Pump and Dump ladies and gentlemen
Pump and Dump
Facebook co-founder Dustin Moskovitz has sold over 1.3 million of his shares in the social network over the last two weeks. Moskovitz converted some of his Class B shares - the kind that carry voting rights - into Class A shares and has been getting rid of stock at 150,000 shares a day since a couple of days after the first …
A great(ish) idea to begin with, sucked loads of users into the vortex, but the generations that come along soon afterwards find it not so "kool" to sign up to a network that their parents are so fond of. Move along a few more generations and you reach saturation point don't you ? Maybe that was the point of the flotation, they figured that they had reached, of even gone past, that point. Now they have to milk the punters they have for all their worth. That's my impression any way. I don't even know or care how long it's been going but these things can't be ageless can they ? Thinking about it, it would be frightening if they were!
Ah, come on, you can do better than that.. Murdoch and Myspace!
Stolen from Wikipedia, fount of all things truthy:
"Myspace was founded in 2003 and was acquired by News Corporation in July 2005 for $580 million... In June 2011, Specific Media Group and Justin Timberlake jointly purchased the company for approximately $35 million."
You're welcome.. yes, schadenfreude cake is my favourite, too.
20$ for the servers? Doesn't it cost more to dump them these days?
The metals recycling business I take my scrap metals to accepts circuit boards and power supplies for roughly scrap-iron prices. Together with the chassis this means between 5 and 10 Euros per system; you just have to separate them into plastics (worthless, but no disposal fee), metal and circuit boards/cabling. With a bit of effort you can keep the fridge well-stocked with beverages and snacks from systems people want to get rid of.
Selling 1/6th of your holding in a company that constitutes the majority of your wealth is just sound financial management. This isn't like Thiel's offloading of most of his holding.
The problem is that few people now have a good opinion of the stock. I think if you didn't have so many holding on thinking it can't go down even further and planning to sell at the first hint of upturn it would be even worse.
It turns out that eyeballs don't mean prizes. Who could have predicted it?
You have to be somewhat bullish to say the least to buy into stock and shares in these uncertain times. Facebook always looked like an over-hyped company. Its flotation doubly so. Indeed the only ones who will be left hanging their heads in shame is those foolish enough to stump up the cash at the height of the bubble.
When its going down, there is almost no bottom. Residual value is very limited as its actually a pretty small operation. Its chief exec is a loose cannon who can and has spunked no less than a billion on another small company. Sooner or later they will have to dump him, or he'll leave in a huff.
How 'cool' is that?
The latter. Facebook has no feasible way to generate money in the short, medium or long term. They don't have the advertising synergy that sent Google stratospheric, and they have no other potential stream of income.
Think about this. When you search for a big-ass TV on google, you don't mind getting adverts for big-ass TVs. In fact those advert can actually be useful, so there is a good chance of a click through, and even a sale. When you are going on facebook to update your status to having a dump, or upload some more kitten pictures, there is no advertising that has synergy. Should facebook advertise toilet rolls when you are updating your status to having a dump? There is also a timing thing. Google you enter some information which they can use to give you the product (search results) and matching advertising (advertising synergy). On facebook, often the entering of the information is that last step in the process. Everything else is done through click-throughs and browsing, from which it is really difficult to target advertising.
I agree AC, at least as they currently do it. But they do have huge potential for targeting ads for what people have written about. Not far off Google displaying ads relevant to what they glean from you reading your emails. If they ditched their CE like suggested above, brought in some expertise from goolge they could turn it around a bit.
There's one born every minute. The funniest/saddest part of this story (so far anyway) is that Goldman was dealing this slurry over the counter before the IPO to all the other dads who were late to the disco.
When the parents turn up, as has been pointed out somewhere here, the party is over, and the guy with the dope is long gone.
Some interesting tech was done. But FB racked up some heavyweight recurring costs in the process, hiring darlings from Google, building a very nice data centre on the arctic circle, buying Instagram and Opera, and other daily essentials. In the long run (...) it has to cover those recurring costs from revenue, like a grown-up. Not from capital, like a trustafarian.
Can it? I confess I have not checked. But who cares? The fees have been paid, the outs have been cashed, and everyone who's anyone is a winner.
A much more interesting question is what all those zuckers will have learnt when the sell side suits next come calling.
Owning stock is not like owning a pet; you are not obliged to keep it. Anyone who suggests otherwise should apologizing for not framing their Amazon gift cards and hanging them on the wall rather than redeeming them
If it is insane to pay $30/share for Facebook, it is equally insane not to take that money if someone solvent offers that deal.