Freelancer.com.au hits $1.1 Billion value

[DomainNames]

Freelancer.com.au / .com hit $1.1 Billion Valuation today after floating

http://www.smh.com.au/business/mark...as-billion-dollar-company-20131115-2xl67.html

•Freelancer founder rejects $430m buy-out offer

Shares in job marketplace outfit Freelancer.com have debuted on the Australian Stock Exchange at $2.50 cents each, a 400 per cent premium to the 50 cent they were sold at under the initial public offer.

The debut price gives the online focused business a market cap of $1.1 billion.

The company is tightly held with just 6.9 per cent of its shares sold on the ASX.

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Freelancer raised $15 million to boost its overseas expansion plans.

Freelancer is essentially a marketplace that allows people to post a task – whether it's a graphic design task, a legal job, some coding – and have freelancers from around the world bid on it.

Freelancer.com founder Matt Barrie will retain the lion's share of the company's stock, holding a 46 per cent stake in the firm. At current valuation this gives Mr Barrie’s paper wealth at $450 million.

Shortly after their debut at midday, shares in Freelancer.com were trading at $2.50 each.

 

[Chris.C]

My two cents - if you own any of these shares sell now for $2.50!

From memory when I crunched the numbers on the float PE ratio on the $0.50 float price it was already trading at like 90 times earnings.

Matt should have taken the $430M and run!

To be frank I can't believe they let them list on the ASX with earnings of less than $400,000 - there is some serious pipe dreaming going on with these "internet company" IPOs of late.

 

[James]

To be honest but Chris, I think sites like Freelancer are more longer term businesses. The reason been they have a clear revenue model and take a percentage on all jobs. So investing in a business which can generate cash is a safer move in my eyes.

What I do not agree with is companies like Snapchat which get values of 4 billion and they have generated 0 on revenue and personally I think the usage on Snapchat has dropped huge. It is the same with Twitter they do not make the same revenues that businesses like Freelancer do as it is all percentage based.

Plus Snapchat was offered 3 BILLION buyout from Facebook and they turned it down haha...Now that is stupid in my eyes...

 

[FirstPageResults]

Took a close look as well.

Agree with James regarding long term growth. They aren't planing on paying any dividends for the forseeable future.

 

[Ashman]

What I do not agree with is companies like Snapchat which get values of 4 billion and they have generated 0 on revenue and personally I think the usage on Snapchat has dropped huge. It is the same with Twitter they do not make the same revenues that businesses like Freelancer do as it is all percentage based.

Plus Snapchat was offered 3 BILLION buyout from Facebook and they turned it down haha...Now that is stupid in my eyes...

Value doesn't always come down to revenue earning ability. With Snapchat I would say that the value comes down to the patents they have for their technology.

 

[nt81]

Plus Snapchat was offered 3 BILLION buyout from Facebook and they turned it down haha...Now that is stupid in my eyes...

There is understandable logic to your comment above.

Except that a world without competitors is pretty boring. So while everyone else (Instagram, Tumblr etc) get snapped up, it is good to see a company hold their ground and not sell out.

Plus I don't really see how SnapChat fits in with Facebook. Both FB and Instagram are anti-nudity where Snapchat is about as pro-show-me-your-bits as they come.

 

[Chris.C]

To be honest but Chris, I think sites like Freelancer are more longer term businesses. The reason been they have a clear revenue model and take a percentage on all jobs. So investing in a business which can generate cash is a safer move in my eyes.

Yeah but you are still just buying a "good story"...

Here's my general rule of thumb, when a stockbroker says the words "just imagine if" or "just imagine when" you should stop listening and walk away with your money.

When the word "imagine" is involved you are no longer "investing" you are "speculating".

I get why people love it - it's exciting!

At the end of the day what makes Freelancer better than it's competitors like odesk or elance?

Pretty much nothing - and I know I prefer oDesk over Freelancer anyway...

And if there is nothing that separates these companies then there is no sustainable competitive advantage, and if there is no sustainable competitive advantage there is no ability to achieve an above market profit margin or rapid earnings growth and therefore no justification for paying three figure multiples of earnings.

At the end of the day a company that makes $400G/year is simply not worth $1B!

At a market cap of $1.1B and earnings of $400G investors are basically saying they expect that Freelancer to achieve 70% earnings growth EVERY YEAR for the next 10 years...

Sometimes these IT stocks can achieve that rate of growth in their first year or two, but 99 times out of 100 they can't achieve this rate of growth over 3 years let alone 10 years.

The numbers simply don't add up.

And if you look at the actually success cases, ie companies like CarSales (CRZ) sure in the early days they get some good growth, like in 2011 they grew earnings by 34%, but in 2012 they only managed 22%, and in 2013 they achieved 16%...

These internet companies are "great ideas" that end up getting constrained by the real world realities and often completely wiped out by the "next big innovation".

Anyway that is my two cents.

What I do not agree with is companies like Snapchat which get values of 4 billion and they have generated 0 on revenue and personally I think the usage on Snapchat has dropped huge. It is the same with Twitter they do not make the same revenues that businesses like Freelancer do as it is all percentage based.

Plus Snapchat was offered 3 BILLION buyout from Facebook and they turned it down haha...Now that is stupid in my eyes...

Agreed.

 

[James]

Value doesn't always come down to revenue earning ability. With Snapchat I would say that the value comes down to the patents they have for their technology.

Yes agree valid point they do have a few patents. But Snapchats patents are all around one click photos are they not. Sure they probably have a bit of value in that.

But you would think voice activated photos and videos would be more valuable in 5-10 years right? I wouldn't pay that much for a patents. Sure they have the user base I will agree with that but the minute people start pushing video ads or even snapchat ads across the network people can quickly un install it.

 

[James]

Yeah but you are still just buying a "good story"...

Here's my general rule of thumb, when a stockbroker says the words "just imagine if" or "just imagine when" you should stop listening and walk away with your money.

When the word "imagine" is involved you are no longer "investing" you are "speculating".

I get why people love it - it's exciting!

At the end of the day what makes Freelancer better than it's competitors like odesk or elance?

Pretty much nothing - and I know I prefer oDesk over Freelancer anyway...

And if there is nothing that separates these companies then there is no sustainable competitive advantage, and if there is no sustainable competitive advantage there is no ability to achieve an above market profit margin or rapid earnings growth and therefore no justification for paying three figure multiples of earnings.

At the end of the day a company that makes $400G/year is simply not worth $1B!

At a market cap of $1.1B and earnings of $400G investors are basically saying they expect that Freelancer to achieve 70% earnings growth EVERY YEAR for the next 10 years...

Sometimes these IT stocks can achieve that rate of growth in their first year or two, but 99 times out of 100 they can't achieve this rate of growth over 3 years let alone 10 years.

The numbers simply don't add up.

And if you look at the actually success cases, ie companies like CarSales (CRZ) sure in the early days they get some good growth, like in 2011 they grew earnings by 34%, but in 2012 they only managed 22%, and in 2013 they achieved 16%...

These internet companies are "great ideas" that end up getting constrained by the real world realities and often completely wiped out by the "next big innovation".

Anyway that is my two cents.

Agreed.

The thing is they are paying for the user base:

9 million users or so. Top 300 trafficked site in the world.

They are paying for the talent already hired 100 staff.

They are paying for the technology already developed.

At the start of the year I was at an event with the CEO of oDesk where he gave a 30 min talk on the future of co working/ online workers ect. Lets be honest it is an area with huge growth.

Many 3rd world countries are realizing how big it is they have already changed their tax laws to help sites like Freelancer and Odesk.

Come on it is not an investment like Comm Bank of blue chip shares where you sit around and get a dividend and have no risk it is a higher risk higher reward share.

 

[findtim]

you guys know all the figures so I won't enter into that, all I know is I use elance and spend @ $30k p/a and growing with them and thus they take a %, so at 8% its $2400 just from me

so in this world there has to be at least 1000 of me? so the numbers for long term growth do add up to success.

the danger for the business model is the "bypass" , where someone like me finds a good worker and then the next job I pay via an alternate method, direct/paypal etc, may off the freelancers try to push me towards that as they end up with more in their pockets.

but the rules say 2 years once you use an elancer which I stick to, the elance system escrow is good protection for me.

fiverr have a pop up that tries to stop you giving your email to prevent the bypass.

its impossible to stop eg: I need a quote on building my website, and then have to give the website address so elance or freelancer can't stop putting my email address on the homepage, thus the bypass method.

just my thoughts, as for shares? its a facebook coin toss !

tim

 

[findtim]

ohhh also, I got this email at 6.39pm

-----------


Hi findtim,
Freelancer Limited shares will begin trading at 12pm AEDST today on the Australian Securities Exchange (ASX) under the ticker FLN. ..........................

-------------

not that I care, but interesting to know I have had no communication up to this point from them.

tim

 

[Chris.C]

The thing is they are paying for the user base. 9 million users or so. Top 300 trafficked site in the world. They are paying for the talent already hired 100 staff. They are paying for the technology already developed.

All worthless if you can't make a profit...

Lets be honest it is an area with huge growth.

100% agree, but growth doesn't always equal profit, and without a profit you don't have a business, you have a liability.

People are buying the "growth potential" - I'm just saying whilst I agree their will be "growth" I'm not sure how much "potential" Freelancer has to produce a return on this growth if they haven't already.

Many 3rd world countries are realizing how big it is they have already changed their tax laws to help sites like Freelancer and Odesk.

Makes sense. I sent $XX,XXX+ to both India and the Philippines last year via oDesk.

 

[DomainNames]

FREELANCERS.COM is just parked..

Has the use of Freelancer.com.au and Freelancer.com helped them get better growth, publicity and now a better market cap/ share price?

Elance was around for years. Obviously Freelance or Freelancer was was mostly a copy of that but with a better domain name ( different price structure etc)

Elance missed the boat not buying the Freelance & Freelancer names

Theres lot of these popping up now as copies of elance and many are doing well from seed money and investors as people want to get in on the "next best thing"

I read recently some planning the same type of business with various names moonlight... sideline.. contractors

Well done to anyone who cashed in now or later from Freelancer.

Wish I owned that name and built it. great success to them all

$400,000 sales or even profit verses $1.1 Billion mar cap.... wow