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biaggio

By biaggio
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Palantir Newbie

Palantir

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I'm curious, how many of you own this?

 

It is 5% of my admittedly small portfolio. Basic thesis-people spend most of their time inside apps, and this is one app that can really be profitable, and become a platform that is layered on top of an operating system. Possibilities are endless here, and my maximum loss is 5%. Can't complain.

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oddballstocks Newbie

oddballstocks

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I didn't. I'm buying on the expectation that I can sell it to another guy for a higher price. I don't believe it is a story stock, I think the fundamentals are incredible, been using the site since it started.

 

At least you're honest about it….for your sake I hope a greater fool comes along.

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enoch01 Newbie

enoch01

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I didn't. I'm buying on the expectation that I can sell it to another guy for a higher price. I don't believe it is a story stock, I think the fundamentals are incredible, been using the site since it started.

 

I'm sorry, I have to ask: are you serious?

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Palantir Newbie

Palantir

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Very much so. Why else would someone buy this stock? Intrinsic value?

 

If you really drill down, Facebook has 8-10B intrinsic value (their cash), every single other asset is totally intangible. It does not make much money, so the business value is pretty minimal. So is the world's most popular websites worth absolutely nothing? I really doubt it.

 

It doesn't make money, but it's obviously very valuable, but there is no way to value it without making a large set of arbitrary assumptions. I can't see any other rationale than waiting for a greater fool. (my max downside is 5%, which I think is reasonable)

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rranjan Newbie

rranjan

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I didn't. I'm buying on the expectation that I can sell it to another guy for a higher price. I don't believe it is a story stock, I think the fundamentals are incredible, been using the site since it started.

 

Unless, I am mistaken, two views in bold seems contradictory to me. Did you mean it has strong user base and real business? That's true for Facebook for sure. To me it seems overpriced based on the fundamental ( current status + conservative future growth). It might do lot better than my expectations and then my current valuations might seem too conservative but I will pass.

 

Added Later: You typed up last post when I was putting this reply. It clarifies what you meant.

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enoch01 Newbie

enoch01

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Very much so. Why else would someone buy this stock? Intrinsic value?

 

If you really drill down, Facebook has 8-10B intrinsic value (their cash), every single other asset is totally intangible. It does not make much money, so the business value is pretty minimal. So is the world's most popular websites worth absolutely nothing? I really doubt it.

 

It doesn't make money, but it's obviously very valuable, but there is no way to value it without making a large set of arbitrary assumptions. I can't see any other rationale than waiting for a greater fool. (my max downside is 5%, which I think is reasonable)

 

OK.  Thanks for the explanation.

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Palantir Newbie

Palantir

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Ok fine, I admit I was exaggerating, it's not only based on selling to a greater fool. I think FB will exceed its expectations. Basically the EV = 40B, I don't think it's unrealistic for this firm's OCF to reach at least 4B in the next few years.

 

 

Unless, I am mistaken, two views in bold seems contradictory to me. Did you mean it has strong user base and real business? That's true for Facebook for sure. To me it seems overpriced based on the fundamental ( current status + conservative future growth). It might do lot better than my expectations and then my current valuations might seem too conservative but I will pass.

 

Added Later: You typed up last post when I was putting this reply. It clarifies what you meant.

 

I think Facebook occupies really important strategic real estate in mobile (I think Zuck gets that), they're commoditizing operating systems and I think they will start eating into Google's business. I believe it's highly realistic that OCF will expand dramatically.

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ItsAValueTrap Newbie

ItsAValueTrap

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I think they will start eating into Google's business

On the advertising side, Facebook doesn't really compete with Google.

 

Go learn something about affiliate marketing (just Google it there's lots of blogs with good information), get some Facebook/Google coupons, and you can educate yourself about online advertising.  Of course there are nuances to this.  Some marketers find that Facebook isn't worth their time at all and only run Google ad campaigns... in that sense Facebook "competes".  That is a structural thing where the #1 player gets to make more money per ad than everybody else.

 

On the content side, Facebook does compete with Google+/Google a little.

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DCG Newbie

DCG

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Very much so. Why else would someone buy this stock? Intrinsic value?

 

If you really drill down, Facebook has 8-10B intrinsic value (their cash), every single other asset is totally intangible.

 

I disagree. Their value is their users. They have over a billions active monthly users, and have the most valuable set of data for advertisers ever complied.

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ItsAValueTrap Newbie

ItsAValueTrap

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I don't think that data is actually all that useful.

 

Facebook's ad targeting is very mediocre.  Search engine advertising is typically extremely well targeted.  The mesothelioma lawyers can advertise effectively on Google whereas it would be difficult for them to advertise on Facebook (abestos lawsuit-related services generate insane cost per click... apparently you can get several dollars for a single click).  In general, some of Google's searches monetize extremely well because people use Google to research purchasing decisions.  When they search, the ads that are displayed are extremely relevant.  Also, the effectiveness of these ads can be easily tracked since people often buy something the same day they read an ad.  Therefore, advertisers can get very aggressive about bidding a higher CPC for their Google search ads.  Ad display networks like Adsense don't have the same dynamics going for them, so display networks tend to have a much lower CPC and CPM.

 

Ad retargeting will help Facebook and other display advertisers get more money per ad.

 

2- A lot of the information on Facebook is wrong.  People will jokingly say that their friends are married to them or related (e.g. their grandchild).  Some people will put in fake ages, etc. etc.

A person's interests/likes and their geographical location can be reliably used to deliver ads though.  It doesn't quite monetize as well as Google's traffic though as far as I can tell.

 

3- There are a lot of affiliate marketers who blogs on their advertising experiences with Facebook and Google.  You can learn a lot from them.

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hyten1 Newbie

hyten1

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what FB is banking on (this is also the promise of facebook, this is also one of the promise of the internet since it began), is they can use their data to target better and get better return for (compare to all the other advertising channel other there) advertiser

 

however this has not been shown to be true yet

 

i use to work for yahoo's ad tech division (yahoo HAD TONS of data on users from ALL different channel/sites)

 

having ALL those data is one thing, using them effectively is another

 

i have not read anything (doesn't mean it doesn't exist) that FB is doing that will translate those data to something that will provide better targeting and generate better return. they recently acquired atlas from msft's. I can be pretty sure atlas doesn't hold an advantage against many other ad tech other there.

 

so far the  best has been search ad

 

the promise is:

 

lots of and better (is it better?, whats better than credit card transaction data, i always wonder why don't the V/MA/DFS do something with those) data --> better return for advertiser

 

this has not been shown to be true yet, and this is not a trivial task to solve. all the big boys are trying to shove it (yahoo, google, msft, etc)

 

if FB cannot achieve this, they are not much different than many LARGE website on the internet. of course maybe there are other rev stream they can build/tap/create, but that has not been shown to be the case either.

 

its a wait and see

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ItsAValueTrap Newbie

ItsAValueTrap

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Isn't Facebook highly profitable as it currently stands?  Once you take out the stock-based compensation (which was "paid" in the past but only expensed now)... Facebook has nice profits.

 

I don't think that Facebook will monetize as well as search.  But it doesn't have to.  And if it ever does monetize as well as search... the Facebook longs will make a killing.

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hyten1 Newbie

hyten1

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i remember back when FB ipo

 

at that time the number was 100bil

 

also at that time BAC was like 50bil

 

some people i knew were very excited about the FB ipo at the time.

 

i ask them which would you pick

 

BAC + 50bil

 

or

 

FB (which the rumor was valuation was 100bil)

 

which would you take? i took BAC

 

some people i knew didn't

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ItsAValueTrap Newbie

ItsAValueTrap

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Sorry I wasn't clear.

 

I meant highly profitable relative to their revenue and relative to invested capital.  I'm sure a lot of folks understand that return on invested capital is very important and I believe Facebook does very well in that regard.

 

I do agree that the valuation is a little high.  A great business can still be overvalued... or turn into the next Myspace.

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