(Telegraph) Facebook’s Mark Zuckerberg: just married and already 13pc poorer
The Facebook founder had more bankers on his float than guests at his wedding, so no wonder there’s almost no chance of getting a proper valuation for the social network site.
By Alistair Osborne, Business Editor 7:22PM BST 21 May 2012
Another day, another status update from Facebook founder Mark Zuckerberg. “Married Priscilla Chan. Already 13pc poorer.”
Maybe the two things aren’t connected. But when you have more bankers on your flotation than guests at your wedding, something can’t be right. Zuckerberg’s newly floated social network site tied up 31 Wall Street banks and all their hangers-on. So the chances of getting a proper valuation for the company were close to zero. Who, after all, was going to disappoint the 28 year-old in the hoodie when so many fees – even at an average 1.1pc – were riding on the $104bn float?
Why, the five key banks – Morgan Stanley, JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and Barclays – were so keen to prove what friends they were they bought all the shares it took to ensure they closed above the $38 float price. True, a glitch on Nasdaq didn’t help. But the five ended up with hundreds of millions of the $16bn offered. That was a recipe for yesterday’s humiliation.
Facebook has tripled its profits over the past three years to $1bn. But, despite its 900m users, it’s not Google. Yet it priced its float at 54 times projected earnings. Google listed in 2004 at 44 times.
As things turned out, Google was cheap. But Facebook is yet to prove it can make real money out of its users. Most of them simply blank out the ads. Let’s hope the shareholders can bear to look at them. One running this weekend on Zuckerberg’s own page, updated for his new marital status, had the worrying headline: “Before a Heart Attack”.
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