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Last we'd heard, Playboy founder Hugh Hefner greeted the overtures of rival nudie mag Penthouse with the news that he wasn't about to sell his stock in the company "to Penthouse or anybody else." But Marc Bell, the CEO of Penthouse's corporate parent, FriendFinder Networks, doesn't seem to want to take no for an answer.
"We are still obviously very interested in acquiring Playboy, plus a few other assets to go with it," Bell told Fox Business Network's Liz Claman on Monday.
Bell said FriendFinder, which operates 30,000 social networking websites -- including several of the NSFW variety -- had recently raised $551 million and "rejiggered its balance sheet." He stopped short of saying whether the company would raise its previous $210 million bid for Playboy Enterprises, which Hefner made an offer to take private over the summer, but he wasn't shy about suggesting why FriendFinder and Playboy, which is bleeding millions, could be a good match.
"We have 124 million people coming to our websites every month," he said. "Imagine what we can do with the power of our brands, our business today, applied to any business we acquire."
Reports are that Facebook is preparing to file its S-1 with the SEC as early as this coming Wednesday, setting the stage for what would be one of the biggest IPOs. The company is estimated to raise as much as $10 billion, which would value the social networking giant at somewhere between $75 billion and $100 billion. Facebook is undoubtedly the social networking leader, and possibly one of the top three to five leading internet companies of our time.
Needless to say, the retail investor will be bombarded with information on how significant the company is in terms of how people do and will communicate, connect, and consume information using Facebook, and perhaps some will even make comparisons to Google Inc.'s (GOOG) meteoric six-fold rise since its IPO just over seven years ago in making their case for Facebook.
While Facebook's dominance of the social media category, indeed the sheer impossibility to even build an effective competition in the years ahead given that it has already captured 800 million subscribers, infusing Facebook into their lives with ever more innovative features, cannot be argued against, we believe the proper question isn't how dominant and successful Facebook is. Instead, the proper question, since we already know what we stated above as almost self-evident, especially smart (institutional) money that already has significant stakes in it, is will the IPO valuation leave any value to be captured by the retail investor?
This is especially an important question given how poorly most social media IPOs have fared recently. Some examples:
We tried to answer at least part of that question by comparing the proposed valuation of Facebook to its peers in the online social networking space, by comparing them on valuation variables such as price-to-sales ratio and price-over-adjusted EBITDA ratio. Besides the new social networking pure plays, we have also compared them to more established players such as Google Inc. that is a social media player via its YouTube and Google+ offerings; and Sina Corp. (SINA), a Chinese internet portal offering that is also a destination for the global Chinese communities. The following table gives an overview of that analysis:
