Posts Tagged Amazon

Social Exuberance

I’ve lived through a couple of bubbles in my time – dot.com and housing come to mind, anyone?  And something tells me the longer I’m around the more I’m going to have to live through.

Is social media another one of them? Maybe. Is a market cap of $80 billion for Facebook rational? Alan Greenspan must be trying his damnedest to make those old thumbs Tweet #social-exuberance.

Exuberant smile? Greenspan retired a while ago.

It strikes me that my framed Pets.com certificates and my wall have more than a nail in common – both were worth a hell of a lot more when I bought them (yeah, that was a stretch, thanks for sticking with me on that one). So now that I’ve said it, let me compare the stock market bubble to the housing market bubble to see what these bubbles might have in common.

There are basically three ways to value a stock, and they are pretty much the same as how the real estate market valued my wall.

My house:

  • Price per square foot (adjusted for how nice the stuff in my square footage is)
  • How much an identical house in my neighborhood sold for
  • Make shit up

A stock:

  • Discounted cash flows (predictions of how much money a company will make in future years, adjusted for how fast they will grow and how long they might last)
  • What comparable “peer” companies are trading at (adjusted for cash, debt (including options), assets and risks)
  • Make shit up

Both Facebook and Amazon have market caps of around $80 billion ($82.9 billion secondary market estimate for Facebook on 1/28, $76.8 billion actual market cap for Amazon on 1/28).  So if they were houses, and I was pre-qualified for an $83 billion mortgage, I could take my pick (well, my wife would, let’s stay grounded here).

As far as revenues go, estimates for Facebook for 2010 are around $2 billion while Amazon is on track for something north of $30 billion. In housing terms, Facebook is listing a very funky two bedroom loft conversion while Amazon is listing a 30-bedroom ancestral estate. So, there are either some really, really nice upgrades in that loft or there are 28 secret bedrooms priced into the deal.

Yes, an $80 billion estimate for Facebook is likely high. And yes, Facebook and Amazon don’t have identical business models.  But yes, the same people who sold me Pets.com shares are the same people who collateralized my mortgage and are the same people selling Facebook shares to foreign investors to avoid SEC regulations.

That must be one amazing loft.  I need to go check it out, I do need more wall space.

-Reid Cox

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Sudden hotness: Social + E-commerce = Social Commerce

Amazing how hot the juncture between e-commerce and social networking has gotten. It’s simple, really. E-commerce is eating into the overall retail segment. And, marketers go where the crowds are. Right now those crowds are not on AOL or WPIX (except for this page about Victoria’s Secret). They’re on Facebook and Twitter.

I remember having some very heated dialogue over using ‘social commerce’ as a thought leadership position within the corporate PR program at eBay about 3+ years ago.  I don’t recall what side of the argument I was on, but needless to say, despite the PR agency’s best efforts (you know who you are) to make it real, it took a Joe Pesci pen to the neck (Nicky in Casino) and never saw the light of day.

Until now.

Sudden hotness has arrived in that kink of a place where social and commerce are meeting.

After CyberMonday all the rumors were about Google to buy Groupon for $2.5 billion (Kara Swisher reports the offer is $5.3 billion). A colleague of mine asked if they’d call it Goopon? Heck, for that mountain of money, they can sponsor the TSA and rename it Gropeon. Today, Payvment announced a $6 million round of venture financing. In recent weeks Facebook has launched Deals to sit on top of its Places product. And, all you need to do is do a Twitter search for #CyberMonday to see how much traction commerce gets on Twitter.

So, while TechCrunch ponders if Amazon missed the boat on social commerce the reality is we all did. Or we would’ve called Nicky and his pen off back in 2007, created a Moto RAZR app for surfing the Urban Outfitters page on Facebook and retired on Black Friday 2009 on the speculation that Google was going to buy it.

Lesson of the day: A lot of the time the PR firm is right.

Update 1:  Dec. 2: Groupon: In the days since Mashable posted the Google buys Groupon rumor, most of the banter has been about how sexy the deal is. Rumors about M&A are dead sexy and dramatic. But we all know that most deals don’t work. And the honeymoon usually ends quickly once the hot company gets ingested.  I’m just happy someone is giving some sound analysis to this deal before it gets done.  Thanks, Sucharita.

Update 2: Dec. 3: Milo.com: Having worked with eBay Classifieds Group before and while classifieds was being integrated into the eBay.com marketplace, I find this $75 million deal to buy Milo.com…fascinating. I have to figure it out in light of all the above, eBay’s constant refrain about mobile as well as it’s M&A history. More later.

-Jose Mallabo

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