The Aleph Blog » Blog Archive » Book Review: The Facebook IPO Primer

Book Review: The Facebook IPO Primer

There is more money to be lost than made in most controversial IPOs, on average. Don’t get me wrong, this is a good book, and the author knows what she is talking about, but whether one should buy Facebook in its IPO next month is a huge open question, and I would encourage you to read this book to think through the problem.

If you read the book, you will get a healthy dose of skepticism, mixed with the idea that many large IPOs in tech have been successful, like Google.  The main idea is that you have to do due diligence.  All snowflakes have six corners, but they are all different.

The book gives you five different ways to value Facebook, and those methods are all over the map, as they should be for a company where the economics are yet to be determined.  At least it is profitable.

The range of valuation gives everyone something to hang onto, but the thought process should force everyone to think about how Facebook will monetize all of their users.  Will the users behave in a way that allows Facebook to make money off them?  So far, yes, but the future is far more volatile than I can imagine.

In general, I would advise readers to avoid IPOs.  Most people lose money in buying them on the secondary markets.  Better you should buy stock in less flashy businesses like utilities, insurance, and energy stocks.  You will make more money there — businesses with a high earnings yield tend to do better than other stocks, and Facebook does not make it there, for now.  Buying Facebook implies a company that will grow far more rapidly than most, and far a long time, which is not common.

If you are thinking about buying shares of Facebook, spend five bucks or so, and get this book.  It’s less than a brokerage commission, and worth more than most in educating you about the value of Facebook.

Quibbles

None; this is a good book.  What matters most is how you think about it.

Who would benefit from this book: If you want to buy the Facebook IPO, buy this book and learn something.  Be aware before you buy, or be dissuaded before you do nothing.  If you want to, you can buy the book here: The Facebook IPO Primer.

Full disclosure: The publisher asked if I wanted to read the book electronically.  I said “yes” and I downloaded it and read it.

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.






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5 Responses to Book Review: The Facebook IPO Primer

  1. [...] A review of The Facebook IPO Primer by Nancy Miller.  (Aleph Blog) [...]

  2. [...] It’s not all that often that a era-defining initial public offering comes along. In the next few weeks Facebook is set to go public amidst a great deal of talk that there is a “bubble” in Silicon Valley. The Facebook story is more than the question of whether you should try to get in on the IPO. It really puts a stamp on the Web 2.0. Veteran journalist Nancy Miller is covering the Facebook story in depth via her e-book The Facebook IPO Primer which also happened to get a positive review from David Merkel at the Aleph Blog. [...]

  3. [...] It’s not all that often that a era-defining initial public offering comes along. In the next few weeks Facebook is set to go public amidst a great deal of talk that there is a “bubble” in Silicon Valley. The Facebook story is more than the question of whether you should try to get in on the IPO. It really puts a stamp on the Web 2.0. Veteran journalist Nancy Miller is covering the Facebook story in depth via her e-book The Facebook IPO Primer which also happened to get a positive review from David Merkel at the Aleph Blog. [...]

  4. [...] It’s not all that often that a era-defining initial public offering comes along. In the next few weeks Facebook is set to go public amidst a great deal of talk that there is a “bubble” in Silicon Valley. The Facebook story is more than the question of whether you should try to get in on the IPO. It really puts a stamp on the Web 2.0. Veteran journalist Nancy Miller is covering the Facebook story in depth via her e-book The Facebook IPO Primer which also happened to get a positive review from David Merkel at the Aleph Blog. [...]

  5. [...] It’s not all that often that a era-defining initial public offering comes along. In the next couple of weeks Facebook is set to go public amidst a great deal of talk that there is a “bubble” in Silicon Valley. The Facebook story is more than the question of whether you should try to get in on the IPO. It really puts a stamp on the Web 2.0. Veteran journalist Nancy Miller is covering the Facebook story in depth via her e-book The Facebook IPO Primer which also happened to get a positive review from David Merkel at the Aleph Blog. [...]

Disclaimer


David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures.


Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions.


Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.

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