Well, it finally happened. Facebook dropped its IPO today. As predicted, the articles about how overvalued the company has become started pouring in. It's interesting to see that even one year ago when we published a blog post asking the Influencers if they would buy Facebook stock many of the quotes and comments sided with the fact that the company is overvalued.
We we're chatting with Robert Scoble on IM today as the IPO news hit and he was rushing to put together his post about the new. He had a very different opinion:
It's undervalued, very undervalued. They have significant revenue engines that are not operating yet. Mobile hasn't turned on at all. And they are expected to build a new kind of advertising for Open Graph developers. I can see them worth a half trillion by 2015.
Comparing this comment to Rand Fishkin, CEO and Founder of SEOmoz, exactly one year ago:
I'm generally on the side of Warren Buffet (and common sense) in these matters. When everyone else is excited about Facebook it's a great time to sell; when they're down in the opinion polls, it will likely be a good time to invest. They are certainly an exciting company and they make an incredibly popular, world-changing product. The issue with buying their stock, however, is not whether these facts are true, but whether the market believes them to be even more exciting than they really are. To my mind, that's almost certainly the case.
Are they overvalued at $100B currently? Are they significantly undervalued? Will they be worth a half-trillion dollars soon? We had a bit of a discussion here at ZURB after the news hit, half a trillion seems like an insanely large number for Facebook, the display advertising market is growing, but not at such exponential proportions. That's what it seems like to us at the moment anyway. We'd love to know what you guys think. Is Facebook overvalued? Undervalued?Editors Note: This morning (2/2/2012) we received a follow up from Rand Fishkin, CEO of SEOmoz commenting on the news and his quote from last year which we mentioned in the article. Below is what he has to say:
If we're talking about the 409A valuation from December that put shares prices at $29.33, then no, I don't think they're overvalued. A professional valuation firm performed that, and they tend to be on the low side to benefit employee stock options. As an example, at the beginning of 2011, SEOmoz received a 409A valuation in the $10mm range, but had a buyout offer at 4X that (which we still thought was low) right around the same time.
If we're talking about the IPO price - to my knowledge, that hasn't yet been announced, so very hard to say whether that will be over-valued. The company certainly has massively impressive revenues, profits and growth.