Facebook going public

I don't know how you think, but obviously it is one of the very eye-catching IPO of the year in the US stock market.

I still have some friends don't go facebook. I personally just use facebook as another email account, not too much more than that. Some seniors they do go facebook but still many on earth they don't due to various reasons: don't like to connect with a lot of people, don't know how to use computers, don't trust the protection of privacy provided by facebook and etc...

Tell me I'm an old style person, but I don't see why just using facebook as another email account is stupid. I know many people spend a lot of time on facebook almost everyday and use it a lot for various purposes, however, considering facebook as a business is another story.

I heard that facebook had $4 billion of revenue and made about $1.5 billion as operating profit. If facebook is going to be valued at $100 billion, the PE ratio is approximately 67x. Let's say it can grow its profit by 100% next year, then the forward PE ratio is approximately 33x.

Are these statistics high? Hard to say...... Some people really like it and think $100 billion market value makes sense, some not quite.

I guess as an amateur investor we have to be very careful not getting very excited when there is IPO. IPO is always a very closely controlled game and it's not easy to win as an amateur.

Some analysis said facebook now directs a lot of internet traffic (maybe about half of the traffic), given its 800 million users. Now years ago there were questions already about the number of registered users; the number of users registered and claimed they reside in a city is bigger than the number of actual residents in that city...... is that mean one person may have more than 1 account? Possibly. Anyway, the sky is the limit, you cannot have more registered users than the total population on earth.

Some analysis said facebook has a huge potential in the future, maybe one of the biggest potential you can find in this century. Well how? They said because in internet, traffic is money. I don't know what you think but I think I kind of heard this kind of "analysis" before. During Y2K people were crazy about internet stocks which caught the most number of eye-balls. The stocks didn't value by the profit it made (if any at all), but the number of times the website being viewed..... Don't you think that's the same thing as traffic?

Some analysis also said google is currently worth about $200 billion, and so facebook should soon worth at least as much as google if not more. But well, google is a different company so I don't know exactly how to compare them. People don't stay on google for 5 hours, you go search for something, you are then given results to other sites, and then you go to those sites. Facebook is different. You log onto facebook and you stay there maybe for several hours. But what do you do on facebook? Ask yourself, what do you do there? Do you keep clicking the sponsor's link? I guess not. You probably go there to send emails, chat with people, check out your friends' photos, you play games on the platform, or try to make some new friends.

I understand there are people that will spend a lot of time on facebook, but it doesn't automatically mean they will spend a lot of money on or through facebook. It's similar to the old days that you may spend a lot of time on sites like yahoo, where you can find a lot of activities including all kinds of news, games, emails, chat rooms, advertisements and etc. Yes yahoo as well cannot be the perfect comparison with facebook, but anyway, yahoo is no where near a valuation of $200 billion.

It's too early to say if facebook will be a success as a public company or not, as I want to see more about its business model as well as the actual experience of using facebook more. I need to collect more data and do more analysis before I can come to a more concrete conclusion. Before I have a more clear view, I don't want to touch facebook's stock.