Schadefreude as post IPO Facebook sells-off

Early investors in the over-hyped social networking portal Facebook could not be happier: they managed to cash out most of their stakes while the company was in the extremely overvalued price range. The recent initial public offer raised $16 billion, at an initial price of $38. According to that share price, the internet company was valued at $104 billion, with a price earnings ratio of almost 100 times the expected profits of 2012. Google, a proven internet advertising and search engine giant is valued at 13x earnings. Is Facebook still overvalued ?

A Facebook credit for your thoughts

Mr. Friedrich Hayek, one of the most proponent theorists of the Austrian school would be terribly happy to find out that competition is creeping up on the government monetary monopoly. This is because companies like Facebook or PocketChange, offering virtual credits for their users to use in games such as Farmville, or Mafia Wars, are gaining more and more popularity: revenue generated by the Facebook credits system sky-rocketed to $557 million in 2011, from only $106 million the previous year, according to its most filing prospectus. They are counting more and more on the virtual credits to generate income streams and this could generate a positive effect, depending on the popularity of their currency, of competition on government controlled market. 

Facebook files its prospectus: stay out!

Facebook`s initial public offering is imminent, as today it filed the prospectus. Just like all new age, Internet companies "that cannot be measured using traditional metrics", the focus is on the 845 million active users, 2.7 billion likes and comments per day, 250 million photos uploaded per day and 100 billion friendships. That is jolly and all, but how much is an uploaded photo, a like or a friendship worth? Wile the advertising business model seems less effective than Google`s Adsense model, there is some growth potential in the web developer (mainly apps) business model, whereby Facebook is charging 30% of all revenues. Integrating social gaming into its platform is an extremely well though out move.