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Pivotal Research Group analyst Brian Wieser and Canaan Partners General Partner Maha Ibrahim debate whether Facebook is a “buy” for investors.
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This is very big news and we have exactly the people we should be listening to about whether or not to buy into this let's bring in Brian Weezer pivotal research group analysts and Maha Ibrahim.
Economic partners general partner good to talk to you both Brian first -- you know.
You say something very edgy about the pricing because you think thirty not why you think 38 dollars -- -- -- You thought 35 dollars you think thirty dollars and is a better price value for the.
Stock.
Why is that.
-- thirty dollars is certainly reflects the value of the stock accounting for the risk associated with it is too simple that.
I -- my hot you know looking at the risk what do you see as the riskier.
This isn't immensely profitable companies -- grown tremendously.
Over the last couple of years I just don't see that changing in the near future and I see a lot of upside on their mobile thought mobile advertising -- So I think the stock is very fairly priced -- trade up significantly from -- Can't -- can -- just say that that that's the big question the mobile advertising the perception is that they haven't been able to capitalize.
On all of the 80900.
Million eyeballs that are out there on FaceBook I mean nobody is clicking on those ads from a Smartphone I mean.
Do you know anybody who does.
There aren't any advertisements on Facebook's current mobile -- so that's why I think there is lot of upside there as soon as they get that property right.
I think in they have a ton more to gain.
Now Brian I have heard that once this thing goes on and it's going to 38 we just heard Charlie desperate say there is a hunger.
Our retail hunger for the stock so there -- probably be a lot of buying into it the shares may go up to fifty I've heard that that price range talked about before the days out tomorrow.
You say if if those shares sell -- fifty dollars a share Google should be worth 15100.
Dollars a share how do you figure that.
Well I think -- by any standard -- you have to compare FaceBook against Google.
And -- when you look at both the growth prospects and again the relative risk -- come up with metrics that are.
Suggested that Google is at minimum with more than where is that FaceBook is -- based just on the advertising metrics is that what you're talking about Brian.
Now does it look at cash from casually look at the cash flow returns going out you know five years and -- -- -- And -- just elaborate a bit on the Israelis to mean to be clear.
-- we have first -- we have massive share overhang.
That there's all these restricted stocks which are good -- -- The -- unlocking over the course of the year to be a billion new shares potentially on the market over the course the year that's one thing.
-- in capital expenditures to be a couple billion dollars a year.
A capital expenditures -- this company.
That's a very large number.
We also have a relatively unproven that model that said we do think it is a very strong business it's going to keep growing but it's not proven yet wavelength.
Catwalk yeah definitely not prevent -- let's Sandra Smith she's one of our reporter she's standing by she's got a question -- -- I'm Brian I would just asked do you know what happens after this stock debuts most expectations are that this thing is gonna jumped 50% out of the gate.
At what point does the market or the does the stocks ended up -- up for disappointment.
If it doesn't get that 50% job what are how much are you expecting this thing to go -- out of the gate.
Well it's hard to say really I -- it does seem like there's a good chance -- pop up.
But over the course of the year we think that the risk will be better appreciate we think that as the ad revenue growth maybe doesn't grow quite as fast as it needs to to support.
Bullish perspective on the stock.
That will be reason for to -- it to for the -- come back to earth but again that.
As more shares come on the market I think that'll be more of a technical reason why the -- should come back to a more fundamental base value.
Maha we've seen it before we'll see it again competitors.
And you say there's something up they're called.
Targeted social networks how big a competitive threat could they really become -- FaceBook.
I look at that as being in those are being accusation acquisition potentials for FaceBook.
Clearly as you see smaller targeted social networks pop up like in the case of -- to -- like coursing with -- Those are ripe for acquisition for companies like FaceBook who really want to own every single property of that.
Content that that is born off of its platform.
And that's where I think -- growing it's not just in the basic average display advertising on -- own platform but it's really in the and math saying.
As many of these micro social networks -- -- possibly can model.
-- wanted to show you some figures you for you've seen these the Wall Street Journal had a piece about it this morning that there are a lot of insiders that are cashing out.
-- of their IPO and look at this.
57%.
Of all the insiders.
That are holding now as private holders of of FaceBook are cashing out.
That compared to 28% when Google did its IPO and 0%.
For Amazon and Yahoo!.
Why are so many insiders cashing out.
I think it's more reflective of the demand to own FaceBook stock on on the part of the buyers.
It's not -- -- sellers want to sell and certainly they've made huge multiple on their original investment so there's no reason for them not to at this point in time.
But there's just pressure from the banks the -- the investment banks wealthy institutional investors who wanna buy into the IPO to get that stock.
Pay both of you thank you very much Brian Weezer and -- hot gave birth -- we are talking about FaceBook and of course again 11 AME.
