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June 14, 2013
Ten Months Later, Facebook is Even More Overvalued

Facebook's Numbers Don't Add Up

  

Last August, Marty Wolf wrote in C/NET that Facebook was overvalued and for its shares to climb back to their May 2012 IPO price of $38 a share would take about 32 quarters, or eight years. From a pure numbers perspective, Facebook is even more overvalued now.

So this week, Marty revised his prediction: to achieve the revenue and earnings per share (EPS) that would justify $38 a share will take Facebook 58 quarters - or about 14.5 years.
 
Facebook Marty used the same method of numerical analysis this week as as he did last August to arrive at these conclusions -- both of which he summarized in an article on Facebook's valuation published in Yahoo! Finance on June 11th.
 
What's behind it is Facebook is growing revenue by growing users at the expense of profit.

It's a fact that Facebook added 86 million new active users in the first quarter of 2013. But it's also true that 32 million of them were mobile users. Subtract those new mobile users from total new users, and it turns out that the growth of traditional Facebook users was flat.

This matters a lot because Facebook mobile users are less drawn to advertising than other types of Facebook users - and Facebook makes most of its money from ads.

The impact can be seen in Facebook's average revenue per user, or ARPU. Facebook's ARPU in the first quarter of 2013 was $1.35 -- up from $1.21 in the same quarter a year ago, but down from $1.54 in the previous quarter. Right now, this all-important measure is going in the wrong direction.

As Marty wrote, "Facebook has achieved a remarkable 1.1 billion users and counting. Now the company needs to grow ARPU in a meaningful way."

To read Marty's complete analysis in Yahoo! Finance, click here.

  

To learn more about martinwolf contact Matthew Putzulu at mputzulu@martinwolf.com.  

About martinwolf    

 

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With offices in San Francisco and Bangalore, India, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in seven countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.

   

 

May 1, 2013

Publicly traded Veramark Technologies, Inc. (VERA:OTCB), a Rochester, NY-based provider of Telecom Expense Management (TEM) solutions, announced it has agreed to be taken private by Varsity Acquisition LCC and All Big Ten Holdings, Inc., a wholly owned subsidiary of Varsity. martinwolf acted as the financial advisor to Varsity in this transaction. Veramark works with companies to take the complexity and expense out of telecom, including managing costly mobile devices and networks. All of the company's solutions are hosted SaaS or available as on-premise software..

Please click here to view the announcement.  


November 6, 2012

Rolta, through its subsidiary Rolta International, Inc. announced that it acquired AdvizeX Technologies, LLC , a US company providing a comprehensive set of IT products and services ranging from roadmap planning to cloud-computing implementation strategy. With the acquisition, Rolta is now one of the top national partners of Oracle, Microsoft, HP, EMC and VMware in the US. Rolta was represented by martinwolf in the transaction. 

Please click here to view the announcement.

 

June 15, 2012

glendonTodd Capital LLC announced that it acquired Aztec Systems, a leading provider of enterprise technology solutions to hundreds of U.S. middle-market companies. Aztec was represented by martinwolf in this transaction. Aztec, a member of Microsoft's Presidents Club, was recently ranked 27th in revenue on Bob Scott's 2012 Top 100 VARS list and serves more than 700 middle-market clients. Terms of the transaction were not disclosed.
Please
click here to view the announcement.

 

 

 

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"The hurrier I go, the behinder I get."

 

The White Rabbit in Lewis Carroll's Alice in Wonderland

 

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