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&P Capital IQ Internet equity analyst Scott Kessler gives his outlook for Facebook.
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-- so should investors buy into the hype surrounding FaceBook IPO or should they sit on the sidelines are -- can't think investors might be prematurely anointing -- look at the long term -- that morning about Scott Kessler.
Internet equity analyst at S&P capital IQ Scott thanks so much for joining at.
You know I think a lot of people are -- -- the 500 -- wondering.
There's so much hype around it tomorrow when it starts trading should you buy and trying get -- -- -- or if you really wanna buy it should you wait.
A week a month and sort of see what happens what do you think.
Well thanks -- for having -- -- You know we don't have a recommendation purse down what someone to do.
Tomorrow or the next week well historically if you look at something like apple or Google getting Google is is the the most applicable.
You know the stock picking the -- you know if you if you look at what has happened over the first week or month and a stock that's been -- like that that that typically go up or down.
Yes -- you looking cool and I remember.
You know we put up pre IPO research on -- we cover the stock it's and so the first full day it was trading.
In August of 2004.
Who came public.
On August 19 the night before price to 85 dollars a share the following day it was in a pretty tight range.
Around 95205.
And honestly it was trading -- that range for a number of weeks thereafter so.
That would imply like -- you might be some appreciation but.
If you school is the analog.
You might see some range bound trading for at least some time but -- of course based -- -- school is -- -- have a very different company very different market right now.
Still we were -- -- -- our viewers the chart 634 dollars after an eighty hunt delegate he felt let say bass boat.
Opens at about 3738 dollars a share what do you think it closed back.
Yeah I mean Gloria and to be honest with you we're not really in the business to I don't know -- get a beat everybody -- -- here right now yeah I mean the way that look we look at that we look at FaceBook and a and a pretty simple way IRA and that is that there's no question that there's been this tremendous growth benefit a lot of folks are.
Very enamored of the significant opportunities the company has -- a great idea of contact that really only started the monetization.
Of the significant 900 million plus user base but at the end of the day.
President really all come down -- two things.
One is risk.
Into his valuation we see a tremendous amount of risk and we think the valuation I mean we spent a lot time looking out over a dozen different companies.
International domestic social media Internet technology large cap small cap and you know what it seems like FaceBook is a lot more expensive than the peer group buying large.
Even reporting for premium were looking at a high and valuation of around eighty billion dollars which is below where many people are expecting the company trade.
Tomorrow how the coming and it build its revenue streams we know that GM pulling out we know that most of the revenue -- -- that is comprised of ad dollars.
Way back in January Procter & Gamble another one of the nation's biggest advertisers.
Cut back its advertising budget because like GM can simply advertised for free with a page.
No good ad platform.
We know Mark Zuckerberg also says he's putting the emphasis on -- users as opposed to the bottom line this is a big problem.
Yeah a lot -- -- -- the big problem as of yet but it's definitely worth.
Thinking about and it's possibly -- some at some point.
But I didn't already fading it was down seven and a half percent in the first quarter.
Right but I think it's fair to assume that you're gonna see annual growth in revenues were actually looking for around 40% growth in revenues over the next couple of years on average generated from where benefit not advertising.
Well I think it's.
A little premature to suggest that -- suddenly Facebook's advertising revenues are disappearing because you know of one company talking about pulling back.
Com a couple of days -- you know the reality is that I think that this still pretty strong growth story in some respects.
But I completely agree with the notion that we think to a large extent people bought into.
FaceBook being as you said an introduction Melissa.
A long term growth story before we've even seen that evolve you know in our business financial services were taught.
Past performance is not indicative of future results.
And I think that's the way that people need to think about FaceBook at this point nothing is guaranteed and -- a pre IPO.
Report that we wrote on FaceBook.
We actually talked about the notion that.
And technology's.
Changed quite a -- in this area and -- can change quite a bit for FaceBook over the short term over the long term it kissing perspective Scott Kessler thanks for joining -- Thanks a lot -- take care okay --
