactly what our research has anticipated. Facebook has fell as low as $17.xx, and is now on the rebound towards its IPO price. Notwithstanding the massive capital losses suffered by those who bought into the over hyped IPO against my admonitions, or the losses suffered by those who bought in the Sell Side powered private offerings which was actually valued higher than the majority of trading time as a public company, the argument is being made that Facebook has finally got the mobile thing and can’t be valued using conventional metrics due to its status as a high growth company.
Wait a minute! Facebook as a high growth company is actually growing revenue SLOWER than its biggest and better capitalized competitor – Google! Considerably slower! While it’s perfectly prudent for the management of a high growth company challenged for market share in a fast moving industry undergoing a paradigm shift, results must result from said efforts. Google is out Facebooking Facebook. Reference I Don't Think Facebook Investors Will "Like" This!!! Google Has Already Caught Up In Terms Of Active Users…
In my previous warnings of Facebook euphoria, I brought up the topic of growth many times, particularly active user growth. Reference The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1, while remaining cognizant that this was written exactly 1 year ago:
Thus, it is highly unlikely one can legitimately factor in the type of growth needed to justify the current Goldman $50B valuation - particularly when you consider that Facebook's growth is already slowing!
Well, let's see if I had a valid point now that we have clear and convincing historical evidence from which to base our analysis... (click any of these graphics to enlarge to print quality size)c
Uh huh! Facebook is MOVING BACKWARDS! IT'S LOSING USERS! LOOK OUT BELOW!!!
At this point, I can't help myself. I MUST point out the literal rippoff that Goldman Sachs pushed as a once in a life time investment a year and a half ago. As excerpted from Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman's Pricing: Here's What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week! while remaining cognizant that this was written exactly 1 year ago:
Goldman warns, 'We’re probably going to dump this load, but we may also need you to remain behind to hold the bag!'
In its offer for the $1.5bn stock sale of privately held social-networking company Facebook,Goldman Sachs disclosed that it might sell or hedge its own $375m investment without warning clients. Under the deal, private wealth-management clients would be subject to “significant restrictions” limiting their ability to sell stakes while Goldman Sachs own holding can be sold or hedged at any time, and without warning. One would hope that astute clients and investors would be put on guard by such conflicting and restrictive liquidity measures! In addition, it appears as if Goldman Sachs failed to disclose its clients that it had offered Facebook shares to its internal investment group, Goldman Sachs Capital Partners, headed by one of its star fund managers, Richard A. Friedman.
So, this begs the question, "Has the easy money already been made Facebook???" Well, let's take an empirical look now that we have some hard data to steer us throught that sell side fog, that very same fog that people pay me to clear.... (click to enlarge to printer size)
I’m available to discuss this in detail with all professional and institutional subscribers via Google+, or phone.
Is It Now Common Knowledge That Goldman’s Investment Advice Sucks??? Tuesday, 25 January 2011
It's official, the mainstream media has turned on those "doing God's work" and come to the side of BoomBustBlog.
I must admit, I was shocked when I first read this headline and saw the accompanying cover. After all, Bloomberg was the organization that published a story lavishing adulation upon a young Goldman analyst that had a 38% win rate throughout the credit crisis and (faux) recovery. I see those results as mediocre at best, and downright horrible from a realistic perspective. To make matters even worse, I believe I ran circles not only around that analyst, but the entire firm, see Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?