Analyst Sam Hamadeh of PrivCo says Facebook delayed its IPO because it missed its revenue targets by $400 million, Katherine Rushton of the Telegraph reports.But here’s what’s weird about that.
* There’s no solid evidence that Facebook has “delayed” its IPO (or even set a date for it)
* Hamadeh’s revenue conclusion doesn’t appear to make sense.
Hamadeh, who runs a private-company research firm, has been famously bearish on Facebook for a while, reporting recently that management was “in a virtual panic” because growth had “hit a wall.”
(Hamadeh attributed this knowledge to “sources within the company.”)
And now Hamadeh’s saying that when Goldman Sachs sold a private-placement for Facebook last year, it promised clients that the company would do at least $4 billion of revenue this year. And yet Facebook’s revenue for the first half of the year was only $1.6 billion. So, Hamadeh concludes, they’ve missed their goal by $400 million!
Advertising spending, which makes up the bulk of Facebook’s revenue, is highly seasonal–Q1 is the weakest quarter, and Q4 is by far the biggest quarter. So even for a media business that isn’t growing at all, the second half of the year should be expected to be significantly bigger than the first half.
Facebook, moreover, is growing at an extraordinary rate, more than 100% year over year. So even if all quarters of advertising spending were seasonally the same, the company should be expected to have a much bigger second half than first half.
And when you put those two factors together?
Facebook should do at least $2.5 billion of revenue in the second half of the year, if not more–thus posting revenue of, say, $4.2 billion for the year.This would be right in line with Goldman’s forecast.
(It would certainly be correct to say that Facebook’s revenue doesn’t appear to be exceeding Goldman’s forecast, and that some might view this as a disappointment. But it does appear to be meeting it.)
And then there’s this business about the IPO being “delayed.”
No sooner did the FT report yesterday that the IPO had been delayed than a source familiar with the company’s plans told us that the FT was full of crap–that nothing had changed. Then the New York Times reported that the IPO was still on track for the spring.
We’re actually not even sure the latter is true–because we’re not sure that Facebook has ever even formally set a date for the IPO. The company doesn’t want to go public, and it doesn’t care about going public, and it doesn’t have to go public–even when it’s required to start filing public financial documents. There aren’t too many good reasons for Facebook to go public, and there are plenty of great reasons for it NOT to go public, so this is hardly surprising.
In any event, we haven’t read Sam Hamadeh’s report, and it’s possible that the Telegraph has misconstrued his analysis. But the logic we’ve heard so far doesn’t make sense.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.