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Questions about Facebook's IPO

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2.7182818284590...

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Feb 1, 2012, 11:23:51 PM2/1/12

Facebook is going to raise $5B. However, all the aspiring investors
will pay a steep excess to the initial share price. So people would be
MORE THAN HAPPY to pay twice the initial share price. So why can't
Facebook profit on this?

1. Instead of issuing $50/shares and 100,000,000 ($5B in market cap),
why can't they issue only 50,000,000 @ $100/shares, and thus sell LESS
OF THE COMPANY FOR the same amount of money? This would benefit Mark
Zuckerberg twice as much.

If you were selling 50% of your fantastically successful business.
Wouldn't you sell it at a steep premium? Say 10X annual revenues,
since your goal is to maximize earnings.
An auctioneer or a seller who doesn't sell a business for what it's
worth has failed, so I don't see why the I-Bankers would sell it so
cheaply knowing that this stock will double in price in 10 days.

The only downside is to investors who purchase the richly-priced
shares. Their ROR would be 10% over 10 years, and not 17.9% ROR.

momarch

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Feb 2, 2012, 6:29:12 PM2/2/12

I would imagine because there are a lot of people who would wave their
arms about and yell $100 a share??? thats BS!!!
even tho its the same amount of $$ as 50 a share in your example
above. My brokerage says you have to buy 100 share multiples...so in
that case to get in...coming up with 50K is a lot easier than coming
up w 100K you know?

Altho they are estimating it to be somewhere between 25-30 bucks for
the IPO....time will tell.

momarch

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Feb 2, 2012, 6:54:07 PM2/2/12

5K and 10K......I meant

momarch

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Feb 2, 2012, 6:30:50 PM2/2/12

oops.....one too many zeros there...but you get it...

Rod Speed

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Feb 2, 2012, 9:15:23 PM2/2/12

2.7182818284590... wrote:

> Facebook is going to raise $5B. However, all the aspiring
> investors will pay a steep excess to the initial share price.
> So people would be MORE THAN HAPPY to pay twice
> the initial share price. So why can't Facebook profit on this?

They will, to the tune of $5B or more.

> 1. Instead of issuing $50/shares and 100,000,000 ($5B in
> market cap), why can't they issue only 50,000,000 @ $100/shares,
> and thus sell LESS OF THE COMPANY FOR

They arent selling less of the company by having half as many shares with twice the face value.

> the same amount of money? This would benefit Mark Zuckerberg twice as much.

Nope.

> If you were selling 50% of your fantastically successful business.

He isnt doing that.

> Wouldn't you sell it at a steep premium? Say

He is doing just that.

> 10X annual revenues, since your goal is to maximize earnings.

He's selling it for a hell of a lot more than that.

> An auctioneer or a seller who doesn't sell a business for what it's worth
> has failed, so I don't see why the I-Bankers would sell it so cheaply

$5B isnt 'so cheaply', its actually more than any other IPO has EVER raised.

> knowing that this stock will double in price in 10 days.

Bet it doesnt.

> The only downside is to investors who purchase the richly-priced shares.

Specially when the stock lists at lower than what they paid for it.

> Their ROR would be 10% over 10 years, and not 17.9% ROR.

Thats just plain wrong.

2.7182818284590...

unread,

Feb 2, 2012, 9:56:56 PM2/2/12

I appreciate your time, once again, sir, You've always been very
knowledgeable and a wealth of info to me. OK, Rod Speed, this is my
point:

You own a gas station called "Speedy's Gas Station, LLC" (SGS). The
real estate, assets, and everything earns $100,000 NET every year
without fail. Currently, the discount rate for something that yields a
consistent earning should be about 5%, let's say. This discount rate
is less than for a stock and more for a governmental security. So this
SGS is worth $2,000,000.

One day, you decide to sell only 10% of this company. Now, you and I
know that this 10% stake in the company is worth ~$200,000 +/- $20,000
----> $180K-$220K. That's all. But people are hyper-exuberant. They
are ready to pay $400,000K for this stake in SGS. Now, you're an
honest and generous man. You're content with $200,000.

So when you decide to sell 10% for your $200,000, a whole bunch of
different investors pay exactly this much total. In a few days, this
shares are appraised at $400,000.

But couldn't you have sold your 10% stake at your company for $400,000
to begin with? Let the people pay more if they choose to.

Bill Reid

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Feb 3, 2012, 9:59:27 AM2/3/12

Oh Lord, where do I begin...

Look, it's nice of you to try to help the guys running the
Facebook IPO, but I guarantee you they don't need your help.
Although they're a little rusty since the dot-com bust over
10 years ago, when they took hundreds of companies public that
failed just months later, they still remember all the tricks
to extract as much money from American sucke--er, investors
as possible.

Number one, they ARE trying to sell as little of the
company as possible for as much money as possible. They
do this with good old-fashioned promotion and PR, so
the sucke--er, investors don't bother to really look
at what they are actually buying and at what cost.

I remember working for a company that went public and
getting regular e-mail updates from the company president
as he worked his way around the country on a classic
pre-IPO "road-show". The investment bankers who underwrote
the IPO set these things up with big-money sucke--er investors
to dazzle them with giant growth prospects of their
potential investment in the IPO. Note that Facebook
is using the media to do free advertising for their
IPO; every TV news show is covering it like it was
actually news or sumpin. That's the underwriters
feeding the news outlets "press releases" that are
little more than pre-canned "news" stories that
the newspapers and TV networks can air with little
or no actual work on their part to create.

You seem to be confused about so much, but nothing
more so than talking about Mark Zuckerberg as if
he actually controlled this IPO or even the company.
There are two groups of people controlling this,
the venture capitalists, typically for a "Silicon
Valley" company the guys who have their offices
on El Camino Real around Page Mill Road in Palo
Alto, and the investment banker underwriters
of the IPO. The goal of all the venture capitalists
is to gain controlling interest of start-ups by making
relatively large investments in "promising" companies
in their early days. They, more than Zuckerberg,
"own" the company and this is THEIR big pay-day
(not that he won't profit tremendously), THEY'RE
the ones selling out a good portion of their stake in
the company. The IPO underwriters stand to rake in
a nice cut of the action for doing nothing more
than getting the sucke--er, investors in the
tent to be fleeced.

Back in the "good old days" for these guys, they
would sell less than 5% of the company, and the
sucke..er, investors would be so frenzied to get
in on the "action" they'd bid up the IPO price
to insane levels, like 100x sales or more, for
companies that hardly had any sales and even
less profits. The LESS of the company they
sold, the HIGHER price they could get for it,
because it became a rare commodity in that
oldest game of supply and demand. They even
had a name for it, they called it the "keyhole
effect", because they didn't open the door
for the public to invest in the company, they
just let them have whatever small part of the
company they could "suck out the keyhole" (this
is an actual quote from a venture capitalist).

---
William Ernest Reid (man, that Facebook must
be sumpin, "Dumb Mikey Lubow" Tenenbaum is
on it trying to get a job at age 67)

2.7182818284590...

unread,

Feb 3, 2012, 11:00:28 AM2/3/12

Thank you Bill Reid. I'm going to comment below to your post.

>They, more than Zuckerberg,
> "own" the company and this is THEIR big pay-day
> (not that he won't profit tremendously), THEY'RE
> the ones selling out a good portion of their stake in
> the company. The IPO underwriters stand to rake in
> a nice cut of the action for doing nothing more
> than getting the sucke--er, investors in the
> tent to be fleeced.

This bit is confusing here above as well. You see, Mark Zuckerberg is
already worth $20B+. How do you figure that he's going to get any
richer? At the most, Z will be richer by 28%*$5B = $1.4B. Where am I
getting these numbers? Z owns 28% of Facebook, and they will raise
$5B. Therefore, he will make $1.4B from this transaction. But he's
already worth more than $20B. So I'm not understanding what you're
saying.

I believe that they were fantastically wealthy BEFORE and not much
richer AFTER the IPO. You believe that they weren't that rich BEFORE
the IPO, but only rich AFTER the IPO.

Finally, with this IPO, how was it determined what percentage of
Facebook is worth $5B?

Well if their goal is to fleece investors and maximize profits, than
they'd better off sell *1%* for $5B and not 10% for $5B. Think about
it. Suppose I were an investor of a company. I'd rather sell 1% of my
holding for $100,000 than sell 10% of my holding for $100,000.

Bill Reid

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Feb 3, 2012, 8:42:12 PM2/3/12

On Feb 3, 8:00 am, "2.7182818284590..." <tangent1...@gmail.com> wrote:
>
> Thank you Bill Reid. I'm going to comment below to your post.
>
> >They, more than Zuckerberg,
> > "own" the company and this is THEIR big pay-day
> > (not that he won't profit tremendously), THEY'RE
> > the ones selling out a good portion of their stake in
> > the company. The IPO underwriters stand to rake in
> > a nice cut of the action for doing nothing more
> > than getting the sucke--er, investors in the
> > tent to be fleeced.
>
> This bit is confusing here above as well. You see, Mark Zuckerberg is
> already worth $20B+.

Nah, I heard $17billion, but it's all imaginary money in
any event...

> How do you figure that he's going to get any
> richer?

Because he will have a much bigger secondary market
to sell his shares and potentially turn his imaginary
money into REAL money; I heard the IPO will take him
from $17billion to $28billion, and that's the difference
between the number of people (companies) who have $17billion
to buy him out and the entire American (and global)
investing public, who actually have much more in aggregate
than $28billion...

> At the most, Z will be richer by 28%*$5B = $1.4B.

Whaaa? This looks like "ShortPee/Tenenbaum" math...

> Where am I
> getting these numbers?

I don't know, but I bet it doesn't smell good...

> Z owns 28% of Facebook, and they will raise
> $5B. Therefore, he will make $1.4B from this transaction.

No, the company will get the proceeds of the IPO,
and the venture capitalists. In theory, he gets nothing
except they might let him continue to work there and
draw a salary/bonuses a while longer...

> But he's
> already worth more than $20B.

This is like saying that you were worth $1million because
your house was worth $1million...BEFORE the real-estate
crash. Hell, for that matter, I said that I have worked
for companies that had IPOs, many people in those companies
were worth $millions in stock options, but then managed
to wind up getting nothing and actually owing the Federal
government hundreds of $thousands of dollars in unpaid
taxes because of the tech crash and their stupid greed...

Just because you're "worth" something today doesn't
mean you'll ever get the money. Get it?

> So I'm not understanding what you're
> saying.
>

Do you think that's because it's simple, logical, and
based on reality?

> I believe that they were fantastically wealthy BEFORE and not much
> richer AFTER the IPO. You believe that they weren't that rich BEFORE
> the IPO, but only rich AFTER the IPO.
>

No, that's not what I said, but that is how the media
is reporting it in their reprints of Facebook press releases.
They also have "reported" that a grafitti artist who painted
a mural at Facebook headquarters will make $200million on
the IPO because he was paid in Facebook stock. Of course,
only the terminally stupid would believe such a thing, but
there it is, try crunching THAT number...

> Finally, with this IPO, how was it determined what percentage of
> Facebook is worth $5B?
>

What percentage? It's whatever percentage of the company
they are selling in the IPO. Essentially the IPO process
tries to find what sucke--er, investors are willing to pay
for the company. Then they "price" the offering at that
price for that percentage of the company. I think they
are selling about 10% of the company, but I'm not sure
because I don't really care...

> Well if their goal is to fleece investors and maximize profits, than
> they'd better off sell *1%* for $5B and not 10% for $5B.

Well, sure, and I could sell 10% of my navel lint for $1trillion
if only somebody would buy it for that price. They are now in
the process of finding out how MUCH they can get for 10% of the
company (or whatever). If they could get $50billion they'd take
that, but there aren't THAT many sucke--er, investors...

> Think about
> it.

I don't have to think about it, I know exactly what it
is and how it works. You obviously don't, and it seems
like a lot of your misinformation comes directly from
those very same press releases they use to bamboozle so
many sucke--er, investors...

> Suppose I were an investor of a company. I'd rather sell 1% of my
> holding for $100,000 than sell 10% of my holding for $100,000.
>

"bob wald" would like to sell his GCOG stock for $100trillion
a share but that ain't gonna happen and if you don't understand
simple supply and demand (and fear and greed) which drive the
financial markets it's a lost cause to understand IPOs where
the very self-same forces are manipulated to bring in as
much money as POSSIBLE to the start-up investors in a company
(POSSIBLE, see that word? POSSIBLE, see it again, let it sink
in, don't forget it)...

---
William Ernest Reid (I'm PO'd I didn't paint graffiti all
over Facebook)

2.7182818284590...

unread,

Feb 4, 2012, 10:58:14 PM2/4/12

Hello once again sir.

I'm just now figuring out something regarding that graffiti artist. My
working guess is this: He was given call options on Facebook stock. So
perhaps his $200M is the nominal value of these call options. What's
more important is the strike price of them. If the strike price were
$50, then he'd have the option to by $200M worth of stocks for $200M,
and this is a net wash (no profit will be made and no money will be
lost).

I appreciate your time to educate me but I'm not that bright.

Bill Reid

unread,

Feb 5, 2012, 11:21:16 AM2/5/12

That wouldn't be my "working guess", I already said my "working
guess" is the whole story is bushwa.

However, if there is any truth to it, I took it to mean
they actually just directly gave him "stock", NOT stock
options. I myself have just been given "stock" in companies
I've worked for before they "went public" (and in some cases
they never did so the "stock" really wasn't worth much
but I did sell it back to them for some money).

In other cases I was given what are called "Incentive
Stock Options" (ISO) which is probably what you are thinking
of. These are NOT the same as the traded call/put options,
they are the subject of special laws and a contract between
you and the company regarding their vesting and exercise
and are not publically traded.

But who knows? I do know (because I've seen) secretaries
become multi-$millionaires after a hot IPO when they exercised
the ISO options they got, so why not a graffiti artist?

> So
> perhaps his $200M is the nominal value of these call options. What's
> more important is the strike price of them. If the strike price were
> $50, then he'd have the option to by $200M worth of stocks for $200M,
> and this is a net wash (no profit will be made and no money will be
> lost).
>

Well, yeah, that's how it works, when you exercise your ISO
options you have to pony up the dough to pay the strike price.
Companies I've worked for had special arrangements with
brokers who would front the money for a nominal fee, exercise
the options and get the stock, and then turn around and sell
however much stock it took to cover the cost of the options
and/or how much money the employee wanted to take out of the
exercise that day, and leave the rest of the stock in a brand
spanking-new brokerage account. So the employee just had
to walk down to personnel/accounting and fill out a form
stating they wanted to exercise a certain number of options
and then they got a new brokerage account with money and/or
stock in it. (This irritated me because I already had a
brokerage account and plenty of money in my checking account
for my option exercise, so I had to fight with them to just
exercise my options and have the stock transferred to my
broker where I could sell it.)

And yeah, if the strike (exercise) price is at or below
the current stock price it doesn't make any sense to
exercise the options (duh). I've worked for companies
where my ISO exercise price (which is generally set at the
price around the date of your hire) was like $10/share
and three months later the stock was selling for like $3
so needless to say (unless you're a Tenenbaum) that ISO
grant was worthless (at another company, I was profitable
on my ISO grant, but the great majority of the employees
weren't, because they were hired after me and the stock
went way down after having gone up dramatically in the
few months after I was hired, so management kept lowering
the strike price of everybody's grants who weren't profitable,
thus completely eliminating the "incentive" part of
the ISO grants).

> I appreciate your time to educate me but I'm not that bright.
>

Oh, don't put yourself down, you're posting in misc.invest.stocks,
so you're about 100 times smarter than the average poster here,
and probably 40 years younger to boot...

---
William Ernest Reid (if you don't believe me, look up "Dumb
Mikey Lubow" Tenenbaum's idiotic post on option pricing from
a few months ago, as just ONE example)

Rod Speed

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Feb 6, 2012, 11:45:51 PM2/6/12

2.7182818284590... wrote
> Bill Reid wrote

>> They, more than Zuckerberg,
>> "own" the company and this is THEIR big pay-day
>> (not that he won't profit tremendously), THEY'RE
>> the ones selling out a good portion of their stake in
>> the company. The IPO underwriters stand to rake in
>> a nice cut of the action for doing nothing more
>> than getting the sucke--er, investors in the
>> tent to be fleeced.

> This bit is confusing here above as well. You
> see, Mark Zuckerberg is already worth $20B+.

> Where are you getting that from ? How do you figure that he's going

> to get any richer? At the most, Z will be richer by 28%*$5B = $1.4B.

That mangles the story completely. The bulk of his wealth wont
be the shares he flogs in the IPO, its those he retains and what
happens to the price of those after the IPO like with Gates and Brin.

> Where am I getting these numbers?

Good question.

> Z owns 28% of Facebook, and they will raise $5B.

Thats not how he benefits from the IPO.

> Therefore, he will make $1.4B from this transaction.

Fraid not.

> But he's already worth more than $20B.

Where are you getting that number from ?

> So I'm not understanding what you're saying.

> I believe that they were fantastically wealthy BEFORE

Only in the sense that the IPO was going to happen sometime.

> and not much richer AFTER the IPO.

That mangles the real story.

> You believe that they weren't that rich BEFORE the IPO, but only rich AFTER the IPO.

And thats true in the technical sense.

> Finally, with this IPO, how was it determined what percentage of Facebook is worth $5B?

It isnt 'determined', they make a crude guess at what they can raise in the IPO.

That can be WAY out. It was with google.

> Well if their goal is to fleece investors

That wont happen if the stock is worth more after the IPO than they pay for the stock.

> and maximize profits,

It has no real effect on profits. Its a way of raising capital.

> than they'd better off sell *1%* for $5B and not 10% for $5B.

Not even possible.

> Think about it. Suppose I were an investor of a company. I'd rather sell
> 1% of my holding for $100,000 than sell 10% of my holding for $100,000.

That assumes you can get the same amount for both parcels. Of course you cant.

Rod Speed

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Feb 6, 2012, 11:57:59 PM2/6/12

2.7182818284590... wrote

Operations like google and facebook are nothing like a gas station.

> The real estate, assets, and everything earns $100,000 NET every year without fail.

That isnt the basis for the facebook IPO, their earnings.

Its essentially a bet on what the stock price will do, just like it was with google.

> Currently, the discount rate for something that yields a consistent earning
> should be about 5%, let's say. This discount rate is less than for a stock
> and more for a governmental security. So this SGS is worth $2,000,000.

While that works for a gas station, it doesnt for an
operation like google and facebook at the IPO stage.

> One day, you decide to sell only 10% of this company. Now, you and
> I know that this 10% stake in the company is worth ~$200,000 +/-
> $20,000 ----> $180K-$220K. That's all. But people are hyper-exuberant.

They arent with gas stations.

> They are ready to pay $400,000K for this stake in SGS.

No they arent.

> Now, you're an honest and generous man. You're content with $200,000.

> So when you decide to sell 10% for your $200,000, a whole
> bunch of different investors pay exactly this much total. In a
> few days, this shares are appraised at $400,000.

That doesnt happen with a gas station.

> But couldn't you have sold your 10% stake at your company for $400,000 to begin with?

Fraid not.

> Let the people pay more if they choose to.

And that is precisely what is happening with the facebook IPO.

It turned out that with the google IPO, they could have flogged the stock
for a hell of a lot more than they did flog it for, but its always very difficult
to decide what you can ask IPO price wise and not see the price of the
stock sag when its first listed and so punish those who chose to buy the
stock in the IPO, particularly with something like google and facebook
which are both outstandingly more successful in the market than the
alternatives and when there is nothing much to compare them with IPO wise.

The prospects for google were very different than facebook and its
much easier for a comptitor to move the users of google away to some
other operation if it does a better job than it is with something like facebook
or ebay which see massive inertia with the current users for various reasons.

Bill Reid

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Feb 7, 2012, 10:42:17 AM2/7/12

Oh criminy, just when I thought I had set the puppy
straight, "Pod Creed" has to come along and muddy up
the waters again...

On Feb 6, 8:45 pm, "Rod Speed" <rod.speed....@gmail.com> wrote:
> 2.7182818284590... wrote
> > Bill Reid wrote
>
> >> They, more than Zuckerberg,
> >> "own" the company and this is THEIR big pay-day
> >> (not that he won't profit tremendously), THEY'RE
> >> the ones selling out a good portion of their stake in
> >> the company. The IPO underwriters stand to rake in
> >> a nice cut of the action for doing nothing more
> >> than getting the sucke--er, investors in the
> >> tent to be fleeced.

What the hell are you doing quoting my post
when you only actually respond to "95009582.87637326"?
Why not just directly respond to his original post?

> > This bit is confusing here above as well. You
> > see, Mark Zuckerberg is already worth $20B+.

> > Where are you getting that from ?

From the media, the same place you get all your
misinformation from...

> > How do you figure that he's going
> > to get any richer? At the most, Z will be richer by 28%*$5B = $1.4B.
>
> That mangles the story completely. The bulk of his wealth wont
> be the shares he flogs in the IPO, its those he retains and what
> happens to the price of those after the IPO like with Gates and Brin.
>

This is about the closest you get to a correct statement in your
post...

> > Where am I getting these numbers?
>
> Good question.
>

From the media, the same place you get all your
misinformation...

> > Z owns 28% of Facebook, and they will raise $5B.
>
> Thats not how he benefits from the IPO.
>
> > Therefore, he will make $1.4B from this transaction.
>
> Fraid not.
>
> > But he's already worth more than $20B.
>
> Where are you getting that number from ?
>

The media, just like where you get all your
misinformation...

> > So I'm not understanding what you're saying.
> > I believe that they were fantastically wealthy BEFORE
>
> Only in the sense that the IPO was going to happen sometime.
>

No, you don't know what you're talking about either. The IPO
doesn't change the fact that he held a sizable percentage of a
company with 800 million idiotic losers as "customers". THAT
is "worth" a lot of money, but the trick would be who would
have enough money to buy him out and the other investors
and get a controlling interest...it's not unreasonable to
ascribe a "worth" to a holding in a company, but in the case
of most pre-IPO companies, we don't know exactly how much
revenues and profits they are making, but if a private
investor wanted that information for a bona fide offer
to buy the company out and the original investors were
amenable to being bought out that way, the information
would be supplied, and the "worth" would be more precisely
determined...Zuckerberg is not "worthless" UNTIL the
IPO, but he probably will be "worth" MORE after it...

> > and not much richer AFTER the IPO.
>
> That mangles the real story.
>
> > You believe that they weren't that rich BEFORE the IPO, but only rich AFTER the IPO.
>
> And thats true in the technical sense.
>

No it's not true in any sense, what a pig ignorant thing
to say...

> > Finally, with this IPO, how was it determined what percentage of Facebook is worth $5B?
>
> It isnt 'determined', they make a crude guess at what they can raise in the IPO.
>

After I went to the trouble to outline the process,
you turn around and call it a "crude guess"...what a
pig ignorant thing to do...

> That can be WAY out. It was with google.
>

What an idiot. Google(TM) used a completely different
process for their IPO than most companies. The basic idea
was the same, but the result was arguably different...

> > Well if their goal is to fleece investors
>
> That wont happen if the stock is worth more after the IPO than they pay for the stock.
>

Sure, just like I've "fleeced" everybody who bought stock
from me and it went down, SUCKERS!!!! Sheesh...

It's a "sell job" whether the stock goes up or down after
the IPO...you could argue that Google(TM) "left a lot of
money on the table" by not going through the typical road-show
"sell job", but then again there have been MUCH more
dramatic runnups right after IPO for companies that
used the "traditional" IPO process...

> > and maximize profits,
>
> It has no real effect on profits. Its a way of raising capital.
>

Uh, yeah, that's correct, and it's basic accounting, unless
you're Warren Buffet...

> > than they'd better off sell *1%* for $5B and not 10% for $5B.
>
> Not even possible.
>

It's POSSIBLE, just not PROBABLE these days, and it won't
happen here...but back in the tech craze daze they were getting
down to around 2% of the company for RIDICULOUS valuations...

> > Think about it. Suppose I were an investor of a company. I'd rather sell
> > 1% of my holding for $100,000 than sell 10% of my holding for $100,000.
>
> That assumes you can get the same amount for both parcels. Of course you cant.

At the peak of the tech craze, you probably COULD have sold 1% of
Facebook for like $20billion...

---
William Ernest Reid (and just to let everybody know, my navel lint
is STILL available for $100trillion)

Rod Speed

unread,

Feb 7, 2012, 2:51:43 PM2/7/12

Bill Reid wrote

> Oh criminy, just when I thought I had set the puppy straight,

You mangled the real story considerably.

> "Pod Creed" has to come along and muddy up the waters again...

Just rubbed your nose in the basics.

> Rod Speed <rod.speed....@gmail.com> wrote
>> 2.7182818284590... wrote
>>> Bill Reid wrote

>>>> They, more than Zuckerberg,
>>>> "own" the company and this is THEIR big pay-day
>>>> (not that he won't profit tremendously), THEY'RE
>>>> the ones selling out a good portion of their stake in
>>>> the company. The IPO underwriters stand to rake in
>>>> a nice cut of the action for doing nothing more
>>>> than getting the sucke--er, investors in the
>>>> tent to be fleeced.

> What the hell are you doing quoting my post

I hardly ever delete any of the quoting, because that allows
anyone to see the context when they read a particular post.

> when you only actually respond to "95009582.87637326"?

I was responding there to his comments on your comments.

> Why not just directly respond to his original post?

I did.

>>> This bit is confusing here above as well. You
>>> see, Mark Zuckerberg is already worth $20B+.

>>> Where are you getting that from ?

> From the media,

It could also be from somewhere else like Wikipedia etc.

> the same place you get all your misinformation from...

Wrong, as always. I dont bother with the media on stuff like this.

>>> How do you figure that he's going to get any richer?
>>> At the most, Z will be richer by 28%*$5B = $1.4B.

>> That mangles the story completely. The bulk of his wealth wont
>> be the shares he flogs in the IPO, its those he retains and what
>> happens to the price of those after the IPO like with Gates and Brin.

> This is about the closest you get to a correct statement in your post...

Its completely correct, and so is the rest of it too.

>>> Where am I getting these numbers?

>> Good question.

> From the media, the same place you get all your misinformation...

Record's stuck, and still wrong.

>>> Z owns 28% of Facebook, and they will raise $5B.

>> Thats not how he benefits from the IPO.

>>> Therefore, he will make $1.4B from this transaction.

>> Fraid not.

>>> But he's already worth more than $20B.

>> Where are you getting that number from ?

> The media, just like where you get all your misinformation...

Record's stuck, and still wrong.

>>> So I'm not understanding what you're saying.
>>> I believe that they were fantastically wealthy BEFORE

>> Only in the sense that the IPO was going to happen sometime.

> No,

Yep, they always do with something as successful as that.

> you don't know what you're talking about either.

We'll see...

> The IPO doesn't change the fact that he held a sizable percentage
> of a company with 800 million idiotic losers as "customers".

Never said it did.

> THAT is "worth" a lot of money,

But not FANTASTICALLY WEALTHY while ever thats all
it does, and doesnt have a decent revenue stream as well.

> but the trick would be who would have enough money to buy him out

He aint about to sell out once its clear it worked.

> and the other investors and get a controlling interest...

And it remains to be seen if anyone will actually
offer enough to convince him to sell out.

> it's not unreasonable to ascribe a "worth" to a holding in a company,

Yes, but but thats an entirely separate matter to FANTASTICALLY WEALTHY.

> but in the case of most pre-IPO companies, we don't know
> exactly how much revenues and profits they are making,

But we often can work out roughly what their revenue stream
can be, particularly when they dont charge those 800M users
to use their service.

> but if a private investor wanted that information for a bona
> fide offer to buy the company out and the original investors
> were amenable to being bought out that way,

And they normally arent with something as successful as Facebook.

> the information would be supplied, and the "worth" would be more
> precisely determined...Zuckerberg is not "worthless" UNTIL the IPO,

No one said anything about worthless except you.

What was clearly being discussed was whether he was
FANTASICALLY WEALTHY.

> but he probably will be "worth" MORE after it...

What I said in different words.

>>> and not much richer AFTER the IPO.

>> That mangles the real story.

>>> You believe that they weren't that rich BEFORE
>>> the IPO, but only rich AFTER the IPO.

>> And thats true in the technical sense.

> No it's not true in any sense,

Wrong, as always.

> what a pig ignorant thing to say...

Wota stunning line in rational argument you have there...

>>> Finally, with this IPO, how was it determined
>>> what percentage of Facebook is worth $5B?

>> It isnt 'determined', they make a crude guess
>> at what they can raise in the IPO.

> After I went to the trouble to outline the process,
> you turn around and call it a "crude guess"...

Corse its a crude process to determine
what percentage of Facebook is worth $5B.

Have a look at what happened with google for starters.

> what a pig ignorant thing to do...

Wota stunning line in rational argument you have there...

>> That can be WAY out. It was with google.

> What an idiot.

Wota stunning line in rational argument you have there...

> Google(TM)

Wota fucking wanker.

> used a completely different process for their IPO than most companies.

Still a crude process to determine what percentage of google is worth a particular dollar value.

> The basic idea was the same, but the result was arguably different...

We'll see...

>>> Well if their goal is to fleece investors

>> That wont happen if the stock is worth more
>> after the IPO than they pay for the stock.

> Sure, just like I've "fleeced" everybody who bought stock
> from me and it went down, SUCKERS!!!! Sheesh...

Wota stunning line in rational argument you have there...

> It's a "sell job" whether the stock goes up or down after the IPO...

Irrelevant to which of those scenarios FLEECES THE INVESTORS.

> you could argue that Google(TM) "left a lot of money on the table"
> by not going through the typical road-show "sell job", but then again
> there have been MUCH more dramatic runnups right after IPO for
> companies that used the "traditional" IPO process...

Irrelevant to which of those post IPO scenarios FLEECES THE INVESTORS.

>>> and maximize profits,

>> It has no real effect on profits. Its a way of raising capital.

> Uh, yeah, that's correct, and it's basic accounting, unless you're Warren Buffet...

>>> than they'd better off sell *1%* for $5B and not 10% for $5B.

>> Not even possible.

> It's POSSIBLE,

Nope.

> just not PROBABLE these days, and it won't happen here...

Because it isnt even possible.

> but back in the tech craze daze they were getting down
> to around 2% of the company for RIDICULOUS valuations...

Nothing like that $5B for just 2%

>>> Think about it. Suppose I were an investor of a
>>> company. I'd rather sell 1% of my holding for
>>> $100,000 than sell 10% of my holding for $100,000.

>> That assumes you can get the same amount for both parcels. Of course you cant.

> At the peak of the tech craze, you probably COULD have sold 1% of
> Facebook for like $20billion...

Pity it aint the peak of the tech craze anymore,
and Facebook was nothing like what it is now, then.

Bill Reid

unread,

Feb 8, 2012, 9:54:28 AM2/8/12

On Feb 7, 11:51 am, "Rod Speed" <rod.speed....@gmail.com> wrote:
> Bill Reid wrote
>
> > Oh criminy, just when I thought I had set the puppy straight,
>
> You mangled the real story considerably.
>

No I didn't. How so?

> > "Pod Creed" has to come along and muddy up the waters again...
>
> Just rubbed your nose in the basics.
>

You know not of which you speak. Welcome to Usenet.

> > Rod Speed <rod.speed....@gmail.com> wrote
> >> 2.7182818284590... wrote
> >>> Bill Reid wrote
> >>>> They, more than Zuckerberg,
> >>>> "own" the company and this is THEIR big pay-day
> >>>> (not that he won't profit tremendously), THEY'RE
> >>>> the ones selling out a good portion of their stake in
> >>>> the company. The IPO underwriters stand to rake in
> >>>> a nice cut of the action for doing nothing more
> >>>> than getting the sucke--er, investors in the
> >>>> tent to be fleeced.
> > What the hell are you doing quoting my post
>
> I hardly ever delete any of the quoting, because that allows
> anyone to see the context when they read a particular post.
>

Yeah, but there was nothing to add to this thread that
I hadn't already added. As usual, you're just wasting
valuable time and confusing people (not that they weren't
confused before)...

> > when you only actually respond to "95009582.87637326"?
>
> I was responding there to his comments on your comments.
>

Again why? I already responded to his comments on my
comments and there was no further "discussion" needed...

> > Why not just directly respond to his original post?
>
> I did.
>

Yes, and it was a waste of electrons...

> >>> This bit is confusing here above as well. You
> >>> see, Mark Zuckerberg is already worth $20B+.
> >>> Where are you getting that from ?
> > From the media,
>
> It could also be from somewhere else like Wikipedia etc.
>

Oh, good point, bad quoting...

> > the same place you get all your misinformation from...
>
> Wrong, as always. I dont bother with the media on stuff like this.
>

So you just pull it out your rectum?

> >>> How do you figure that he's going to get any richer?
> >>> At the most, Z will be richer by 28%*$5B = $1.4B.
> >> That mangles the story completely. The bulk of his wealth wont
> >> be the shares he flogs in the IPO, its those he retains and what
> >> happens to the price of those after the IPO like with Gates and Brin.
> > This is about the closest you get to a correct statement in your post...
>
> Its completely correct, and so is the rest of it too.
>

It is not COMPLETELY correct and in any event was a redundant
waste of electrons...

> >>> Where am I getting these numbers?
> >> Good question.
> > From the media, the same place you get all your misinformation...
>
> Record's stuck, and still wrong.
>

OK, I'll buy that you're pulling this stuff out your arse
like the magic trick with the string of handkerchiefs...

> >>> Z owns 28% of Facebook, and they will raise $5B.
> >> Thats not how he benefits from the IPO.
> >>> Therefore, he will make $1.4B from this transaction.
> >> Fraid not.
> >>> But he's already worth more than $20B.
> >> Where are you getting that number from ?
> > The media, just like where you get all your misinformation...
>
> Record's stuck, and still wrong.
>

That's one long string of handkerchiefs...

> >>> So I'm not understanding what you're saying.
> >>> I believe that they were fantastically wealthy BEFORE
> >> Only in the sense that the IPO was going to happen sometime.
> > No,
>
> Yep, they always do with something as successful as that.
>

Ooooh, a big knot in that one, barely got it past your little
brown ring, judging by the horrible grammar.

> > you don't know what you're talking about either.
>
> We'll see...
>

No, we already saw...you have this very narrow and childish
view of how business works. And that's AFTER I explained it
in first-person detail, and even pointed out counter-examples
of other types of business financing...

> > The IPO doesn't change the fact that he held a sizable percentage
> > of a company with 800 million idiotic losers as "customers".
>
> Never said it did.
>

Sure you did, and you're gonna do it again just to
make sure everybody knows you're an idiot...

> > THAT is "worth" a lot of money,
>
> But not FANTASTICALLY WEALTHY while ever thats all
> it does, and doesnt have a decent revenue stream as well.
>

I love the way that the more mangled your logic and
understanding of the topic, the worse your grammar gets.
How do you know what their "revenue stream" is? How
would an IPO affect their "revenue stream" or "while ever
thats [sic] all it does [double sic]"? Are you having
a stroke?

> > but the trick would be who would have enough money to buy him out
>
> He aint about to sell out once its clear it worked.
>

HE ALREADY SOLD OUT, YOU MORON!!! What the hell do you
think happened to the 72% of the "his" company he DOESN'T
OWN?!???!!

> > and the other investors and get a controlling interest...
>
> And it remains to be seen if anyone will actually
> offer enough to convince him to sell out.
>

THEY ALREADY DID!!!! WHAT A FRIGGIN' IDIOT!!!!

> > it's not unreasonable to ascribe a "worth" to a holding in a company,
>
> Yes, but but thats an entirely separate matter to FANTASTICALLY WEALTHY.
>

So I guess your big contribution to this thread is making
the distinction that being worth $17billion is only "fantastically
wealthy" (no caps) while $28billion is "FANTASTICALLY
WEALTHY" (CAPS).

I suppose if the stock takes off after the IPO he
will be "SUPER-DUPER FANTASTICALLY WEALTHY!!!!!!!!!"...

> > but in the case of most pre-IPO companies, we don't know
> > exactly how much revenues and profits they are making,
>
> But we often can work out roughly what their revenue stream
> can be, particularly when they dont charge those 800M users
> to use their service.
>

Well, sure maybe, but what's your point? Did you have
one, or DID you have a stroke and just wander over to the
keyboard and start pounding gibberish on it with your
good arm?

The only point I can see is the process of smart money
selling out in stages to dumb money...if you are working
out "roughly" what a company makes in order to make
an investment, you are classic "dumb" money. THAT'S
the big potential advantage of an IPO, selling stock
in your company where the price is based on media hoopla
rather than the actual performance of the company (for
a daily lesson in "dumb money" mentality, read
misc.invest.stocks, where I am posting from).

> > but if a private investor wanted that information for a bona
> > fide offer to buy the company out and the original investors
> > were amenable to being bought out that way,
>
> And they normally arent with something as successful as Facebook.
>

No, generally they would do whatever made them the most
money. With a built-in media hook and 800 million current
idiotic losers as customers who potentially will be
converted to "investors", an IPO DOES seem like the
way to maximize their "cash-out"...

> > the information would be supplied, and the "worth" would be more
> > precisely determined...Zuckerberg is not "worthless" UNTIL the IPO,
>
> No one said anything about worthless except you.
>

Nope, never said anything of the sort, but I will grant
you that for some people the understanding of the difference
between "worth" and "money" is hard...sorry if I confused
you with reality, which IS all complicated and stuff...

> What was clearly being discussed was whether he was
> FANTASICALLY WEALTHY.
>

No, I thought we had moved on to whether he was
"SUPERCALIFRAGILISTICEXPLIALDOCIOUSALLY WEALTHY!!!!!!!!!!"

"You think and talk sometimes like a little child"
- "A Clockwork Orange"

> > but he probably will be "worth" MORE after it...
>
> What I said in different words.
>

Stupider words with garbled syntax...

> >>> and not much richer AFTER the IPO.
> >> That mangles the real story.
> >>> You believe that they weren't that rich BEFORE
> >>> the IPO, but only rich AFTER the IPO.
> >> And thats true in the technical sense.
> > No it's not true in any sense,
>
> Wrong, as always.
>

I am pretty consistently right, but it IS
a heavy burden to bear on Usenet...

> > what a pig ignorant thing to say...
>
> Wota stunning line in rational argument you have there...
>

B-b-b-but you invented the term "pig ignorant" and
have used it literally hundreds of times to make whatever
incorrect point you were making at the time...why can't
I use it?

> >>> Finally, with this IPO, how was it determined
> >>> what percentage of Facebook is worth $5B?
> >> It isnt 'determined', they make a crude guess
> >> at what they can raise in the IPO.
> > After I went to the trouble to outline the process,
> > you turn around and call it a "crude guess"...
>
> Corse its a crude process to determine
> what percentage of Facebook is worth $5B.
>

It's the same basic "crude" process that is used to
determine the worth of houses, stocks, cars, Beanie
Babies, land, gold, and my navel lint...sorry it's
not "refined" enough for you. Got a better way to
do it?

> Have a look at what happened with google for starters.
>
> > what a pig ignorant thing to do...
>
> Wota stunning line in rational argument you have there...
>

What's your line about "never ever had a clue" or
something like that? Well, whatever it is, that's my
response...

> >> That can be WAY out. It was with google.
> > What an idiot.
>
> Wota stunning line in rational argument you have there...
>

"never ever had a clue" "pig ignorant"

> > Google(TM)
>
> Wota fucking wanker.
>
"never ever had a clue" "pig ignorant" X10

> > used a completely different process for their IPO than most companies.
>
> Still a crude process to determine what percentage of google is worth a particular dollar value.
>

You are so critical of the free marketplace and supply
and demand...go back to Russia where you belong!!!

> > The basic idea was the same, but the result was arguably different...
>
> We'll see...
>

See what? I mean, there have been recent social
gaming company IPOs where the stock actually went
down after the IPO, what does that prove?
Under-subscription, withdrawal of the offering,
stock going down after the IPO, stock going way the
hell up after the IPO, these are all routine outcomes
in the history of IPOs...what are we looking for
in the Facebook IPO that would prove anything one
way or the other, except you need to visit your
doctor immediately for your stroke symptoms...

> >>> Well if their goal is to fleece investors
> >> That wont happen if the stock is worth more
> >> after the IPO than they pay for the stock.
> > Sure, just like I've "fleeced" everybody who bought stock
> > from me and it went down, SUCKERS!!!! Sheesh...
>
> Wota stunning line in rational argument you have there...
>

"never ever had a clue" "pig ignorant" TO INFINITY!!!

> > It's a "sell job" whether the stock goes up or down after the IPO...
>
> Irrelevant to which of those scenarios FLEECES THE INVESTORS.
>

Sure, just like anybody who sold their house in 2007 "fleeced"
the buyer...

> > you could argue that Google(TM) "left a lot of money on the table"
> > by not going through the typical road-show "sell job", but then again
> > there have been MUCH more dramatic runnups right after IPO for
> > companies that used the "traditional" IPO process...
>
> Irrelevant to which of those post IPO scenarios FLEECES THE INVESTORS.
>

I "fleeced" a whole bunch of investors by never ever buying
Enron stock...I'm cagy that way...I'm currently "fleecing" "bob wald"
by not buying GCOG stock...

> >>> and maximize profits,
> >> It has no real effect on profits. Its a way of raising capital.
> > Uh, yeah, that's correct, and it's basic accounting, unless you're Warren Buffet...
> >>> than they'd better off sell *1%* for $5B and not 10% for $5B.
> >> Not even possible.
> > It's POSSIBLE,
>
> Nope.
>
> > just not PROBABLE these days, and it won't happen here...
>
> Because it isnt even possible.
>
> > but back in the tech craze daze they were getting down
> > to around 2% of the company for RIDICULOUS valuations...
>
> Nothing like that $5B for just 2%
>

Bah, $5billion is like nothing in a country with a
$1.5trillion budget deficit...you think small because
you live in a punk country with more kangaroos than
people...

> >>> Think about it. Suppose I were an investor of a
> >>> company. I'd rather sell 1% of my holding for
> >>> $100,000 than sell 10% of my holding for $100,000.
> >> That assumes you can get the same amount for both parcels. Of course you cant.
> > At the peak of the tech craze, you probably COULD have sold 1% of
> > Facebook for like $20billion...
>
> Pity it aint the peak of the tech craze anymore,
> and Facebook was nothing like what it is now, then.

Well, yeah, Einstein, it didn't exist then, but things
were so crazy a company almost didn't even have to exist
to have the sucke...er, investors throw their hard-earned
dollars at it...

Of course, what I always think about when I think
of Facebook is: wasn't there a super-duper successful
company just a few years back called "MySpace"? Or
did I just imagine that?

---
William Ernest Reid (heartland of America, keep sending
me your money, I promise to spend it)

Rod Speed

unread,

Feb 8, 2012, 2:35:35 PM2/8/12

Bill Reid wrote

> Rod Speed <rod.speed....@gmail.com> wrote
>> Bill Reid wrote

>>> Oh criminy, just when I thought I had set the puppy straight,

>> You mangled the real story considerably.

> No I didn't.

Everyone can see for themselves that you clearly did.

> How so?

I told you. Read it.

>>> "Pod Creed" has to come along and muddy up the waters again...

>> Just rubbed your nose in the basics.

> You know not of which you speak.

Wrong, as always.

> Welcome to Usenet.

Been here a hell of a lot longer than you have, thanks.

And its usenet.

>>> Rod Speed <rod.speed....@gmail.com> wrote
>>>> 2.7182818284590... wrote
>>>>> Bill Reid wrote

>>>>>> They, more than Zuckerberg,
>>>>>> "own" the company and this is THEIR big pay-day
>>>>>> (not that he won't profit tremendously), THEY'RE
>>>>>> the ones selling out a good portion of their stake in
>>>>>> the company. The IPO underwriters stand to rake in
>>>>>> a nice cut of the action for doing nothing more
>>>>>> than getting the sucke--er, investors in the
>>>>>> tent to be fleeced.

>>> What the hell are you doing quoting my post

>> I hardly ever delete any of the quoting, because that allows
>> anyone to see the context when they read a particular post.

> Yeah, but there was nothing to add to this thread that I hadn't already added.

Everyone can see for themselves that you are lying, again.

> As usual, you're just wasting valuable time and confusing
> people (not that they weren't confused before)...