Facebook jumps then slumps in first Facebook's shares debuted on the Nasdaq today at $42 and immediately skidded downwards to the original IPO price of $38. The social network set its IPO price last night at $38, valuing it at $104bn. However, through the mysteries of IPOing, it actually opened at $42, shortly after 11am Eastern Time. That price values the …
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F******* Facebook Friday - now that today's IPO estimates the 'values' of mine and everyone else's facebook accounts at $115 each, I feel the need to withdraw this product, ie me, from the market place.
So if like me, you've had somewhat mixed feelings about using the website and the positives, some types of social interaction, have been balanced by the negatives, loss of privacy and the wrong sort of on site inaction, why not take this opportunity to close your account and grab back those supposed 405 minutes a month each of us give to it ?
Let the Web 2.0 bubble start to deflate.
* It's not what you think, farewell doesn't have 7
If the market opens and there are huge gains then the stock was under priced (that extra cash could have gone to the company not investors).
If the market opens and the stock plummets then the stock was over priced (and you have cross investors).
If it sticks at about its offer price (up 5% on the day according to the article) then they've got the price spot on. Where's the problem?
There is a blog at The Guardian which purports to show the order book for FaceBook yesterday at 12:34pm ET.
<<"A screen grab of the order book for Facebook. The big yellow block represents bids for shares at $38.
Business Insider gets a look at the order book, sent in by Twitter user @Bourbon_Meyer.
"It strongly appears that there's a huge perma-bid at $38 on Facebook," Joe Weisenthal writes. "Check out the big mass of yellow on the left column... all those bids at $38.">>
I can't copy the chart, but if you go to the Guardian you will see how the underwriter's manipulation supported the $38 price, which uninitiated investors attribute to other investors like themselves.
http://www.guardian.co.uk/technology/2012/may/18/facebook-ipo-stock-market-live?commentpage=1#post-area
No they didn't. Read the article again. JP Morgan Chase, Morgan Stanley and other of the IPO underwriters purchased loads of stock before the closing in order to prop up the share price and avoid and even more embarrassing opening day. The big institutional investors and the big hedge fund managers were cautious because they have looked at the numbers and realized that Facebook has a revenue per user of only USD$9.00 which has been in decline the past three quarters (by comparison Google has a revenue per user of $63.00). Those guys in the market who do their due diligence know that so far Facebook has not come up with a viable profile growth model. All those 100's millions of eyeballs mean nothing if they are not clicking on sponsored ads and buying things (ask yahoo).
Seriously. There is no "there" there ... How can a company with absolutely zero product be worth that much? What has facebook produced that I wasn't doing with computers before zuckerberg was born? Eventually people will realize that it's just a big wast of time and start bailing in droves.
Historical precedent? Sure ... Holland, tulips, and the mid 1630s. For more see "Orchidelirium".
Try to find a copy of the 1841 book "Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay ...
Seriously. There is no "there" there ... How can a company with absolutely zero product be worth that much? What has facebook produced that I wasn't doing with computers before zuckerberg was born? Eventually people will realize that it's just a big wast of time and start bailing in droves...
My wife went totally gung-ho for Facebook a couple of years ago. When I told her there wasn't anything she could do with Facebook that couldn't be done with a blog or a properly-run listserv, she got all huffy and gave me that goddamn' tired-assed "Luddite" rap, finishing off with telling me I just hadn't learned to "embrace" it yet.
Historical precedent? Sure ... Holland, tulips, and the mid 1630s. For more see "Orchidelirium"...
Florida real estate in the 1920s? For more, see the Marx Brothers' Cocoanuts.
Irrelevant.
They make money selling adverts because they are dominant in Social Networking. But it is precarious. They could crash and burn faster than you say "bebo".
So how long does it take to make $115 in Adverts per user? Obviously they are overvalued.
Icon for share price obviously.
One day, when I am terminally bored, I may turn off "adblock" login to my FB account and see what these "ads" actually are. I mean apparently there are $3.xB p.a. worth of them, so they must be both prolific and impressive and impressively "in my face", right?
I see them occasionally if I ever forget myself and look at FB on my iPad - there are dozens of the buggers and it makes me realise I should not browse the web on Ipad Safari until Apple allows an adblock app for safari on a iPad (like that is EVER going to happen!)
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Maybe I'm just skeptical, but I can't see it lasting. More and more users are jumping ship for services such as twitter, and while they're worth something, I think this is a hugely over inflated price. The problem with a site that depends on the whims of teenagers for a large portion of its revenue stream is teenagers are notoriously fickle, and have the attention span of (insert appropriate metaphor here).
...The problem with a site that depends on the whims of teenagers for a large portion of its revenue stream is teenagers are notoriously fickle, and have the attention span of (insert appropriate metaphor here).
Well, I won't speak for anyone else here, but when I was a teenager, I actually had quite a solid attention span, but -- and this was a big "but" -- it had to be something actually worth paying attention to. Granted, it was the early/mid '70s, but even then there was all kinds of electronic media jangle competing for my attention: we'd just gotten cable TV in our area, so there were suddenly shitloads of channels to flip through, plus "Pong" had been released during my freshman year of college...
Good luck to Zuckerberg, if he gets a few bill and a desert island out of it then why not, he wins. I suspect it's on it's way down the drain along with the w2k bug, dot com bubble and numerous other hyped up marketing ploys.. Seems to me is only marketing and people on the dole that like FB, not exactly known for their willingness to click and buy on a new shiny now are they.. Too early ?
It is not a mystery.
It is a market order called "buy on opening". Today everybody who bought the opening is out 4 bucks a share. They don't care 'cause they know it's going to $90 by Halloween. And they're going to double up when it hits $34.
God Bless them everyone. They made Wall Street rich and powerful.
First there were 421 million shares floated and out of that only 43% were offered by Facebook Inc. Now consider that if this was such a great deal, why were the remaining 57% of the shares available from Facebook insiders? My take is that a whole bunch of folks who sold those 240 million shares are pretty happy with their take and many are probably looking to jump ship for the good life.
Seriously folks, if they were expecting the price of shares to rise dramatically, why wouldn't they hold the shares until after the IPO popped and rake in a lot more cash? I'd wager it was because the best value for them was to get paid now.
Not necessarily so.
Let's say you were in at the start of a company like FB and were vested with shares now estimated to be worth a $ billion. You have a $ million dollars in cash and equivalents, but your billion dollars is tied up in stock that is not traded. Then your company announces an IPO.
Do you want to keep all your eggs in one basket or be prudent? Do you cash out half or do you let it all ride for another spin of the roulette wheel and maybe have $2 billion?
If you sell you should sell on IPO day as that's the day that you can sell into a market with more than enough buyers to get out without skewing the price. If you wait a couple months, the amount of stock you're selling will drive down the price and take weeks to get off.
What does the reasonable man do? I know what I'd do.
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But only a little bit different.
Unlike the companies in the previous dot.com bubble, Facebook does make decent profits of around $1bn per year, so the company is certainly worth something.
The only problem with it is the price. It values the company at around $100bn. Why would you pay $100bn for Facebook when pretty much everyone who is likely to sign up for it already has, and there is a risk that existing subscribers might jump ship to something else in the future in the same way that people jumped ship from MySpace and Friends Reunited to Facebook a few years back.
Given the fact the company has reached saturation point, and the risk of something new replacing it, even $10bn would be expensive - that would mean a 10 year payback, and I don't really see Facebook still being around as the market leader in 10 years time. At $3bn or $4bn, I would probably bite.
Attributed to Isaac Newton... the law of gravity!
Only problem, of course, is that this is actually something that he conclusively disproved. If Facebook Shares have sufficiently high upward velocity, gravity, weakening evermore with increasing distance, will not be able to bring the Facebook Shares down. They will be in a 'hyperbolic' orbit.
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