tv Your Money CNN May 20, 2012 12:00pm-1:00pm PDT
you have been on facebook for years, but the story for investors has just begun. welcome to "your money." i'm ali velshi, christine romans is here with me. we've been following this company with one question in mind. after a troubling opening day for its stock, can facebook live up to the hype? facebook, the most anticipated tech stock in history. from a start-up in a dorm room to a global community approaching 1 billion people, facebook is the next paradigm shift on the web. first, the internet was defined by the porthole, a one-top shop for everything you needed. then came search, a single place
to answer any question you could possibly ask. but facebook represents something different. the idea that the internet and technology can bring people together and together the community you choose cure rates your entire journey through life. but is this a real shift in the motion important tool in the world or a fad that's peaked? can facebook live up to the hype? and if it really is a paradigm shift, can facebook dominate it? >> as no other network can, we've brought together cnn's best team covering this story. dan simon at facebook headquarters in menlo park, california, where mark zuckerberg remotely rang the opening bell on the nasdaq on friday. alison kosik, and flees a taylor at the new york stock exchange where she's been talking to traders. and three men who invest for a living, we'll ask them if facebook is a good investment for you. ed reilly, ted shapiro, an early
facebook investor, and matt mccall, president of the penn financial group. >> dan, let's start with you. let's leave the stock aside for a second. that's a big topic, but this is about the company. it was amazing to see thousands turn out in menlo park to see mark zuckerberg kick off facebook's first public trading day. talk about the mood there and how it happened. what happened to the mood when that stock failed to soar like expected? >> well, first of all, as you can imagine, still conn valley was buzzing over this stock debut for weeks. so much anticipation, all across the country. but here, you know, you could just feel the environment. you could feel the electricity. i did speak to a facebook executive about mark zuckerberg ringing the bell. he said the energy in there was off the charts. it felt like a rock concert. and especially after coming off an all-nighter. they had a hackathon where they were up all night trying to come up with the newest and greatest
ideas for facebook and all met in the public square to usher in this area. it was quite an event to see. >> dan, this still remains the story of the company, but it soon changed through the course of the day into the story of the stock. >> let's bring in alison kosik. it was a key question everybody in social media is asking now, how do you make money on technology that changes the world, because it didn't seem like a super sure bet today. >> no stock is a sure bet, right, christine? it's all a big gamble. and when you look at how facebook traded on friday, yes, it ended flat. but you have to remember, it was hyped up quite, quite a bit. so the expectations were really, really high. and with a lot of these tech ipos lately, that's really how it's been. it's been a lot of hype. especially when you see what happened on friday, you know, the investors showed their displeasure in the fact that the facebook shares did not get that pop that they wanted. all of these social media companies, including zynga,
yelp, pandora, groupon, linkedin, all ending lower on the day. but one analyst says, wait a minute, everybody take a breath. this is one day. the trend is still positive for social media. because you know what? people are using social media. advertisers are advertising on social media. advertisers are spending money on social media. so the trend in the long term is positive. this is one day and the suggestion from analysts is, give this some time and let's see what happens. look on the bright side. zynga, when zynga went public in december of 2011, its ipo price was $10. guess where it closed? it closed 5% lower. $9.50. so at least look on the bright side. facebook didn't end lower than its facebook ipo price. >> and remember, too, to be fair. there are a bunch of people in menlo park, california, who are now millionaires. people who have been investors for a long time. thanks, alison. >> i finally tweeted something out today for all the facebook haters out there. this isn't a public vaccination.
if you didn't want to buy facebook stock, you don't have to buy facebook stock. felicia taylor's on the floor of the new york stock exchange. phylici phylicia,, let's talk about something for a second. there was definitely something up with the trading, as alison said, at nasdaq. you know, for us old-timers, that didn't used to happen. >> no, there's no question about it. thank you for including me in that group of old timers. that was really sweet of you, ali. but what was fascinating was to be here on the floor of the stock exchange and to watch what was going on on friday and see the traders literally huddled around their the terminals, watching that penny point move. and you could see it that the action was in there. as we've talked about, underwriters come in to make sure that that stock didn't go below $38 a share. that was their job. that's what they were supposed to do. and they did it effectively. day traders were coming into this stock and hammering it and pushing it. there was a lot of short
covering at the end of the day, which is it's interesting to the see so much activity in facebook stock and its first day. get a load of this. 567 million shares traded on this first day. only 421 were offered. compare that to 1.1 billion shares that traded on the entire new york stock exchange. it was a 20% part of what happened at the nasdaq. that traded some 2.6 billion shares today. >> apple on a given day will trade 25 million shares. this is ten times what microsoft would do in a day. which means it turned over. so here's, felicia, what i think it means. and that is that all those early stage investors, or many of them, and we'll talk to one in a few minutes. many who are venture capitalists who want to put their money into a company for a few years and take the money out of it were bailing out. they were getting a good price for their stock. it's a price they thought they would get and a whole bunch of new investors came in. >> if you were one of those guys
that got in on the ipo price, that was fine. you did absolutely fine. it went up to $42, $45 a share. but it's moving forward and taking this story forward. a lot of traders on the floor here told me they expect that this stock is actually going to dip below $38 a share. is this something that individual investors really want to get in on? i would venture to say that right now, that is too uncertain to say. you don't know where this stock is actually going to value out. we don't know where their earnings are. they may be able to make money, but we don't know where that growth is coming from yet. >> that said, if you were a retail investor, you could get into a big stock at the ipo price. something we said wasn't likely to happen. >> felicia, stay there. let's bring into some of those people who trade stocks for a living. ned reilly, craig shapiro, matt mccall. i want to the ask each of you the same question. ned, i want to the start with you. we know this thing came in lower than most people thought it was going to come in. can i, or i being my viewer, the retail investor, make money by
buying facebook at this price? basically, ty po price? >> well, i said it last week and i'll say it again. this is not the kind of stock that a retail investor should be in right now. there's too many questions about the business platform. the price it's selling at is a price earnings ratio that's just astronomic. and this management team has done a great job of getting the audience. now the problem is shifting from the desktops and the laptops over to the mobile devices. and as we've been talking about, mobile devices don't carry a lot of ads right at the moment. so these are critical questions that the company, not only this company, but others in that so social space, as well as some of the bigger, more developed companies like google, have got to answer. and how do i figure out how i'm going to capitalize on that mobile device later on down the road. >> craig thshapiro is the ceo a president of the collaborative fund. he's heard your argument before, because he's been in on it.
craig, i know you disagree with ned. both of you thought this thing would end up higher than it was today. if you thought it would end up higher and it was a good investment last week, i would have thought this was a screaming buy at 38 bucks. >> i do. i couldn't disagree more with ned, and respectfully, but i think -- i'm actually happy to see the price where it's at. i think it's a fairly traded stock and i think it's an opportunity for a retail investor to get in. and if it's a retail investor looking to make a quick dollar, i think it's a problem. but if you're in -- you want to be in a company for the long haul, i still think facebook is a great, great company with a lot of potential. >> matt mccall, you also didn't think -- you also thought it would be higher than it is right now. who are you siding with? ned or craig? >> i'm going to go down the middle here, but i'm going to lean towards ned. i did say -- i didn't like the stock, i wouldn't buy it on the first trading day. i was thinking about this today. this is one of those stocks, when a girl who did my makeup
and texts me and asks if i should buy it, it's a cocktail stock at a cocktail party. people talk about it. it doesn't make you money, though. it's great to talk about. you look at valuation. ned mentioned p/e ratio. look at apple and google. they have p/e ratios below 20. >> it is a high p/e, but we'll talk about that. you boy stass stay there. should you invest in facebook's future? that's the question i'm posing to one of the tech world's elite entrepreneurs who just happens to be a former employee at facebook. that's next on "your money."
every communications provider is different but centurylink is committed to being a different kind of communications company. ♪ we link people and fortune 500 companies nationwide and around the world. and we will continue to free you to do more and focus on what matters. you know what's exciting? graduation. when i look up into my students faces, i see pride. you know, i have done something worthwhile. when i earned my doctorate through university of phoenix, that pride, that was on my face. i am jocelyn taylor. i'm committed to making a difference in people's lives, and i am a phoenix.
visit phoenix.edu to find the program that's right for you. enroll now. but proven technologies allow natural gas producers to supply affordable, cleaner energy, while protecting our environment. across america, these technologies protect air - by monitoring air quality and reducing emissions... ...protect water - through conservation and self-contained recycling systems... ... and protect land - by reducing our footprint and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today. of all our different items in our festival of shrimp. the crab-stuffed shrimp are awesome! tequila lime tacos. [ man ] delicious! [ male announcer ] it's festival of shrimp!
for $12.99 try any two shrimp creations like new barbeque glazed shrimp. offer ends soon. we're servers at red lobster. and we sea food differently. agents, when it comes to insurance, people feel lost. that's a dead end. don't know which way to turn. this way. turn around. [ woman ] that's why we present people with options to help them find coverage that fits their needs. almost there. whoo! yay! good work. that's a new maze record. really? i have no idea. we don't keep track of that kind of stuff. well, you should. [ male announcer ] we are insurance. ♪ we are farmers ♪ bum, ba-da-bum, bum, bum, bum ♪ if you're planning to buy shares of facebook, issued know what facebook is selling. it's you and your data. more than 900 million people use facebook. that's around three times the total population of the united states. facebook's user base has quadrupled four times over the
last three years. facebook has 100 billion friendships. users leave 2 billion likes and comments each day, 2.7 billion, actually. facebook is also the world's largest photo sharing site. users upload 250 million photos every day. all that data allows facebook to offer highly targeted advertising. in 2009, facebook made 98% of its money from ad sales. that dropped to 85% last year, $3.7 billion. sounds like a lot, but facebook makes less than $5 per user each year. google makes more than four times that amount. so facebook needs to convince investors that it can turn users into money. davemorin was an early member of the facebook team. he's the co-inventor of the facebook platform and facebook connect. before that he worked as a marketing manager at apple. dave, back. facebook needs to continue adding new users or get more money out of each user. we know the company plans to tap
into the mobile ad market, but how does post-ipo facebook grow, grow well, not alienate users, because it's got to poke into them a little bit more, not to use a facebook term, but it's got to get into their business a little bit more. >> i think the important trend to take a look at right now is the shift to mobile devices and to the mobile internet. you know, the desktop internet was really only about 1.5 billion personal computers. and the data says that there's about 5.5 billion mobile subscribers in the world today. so in terms of growth, facebook really has to start looking at the shift towards mobile and, you know, looking towards users that are on the mobile side instead of, you know, just focusing on the desktop. and i think they're starting to do that. but, that's really where the growth is going to come from. >> all right. i'm an avowed facebook admirer. i'm not that much of a user, but
i love the concept, i love what it could represent. what i get a lot of on twitter and the criticisms of the tech world is full of criticisms that failed in the internet space. right now facebook has the edge, so did aol once, and myspace. aol and myspace, we don't talk about all that much. what does facebook do to make sure it's in the right space, which it probably is, as you described, but that it dominates that space forever more? >> i think facebook's focus on the user first and creating a real core utility for sharing information and communicating, that's been a big part of facebook's success so far. that's how they've won against competitors in the past. going forward, the major area where facebook has to focus is on the platform, and, you know, continuing to provide tools for third party businesses or marketers, even businesses like us at path to build out new and unique and interesting businesses and apps, whether that be mobile or continuing on the web, you know, facebook
really has to continue to empower the platform, so that the network effect of businesses that depend on facebook is just as strong as the one around users. >> hey, dave, it's christine romans. i want to ask you a little bit about the cult of mark zuckerberg and what happens there in menlo park. you know, he's one of the world's wealthiest people now, but you wouldn't know this if you met him on the street. the company-issued hoodie and the like. and a new article in "the new york times" says zuk excepts that same attitude from all of his employees, "peer pressure dictates that consumption be kept on the down low. it is understood, say facebook employees and their friends, that mr. zuckerberg would find it uncool for one of his underreligions s to drive a lamborghini to the office." is it true, there's a culture about not flaunting this newfound wealth? >> i would say that's not just a facebook thing, but a silicon valley thing.
silicon valley has always been a place that though there is a lot of wealth created, people try to sort of behave in a more humble -- >> why do you think so? why do you think? >> well, i think that it's not entertainment, you know? >> it's not wall street money. on wall street, it's -- >> selling -- >> they go nuts when something happens around here. you're saying it's different. you're not going to see a bunch of blinged out watches. >> i think one of the key differences is that because the culture of silicon valley is so rooted in entrepreneurship, what you see people doing with their wealth is instead beginning to reinvest it into the ecosystem and to help drive innovation with new entrepreneurs. and i think that the second thing that you actually see quite a lot of is philanthropy. and you know, one of the things that's quite encouraging to me about the early facebook crew is that because the facebook mission was so socially focused, you know, there's a lot of folks in the early facebook crew that
are really starting to approach the philanthropic space in a really unique, almost facebook-like way. people really want to help make it better and help make the world of philanthropic giving as we did with the social fabric. >> and mark zuckerberg could end up being one of the great philanthropists of our time. he started with this big donation no newark and what cory booker is trying to do with their schools. but do you think mark zuckerberg will be the ultimate leader of this company? he controls most of it still? is he the right leader for a facebook that's now public and is going to keep growing or try to creep grkeep growing? >> i think mark could possibly end up one of the great philanthropic leaders of all time. his co-founder, dustin mosquovitz, has already planned to give away most of his wealth not when he dies, but before he dies, very aggressively. he just started good ventures,
which is a big new philanthropic foundation. so i think you're seeing the leadership not just say that, but start to take actions in that direction. as far as mark being, you know, the long-term leader, i think the answer to that question is yes, you know? i think mark has shown a great tenacity in sort of how he's led the company. he's proven that he knows when to innovate and how to innovate and how to push the company forward, at the exact right times and, you know, he really has inspired everyone that's worked with him, including us. you know, we take a lot of his lessons around staying focused, on building for the long-term, and sort of striving for, you know, building really a team driven by excellence. we take that into account at path every single day. >> dave, good to see you. thank you for joining us. appreciate you sharing your wisdom from the inside with us. dave moran is the co-founder of path, one of the former facebook employees, one of the developers that give you the experience you've got. when we come back, there's
really only one reason to buy a stock of a public company, and you now have a chance to buy facebook at pretty much the price that all the big guys had a chance to buy it at. should you or shouldn't you? we'll talk about it when we come back on "your money." for three hours a week, i'm a coach. but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. today is gonna be an important day for us.
you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.
i tell you what i can spend. i do my best to make it work. i'm back on the road safely. and i saved you money on brakes. that's personal pricing. there's been a lot of interest in facebook's ipo, from big banks to newbie investors. ipos, as she'll tell you, are a risky business. that's not really a point i tend to make as much as -- i want to welcome back our panel, ned reilly, chairman of reil reilly asset management and craig shapiro, an early facebook
investor. did you make like a bandit and get out? >> i'm still in it. >> mark mccall is the president of penn financial group. craig is all in about facebook. matt and ned are not guys who shy away from the market. they're a little lukewarm on this whole thing. ned, i'm going to do what i said to felicia. we're old-timers in this whole thing. we didn't know about the world of investing through the internet. we started with buggy whips. we've got to get with the future, ned. are you just grumpy about the internet or is there something about facebook you don't like? >> well, i'll look at my slide rule right now and see if i can calculate a future price. that's what i started with. maybe we are grumpy. i don't know. maybe you see all of these great, wealthy people out there. but it isn't that. i really believe that a facebook is probably going to be a very successful company.
i'm just not convinced at this price, this time, that i'd want to participate in what i call a rifle shot approach, to own facebook and maybe four or five other social media companies, because i was around in the 1990s when everybody thought technology was going to be the thing of the future -- >> but it is, ned, it is, right? i mean, the internet's the most powerful tool in the world. >> i don't disagree. but the stock prices of some of those companies back then, people aren't back to normal and microsoft, intel, and these companies are still viable, good contributors today. i think what we've got to look at is facebook in the context of how you participate in the stock. look at those mutual funds that may have a heavy position. look at those exchange-traded funs. i have been advocating the three qs, which is the top 100 stocks and the nasdaq index for the last three years. n now, i ended up with 17% in apple stock. i said, that wasn't genius, that was purely accidental. but apple was a success.
if facebook is going to be that kind of a success, then people are going to be able to -- >> that's a very, very good point. >> so you can buy an etf, which is like a stock. the top 100 stocks in the nasdaq. facebook will be in it. matt mccall, you suggested the internal social media etf, socl is the ticker symbol, and they get a piece of all of these social media companies. i'll come back, matt. this one's for craig. craig, we have had 31 internet ipos since the beginning of 2011, not the '90s that ned was tab, 2011. 22 of those are trading below their closing price on the day they went public. 16 are trading below the offer price. the offer price would be 38 in the case of facebook. tell me as a guy who's a venture capitalist, the odds are against these tech ipos? >> you know, it's unfair, i think, to lump facebook in with
the rest of that group. i think it's its own, unique boost. there's no other company, really, in the world. forget about those other ipos since 2011, that touches a billion people. people on average spent seven hours a month on facebook. and they have billions of dollars in cash in the bank. and so it's not, it's not a typical ipo. certainly very, very different profile from the companies that you're talking about. >> all right. christine, i think it's fair to say, i've seen a lot of hype around there about us hype welcome the media hyping facebook stock. and if anybody's actually watched you and me in the last few weeks, they'll know full well that christine has been the brakes and i've been the accelerator, largely just to make opposite points. i don't think we're that far apart. >> in part because of matt mccall. matt mccall was really buttressing what i've been thinking, matt. which is, give it a month. if you're an individual investor, give it a month and let it settle out. it's not a game for the weak at
heart. you were absolutely right to suggest that people just let -- >> in other words, you don't have to rush in on day one, matt. >> that's what blows my mind. the way that it seems it's been going on friday is the fact if that if you don't get in, it's over. you have years ahead of you to get into facebook. you have tomorrow, tuesday. sit back and relax. one of the biggest things i tell my clients, anyone investing, patience is a virtue. i think it could come down to the low 30s, high 20s, at that time, yes, i might have a buyer of facebook. but craig talked about, facebook's different. it's different and you can't compare it to other ipos. if i had a dollar for every time somebody told me that, my goodness with every ipo is different. since 2008, we've had 70 internet-related ipos hit the market. the average gain, 59%. facebook, zero. that shows you that facebook,
maybe it's not like every other ipo. >> poor craig, man. this guy's like a pariah for being a venture capitalist and an early stage investor in facebook. but you represent all the views out there and i think this guy is smarter for having had this discussion, understanding the ipo process, understanding all these -- ned, craig, matt, stay exactly where you are. up next, you all know mark zuckerberg and if you don't, there's nothing i can do for you. but what about the woman behind facebook's success, next on "your money." i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare.
nice. but, y'know, with every door direct mail from the postal service, you'll find the customers that matter most: the ones in your neighborhood. print it yourself or find a local partner. and postage is under 15 cents. i wish i would have known that cause i really don't think i chose the best location. it's not so bad... i mean you got a deal... right? [ bird cries ] go online to reach every home, every address, every time with every door direct mail.
mark zuckerberg is synonymous with facebook and the movie "the social network" made him even more famous. but many argue it's someone else who is really the driver of the company's financial success. poppy harlow reports. >> reporter: you know the story. mark zuckerberg started facebook in his harvard dorm room. but do you know cheryl sandberg. she's his right-hand woman and people say facebook wouldn't be where it is without her. >> i was a really serious geek in high school. it works out. >> reporter: she's sheryl
sandberg, facebook's chief operating officer, number two to founder mark zuckerberg. she joined facebook in 2008, taking it from less than 150 million users to more than 900 million today. >> if sheryl hadn't been there, i don't think facebook would be going public today so successfully. if she came in and basically created the business. she had a whole month's worth of meetings, trying to figure out what business facebook was even in. >> reporter: a harvard grad who worked as larry summers' chief of staff at the u.s. treasury department, she landed next at grade scho google, where she built the company's ad business. i think sheryl's main contribution was figuring out how to go from essentially zero commercials in a new channel to figure out how we were going to get billions of customers and built that from crascratch. >> reporter: i interviewed her the day facebook became profitable. >> the big announcement today is that we hit 300 million active users. we're cash flow positive.
>> reporter: as a female who has reached close to the top of the corporate ladder, she challenged young women to do the same during her 2011 commencement speech at barnard. >> you are the promise for a more equal world, a world where men ran half our homes and women ran half our institutions would be just a much better world. >> reporter: and from this mother of two, balance is key. >> i walk out of this office every day at 5:30. so i'm home for dinner with my kids at 6:00. >> reporter: has she changed the culture at facebook, do you think? >> oh, absolutely. i think her influence has gone far beyond just facebook. i think she's established a new way of doing thing, a new culture to aspire across all technology companies. >> so she's changed silicon valley? >> absolutely. if you look at oracle or apple, a lot of these companies have a single leader. usually it's always been a guy who has a singular vision. we're seeing a shift from ego-driven to leadership driven. >> reporter: people who know her say washington could be in the cards. >> i told her she should run for
president. >> i think sheryl will end up in washington and i honestly think she could some day be president. and that's not a joke. >> reporter: do you have political aspirations? >> i, um, i have aspirations to do something that matters. and right now i don't think there's much i could do that would matter more than facebook. >> now, a big challenge, christine, for sandberg is that she's going to have to figure out how to tackle all of the users that are going mobile with facebook. that is a big challenge. she's going to have to figure that out. ultimately, mark zuckerberg controls the company with more than half of the voting shares. as you know, christine, if anyone can do this, analysts say it's sheryl sandberg. she's the one who ostensibly built google's ad business into what it is today. you can't overstate her importance in this ipo. >> poppy, it's so interesting. she could probably have any job she wanted in silicon valley. she could probably be ceo of any company she wanted in silicon valley.
do we expect she'll stay at facebook for the long-term? i know that some of her compensation is tied to staying there for a few more years. >> it is, but she's got plenty of money. i doubt that it's because of money for her. you know, it's interesting, i was talk to david kirkpatrick, who we saw in the piece, the author of the facebook effect. he knows this company inside and out, he knows mark zuckerberg and sheryl sandberg very well. he tells me he doesn't believe that mark would have taken this company public without knowing that sheryl sandberg would be by his side, not only for a year or two years, but a good amount of time. and their relationship has worked so well together, as number one and two at this company, he said, because she doesn't aspire to be ceo. she's fine being mark's deputy, because she doesn't think there's anything more meaningful she could do, than be at facebook. that's key, with having someone in that role that's not always looking higher and trying to take that ceo spot. >> fascinating person. poppy harlow, thanks. >> sure. jesse hempl wrote "fortune's" cover story on
facebook. you've covered facebook for some seven years, right? >> yeah, it's been seven. >> a lifetime in facebook years. people buying facebook stock are really betting on mark zuckerberg. is that a safe bet? >> i think today we saw people aren't so sure it's a safe bet. i don't know about you, bifs surprised to see what the stock did. >> a lot of people thought there would be this launch. but in the end, it was just holding on to $38 a share. >> you know, i think part of that is that in the last week, there's been very smart coverage of facebook and people have been examining the business itself. and when you look at the business, it's just not a sure bet yet. that's not to say that there's anything wrong with it. but last week for the first time we've heard that they haven't actually got it figured out. this is not your next google. >> you mentioned google and that's a good example. 2004, google went public. was a lot of people say google went public with room to grow. facebook goes public priced for perfection and sized for perfection. >> well, it would seem that,
right? facebook, here's a company that it is growing, but it is growing faster than it is bringing in revenue, right? and it's growing in markets where it doesn't make as much money, right? the users that it's picking up are in brazil, india, places unlike the u.s., where it just doesn't cost as much to advertise. and say what you will, it's a more mature business at this point. we know a lot more what we're getting when we buy it. >> each quarter you bring up the users, how much they make per user, $2.40 off each north american user. but europe and asia, the average much lower, just 37 cent. do they have a plan to increase that revenue for the rest of the world? >> they have a lot of plans we haven't heard of yet. so we're betting they have a strong management team and they've got the talent that they're going to need to unravel this pickle of a problem. we do know that they have launched a new advertising strategy back in february. it's just too early to tell whether it's going to work yet. >> you talked about the management team. sheryl sandberg, we just saw this amazing piece about sheryl
sandberg. the combination of zuckerberg/sandberg is pretty powerful. >> it is a powerful combination. sandberg is somebody who you want on your side. she has more experience than anybody else at how to make money off the web. she's done it once before at google. >> so nice to see you, jessi hempel, "fortune" magazine, thanks so much. up next, investment experts with some free advise. customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. every communications provider is different but centurylink is committed to being a different kind of communications company. ♪
we link people and fortune 500 companies nationwide and around the world. and we will continue to free you to do more and focus on what matters. if you made a list of countries from around the world... ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.
we took a little time out here so the boys could stop ganging up on craig. ned reilly of reilly asset management, matt mccall, ned's on the left. craig shapiro, just like a target, right in the middle. he is a venture capitalist. this is what guys like craig do. they're looking for the next facebook. they put money to companies. i don't know if that rule of thumb still applies, craig. that a third of the companies you'll invest in will blow the lights out, they'll do really well. a third will do nothing and a third you may lose money on. i don't know if that's the right ratio, but that's what you do, right? >> that's right, ali. in fact, just using facebook as an example, three venture funds have returned their entire fund
just through facebook alone. >> wow. so my concern is that you guys are early stage. now facebook has entered a stage of maturity. generally speaking, maturity means growth is slower and suckers like us invest in it. guys like you move on to the next thing? >> yeah. here's where i take issue, i think with ned and matt a bit. people laughed at peter thooel when he initially invested. people laughed at yahoo! when they offered $1 billion. people laughed at microsoft when they invested at $15 billion valuation. people laughed at goldman sachs when they invest eed at a $50 billion valuation and they're all not laughing today. so i think when you hear ned and matt talk about, well, wait a month or invest through three qs, that's more technical. i think the underlying values haven't changed. you've got an incredibly focused ceo, founder and ceo with a talented team building a potent
product that reaches a billion people. >> if you're peter thooel, think about it. what, half a million to help this company get through its first summer, i think. you have to really take big risks and then the reward is big. that's the whole point of the thing, right? >> mm-hmm, absolutely. it comes down to risk tolerance. and i think for the average investor, if you're concerned about it, i think going through a mutual fund or some exchange could work. but if you believe in the company and the potential, it doesn't matter whether you invest today or next week or next month. >> so let me ask you this, let me ask you this, ned reilly, for two seconds, let's pretend that facebook isn't the only story out there. because god forbid i'll have to talk about jpmorgan or greece. this is going to upset me. where, if you are an investor who wants to feel the juice of the market, the things that are working, the things that are growing. you don't want to have the depressed discussion about how
nothing's working and half the world is in recession and the other half is slowing down. what do you do? you're telling me not to get into facebook. where do i go? >> ned, this was the worst week for stocks since 2012. the big story is with facebook. this was a bad day for investors and a bad week for investors. >> that's a great point, christine. with all of this about facebook and everything else, we've forgotten the fact that google was down about $22 on friday. the tech stocks got murdered, and you wonder if facebook was the catalyst or it was just the sentiment of the market. i like the market today. i think it's got a lot of potential. the answer to your question is, i still like the three qs, the triple qs. because they have companies that are rapidly growing. the price earnings ratios of these companies are reasonable. whether it's apple or google or several other of the tech companies out there. now, facebook has got a higher multiple, but you can grow into it. remember, companies like google who were 60 or 80 times earnings
five years ago. so i'm not trying to poo poo facebook. as a matter of fact, craig, i congratulate you. i think that's terrific. i don't have any of it. if you want to give me 25% of yours and a buck a share, i'll buy it from you. >> all right. >> the point is here, that there is a sector growing and it's technology and i think that is going to be the area where people are going to make their money. >> ned has redeemed himself from acting like a dinosaur. we've embraced technology. okay, hold on. when we come back, we've learned a lot about ipos, learned a lot about listings and public companies and talked a lot about technology. how do you decide after the facebook hype is over when to get in on a stock? i'll talk to the panel about that when we come back. if you are one of the millions of men
who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or, signs in a woman which may include changes in body hair
or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are, or may become pregnant or are breast feeding should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. talk to your doctor today about androgel 1.62% so you can use less gel. log on now to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news.
like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. ned riley and craig shapiro, and early facebook investor matt mccall, christina and i were talking in the commercial, you guys represent different types of risk tolerance. so do the two of us. and so do all of our viewers. so in the end, you are not -- i
think we all agree, we all five agree you will not make money by sitting the market out. so the question is, how you make the decision to get into the market. matt mccall, if you are the average investor who gets the -- they've got to be in the market, but you don't know too much about it, how much do you decide you pay for a stock? >> that's a very tough question. it comes down to the amount of money that that stock makes. that's called the earnings. earnings per share. you can relate that to the price of the stock, and that's where you get the price-to-earnings ratio. i mentioned earlier that we have facebook trading above 100 priced earnings ratio. apple and google, below 20. actually, apple below 15. >> apples to apples -- no pun intended -- comparison. one is more expensive than the other. but invariably something will be more expensive than something else. so i can buy a sweater at $40 at macy's that i might pay $400 for
at prada, it doesn't mean prada is overpriced, so is facebook the prada to google's macy's? >> that's actually a great analogy. if a company has a 15 pe ratio, but one's growing at 80% and one's growing at 10%, you can darn well bet i'll buy the one growing at 80%. we're in a pullback, too, in the market now. if i had a dime for everyone who said to me, let it pull back, now we're down to $530 in apple, and you buy it. if you believe in it, buy into weakness. it's tough to do psychologically, but that's the best thing to do in the long term. >> the whole story about facebook is a really great moment for investors, who may not be paying attention to their investments or may not even be in investments. is there a bigger lesson here
about the public interest and scrutiny in facebook and how people should be invested? >> well, it is. first of all, you should know what you are buying. people do that with the facebook. because they've used it for so long. but there's another part of it, how much money do they actually make off of what they've developed. there's a huge audience. it's been very successful in what they've done. but you've got to make money and eventually you've got to pay out dividends. and you've got to get some return for the investment you make. there's such a thing called motion in subjectivity that normally supersede objectivity. and i'm saying in a simple way, people are not very objective with their money. so they get emotional, they get all tied up in it. then they usually make big mistakes. that includes a lot of sophisticated portfolio managers. they usually sell out at bottoms and buy at tops.
one of the things i try to tell people is, take the emotion out. try to be objective. buy when everything else in the world is coming to an end and sell when everybody's getting happy and they've got a facebook kind of party going on. that's when you run for the hills. a lot of people don't adhere to that philosophy, because when they start to lose, it's extremely painful. >> if it's anything i learned from you guys, it's that different philosophies do prevail. ned riley g to see you. and matt mccall. >> mark zuckerberg angered investors wearing that hoodie. there's a secret hiding under that gray exterior.
but there's something about the social network that you didn't know. wonder why the interface is blue? turns out mark zuckerberg is red/green color-blind. he told antonio vargas that blue is the richest color for me. i can see all of blue. he can't see green, but that doesn't mean he's not turned down a lot of green. four months after the facebook.com launch in 2004, zuckerberg then 20 years old turned down a $10 million offer for the company. that's according to the book "the facebook effect" by kirkpatrick. >> maybe he could take some money and buy new clothes. but did you know mark's famous hoodie hides this secret. >> it's a company hoodie. we print our mission on the inside. >> what? oh, my god, the inside of the hoodie, everybody. take a moment. what is it? making the -- >> making the world more
connected. >> they had a conference, and there he was taking off the hoodie. she's like, what's inside? turns out it is the company moto inside. and it is company issued. some people were disappointed. i say generation x and above were disappointed when he went down the road show and was wearing the hoodie. >> the bottom line is, you know what i think about this. this is not an investment matter. this is the fact that i do think they have been responsible for leading a paradigm shift in the internet. if you believe you want your life experience cure eig cure y the people you read and recommend, facebook could be the future. >> it is certainly the future for how you use the internet. and that's the question of the social media stocks. >> that's for a show called your life. this one is called "your money." >> but i will say as well it wa