Facebook IPO: What is in the S-1 to convice you its a good buy?

Facebook’s IPO is going to be as big if not bigger than Google was a few years ago. The S-1 filling document is a very lengthy dry read that most people will skip. We are not most people. The S1 was very insightful. For one thing we don’t have to wonder if Zuck would still be in charge. He will have the most votes based on his type of stock. The shares will be split into “A” and “B” shares, where the latter get 10 votes per share, and the former get one. Zuckerberg presently owns around 28.2% of the share capital.

Facebook had revenues of $3.7bn and had an operating income of $1.7bn.
They had 845 million active users and the numbers are still growing.

Saying Facebook depends on advertising is a common sense but what surprised us is that it only accounts for 85% of the revenue. The rest comes from in-app purchases.

Zynga is almost as important as Mark is for the company. In 2011, they were 12% of Facebook’s revenue. Facebook wrote in that “If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected.”

The mobile version of the site had 425 million monthly active users in December 2011. There are no ads on the mobile site but that may soon change. The S1 states, “our revenue may be negatively affected unless and until we include ads or sponsored stories on our mobile apps and mobile website. We believe that people around the world will continue to increase their use of Facebook from mobile devices, and that some of this mobile usage has been and will continue to be a substitute for use of Facebook through personal computers. In 2011, we began serving our products from data centers owned by Facebook using servers specifically designed for us.” I wonder will the servers help place ads on mobile devices?

There are 138m shares that have been issued to the employees of Facebook for $0.83. At an expected price of about $45, that’s almost $6.2bn profit for the employees. That is not a bad turn around for a 401K plan.

Man U goes IPO: Manchester United’s plans $1 billion IPO

 

Arguably the most recognized, loved, hated and successful team in the world is about to offer it’s self up to the open market.  Manchester United’s planned $1 billion public offering has been approved by Singapore’s stock exchange. They will start trading at the end of the year.  The is worth about $1.9 Billion so says Forbes.

What you may not know is that the team though overseas is an American-owned club.  Manchester United is owned by the Glazer family. The same family that owned the Tampa Bay Buccaneers.  Forbes magazine  has ranked Manchester United as soccer’s most valuable team for the last seven years.

The ipo is welcomed at the team may be worth a lot but they are also in a lot of debt. The club has about $750 million of debt on the books.

LinkedIn was lucky to come out with an IPO when it did; Groupon & Zynga have both backed out of theirs due to volatile market

Groupon is more than rethinking its IPO. It has put it on the back burner. While they claim to not be canceling its IPO they are not in any rush to come out and play in this market.  Groupon had planned to go public after Labor Day but thought better of it. There had been talks of a  planned a roadshow for investors next week. That roadshow has been canceled. So the  $750 million IPO in June it filed for just a few weeks back will have to wait.  Zynga on the other hand is still coming out to play but just a little bit later. They plan to go IPO in September but have no moved that to November.

Groupon IPO: Are they ready? Better yet are you ready to take advantage of it?

Groupon is going after what seems to be a hot market right now. They are going to have an IPO very soon. After seeing how much a non market leader like LinkedIn could do with an IPO; it was only a matter of time before Groupon jumped at this chance. LinkedIn had a great IPO, though many feel the price was inflated unnecessarily by media hype. Groupon’s IPO will be underwritten by Morgan Stanley, Credit Suisse and Goldman Sachs.

What those that trade stocks like most about companies that file with the SEC is that all their private financials become public. For the full year of 2010, the Groupon’s revenue totaled $713 million. That is up 23x from 2009. If you are wondering if Groupon will continue to grow fast. Wonder no more, In just the first quarter of 2011 the company had a revenue of $644 million.

Groupon’s subscriber base is also growing. They had over 83 million subscribers at the end of the first quarter. That is up 50 million from from 2010. This is one of those stocks that will get a lot of hype but is well deserved because it has the business to back it up. The company raised over $1 billion in venture capital and was able to snub tech giant Google. Google made an offer to buy the company last year. They were turned down flat.

As great an investment as Groupon sounds. There are some concerns. The company has yet to turn a profit and does not expect to be profitable in the near future. Groupon had net losses of $389.6 million in 2010 and $102.7 million in the first quarter of 2011. Despite it’s net income lost, Groupon is still a great investment because it is the clear leader in a very young growing market.

Groupon’s CEO Andrew Mason said a few words in the filling about Groupon’s strategy:

” If you’re thinking about investing, hopefully it’s because, like me, you believe that Groupon is better positioned than any company in history to reshape local commerce. The speed of our growth reflects the enormous opportunity before us to create a more efficient local marketplace. As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity.”

LinkedIn IPO reminds us of the old days. Priced at $45 & opens at $80 now over $100. Should you buy or wait?

Remember when IPO’s would open up and than jump to over $100 a share. There was a new .Com IPO almost everyday. At least two or three would hit the market. There are not too many left over from those good old days. When that boom went bust. We should have learned not to jump on the train so fast without checking to see what stops were ahead.

I knew better although I did buy GeoCities stock and was very happy with my return. This time around you should know better too. So let’s get to the point. Is LinkedIn a good buy? The short answer is yes. As long as you have an exit strategy. The stock was priced at $45 but backroom deals (I mean early investors) drove the price to open to the public at $80 a share. I got in at $82 a share. Why would I buy an IPO for that much?

Stocks are a momentum driven beast. IPO’s are the cool kids. Everyone wants a to have a part of it. The more people talk about it the more it will drive the price up. LinkedIn in the long term is not a smart buy. The stock will not and can not sustain above $100 per share. The value proposition is just not there. It’s not like Google that was and still is a leader in it’s field.  LinkedIn has just above 100 million subscribers to its service. Although it has a good mix of revenue from premium service subscribers, advertisers and recruiters; the amount of income it does is not a justification for the inflated price of its stock at the moment.

If you are looking for a quick buck you should have got this stock this morning at $80 to $85. Right now if you jumped in on the stock that was at last glance $110 you would be waiting for the downswing. The MACD Lines should be crossing anytime now. I think the stock will hit $125 before it goes back south. My exit in case you wanted to know is that. I have triggers set at $125 for a high and $100 for a low as an exit. The stock should stable around $60 to $85 in the next few weeks.

If you want a long term stock wait for Yandex. They will hit the IPO market next week. They are the Google of Russia with currently over 64% market share in search and has over 10 billion web pages indexed. Google has about 21.9% of search engine generated traffic. Yandex is the national non-English-language search engine. Expect to see the same price jump that Baidu had.  Unlike LinkedIn Yandex is a long term win.