Jump to content
drbubb

FACEBOOK at $38, FB = $104 Billion. Is it overvalued?

Recommended Posts

Early FB backers cashing out - says Bloomberg

 

Wait until it is public, then the "rush for the exits" will really start

=== ===

 

Meantime: GM thinks FB ads are poor value

 

The Real Reason GM Left Facebook

Forbes - 8 minutes ago

 

So GM is pulling its $10 million Facebook ad budget and we all are now left to ponder who will be next, right?

In their official statement GM ...

. . .

See, somewhere along the way to IPO nirvana the folks at Facebook forgot the one cardinal rule in advertising – always keep the client happy and do whatever you can to please them.

 

/see: http://www.forbes.com/sites/marketshare/2012/05/17/real-reason-gm-facebook/

 

Highly Cited:

GM Says Facebook Ads Don't Pay Off‎ Wall Street Journal

Share this post


Link to post
Share on other sites

Is there anyone here who thinks FB shares will be a Good Buy?

 

(Rather than a Good-Bye - to your money)

 

pink_my_lips_kiss_it_good_bye_mousepad-p144135998257883055envq7_400.jpg

Share this post


Link to post
Share on other sites

IT is $38.00 !!

==========

 

Facebook sets bar high for huge IPO

By Brandon Bailey and Peter Delevett

 

After months of anticipation, Facebook on Thursday set the share price for its first public stock offering at $38 as the social networking giant made final preparations for a record-breaking market debut Friday.

 

At that price, the planned stock sale is expected to raise $18.4 billion for the company and some early investors, making it the second-biggest offering of any U.S. company in history in terms of dollars raised, behind Visa's $19.6 billion debut in 2008.

 

More significantly, the price sets a total value for Facebook at $104 billion, giving it a greater worth than any other U.S. company at its stock market debut.

 

/more: http://www.mercurynews.com/business/ci_20648435/facebook-sets-bar-high-huge-ipo

=== ===

 

What do you have when you add the word "greedy" to "bastards" ?

Answer FB's IPO

Share this post


Link to post
Share on other sites

FB will probably do okay when launched.

 

But after a surge of a few days, I could see a long slide in the price.

 

Too many people own it already. And expectations are way too high.

 

Eventually, FB may stand for Fabulously Bad

 

Here's Ocado's chart since IPO in Jul 10. This company was absolutely overvalued given it's losses and no real outlook for profits (and given that 3 Goldman Sachs alumni were selling it off!). The market seemed to get it immediately that it had been duped dropping 30% over the first 3 month. However there were some suckers left with a 150% rise from month 4 to month 6 to 275p. Then over the next 12 months (18 months post IPO) a crash of 80% from 275p to 56p.

 

Who knows what was going on in the background to convince people to buy or sell at any given moment but one hell of a whipsaw ride in the meantime with true value showing out in the end. Though at 116p one could argue this is still overvalued

 

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=UK%3AOCDO&insttype=Stock&freq=2&show=&time=10

Share this post


Link to post
Share on other sites

One of the main characteristics of a bubble is that it is only generally recognised as a bubble after it ceases to be;

 

Searches on google for "Facebook bubble";

430f9807.jpg

 

There isn't enough news reference volume to gererate a result and therefore not many articles likening Facebook to a bubble.

 

Curiously, searches for "Facebook bubble" seem to be higher in Macedonia than anywhere else;

 

8c2dd978.jpg

 

There could be something else behind that of course.

Share this post


Link to post
Share on other sites

Tom at Bloomberg on the FB chart: "It's UGLY !"

 

As it gives up gains.

Share this post


Link to post
Share on other sites

FB has bounced from those "it's ugly" lows, dragging the Dow back up too

 

If FB closes DOWN on the day,

Will all the other Social Networking Cr@p get hit too ?

 

"Zynga halted again" - twice already today

== ==

 

 

This looks like Last Second dotcom all over again, on a bigger scale

 

 

"Sheryl (Sandberg) is an AMAZING person" - on Bloomberg.

(Once the stock is down 40%, she may get forced out.)

 

FB : Fatuous Bvllsh/t

 

fat·u·ous

   [fach-oo-uhs]

adjective

1.

foolish or inane, especially in an unconscious, complacent manner; silly.

2.

unreal; illusory.

Share this post


Link to post
Share on other sites

If FB closes DOWN on the day,

Will all the other Social Networking Cr@p get hit too ?

 

"Zynga halted again" - twice already today

 

Zynga stock crushed by Facebook IPO

 

Trading in the social game company has been halted after its stock fell 13 percent following the Facebook open. by Eric Mack May 18, 2012 9:07 AM PDT Follow @ericcmack Right now plenty of folks at Zynga are likely wishing this whole stock market thing ...

Share this post


Link to post
Share on other sites

This has to be a "disappointing" start for FB shareholders

 

FB: 38.2318 / Change: +0.2318

Open: 42.05 / High: 45.00 / Low: 38.00

Volume: 580,587,742

Percent Change: +0.61%

 

Only MS's "defense" kept it above $38.00

===================

 

Reuters) - The historic initial public offering of Facebook Inc did not go as planned on Friday, as the social networking company's sky-high valuation combined with trading glitches left the stock languishing near its offering price at the market close.

 

Facebook shares began trading late Friday morning and opened 11 percent above the $38 offering price, but after peaking at about $45 slid rapidly at the end of the day to close at $38.23. The IPO was the third-largest in U.S. history and valued eight-year-old Facebook at $104 billion.

 

The surprisingly weak debut of a stock that analysts had predicted would climb between 10 and 50 percent is not likely to dent the business prospects of Facebook, which boasts 900 million users and is upending business practices and social relationships around the world.

 

But the unexpected developments were a clear setback for Morgan Stanley, the lead underwriter on the deal, which sources said was forced to defend the $38 price level by buying shares on the open market. Many market participants said they expected the stock to remain under pressure next week.

. . .

"The underwriters got greedy on behalf of selling shareholders and bumped the price high enough that they didn't get much of a bump on the first day," said Bill Smead, chief investment officer at Smead Capital Management, which did not buy Facebook shares in the IPO. "They increased the size of the deal and that really did a number on it."

 

Skeptics have argued all along that a valuation of more than $100 billion -- about equivalent to Amazon.com Inc and exceeding that of Hewlett-Packard Co and Dell Inc combined -- was far too high for a company that posted $1 billion in profit and $3.7 billion in revenue in 2011.

 

/more: http://www.reuters.com/article/2012/05/19/us-facebook-idUSBRE84G14Q20120519

Share this post


Link to post
Share on other sites

ARE WE PAST THE PEAK ... In Fatuous Bvllshite ?

 

(you would have thought a professor in Behavioural Finance could know BS when he sees it)

 

Facebook Dashes Faith / By AL LEWIS..

 

I overestimated the ordinarily reliable powers of greed and unbridled hyperbole.

. . .

The Nasdaq stock market, which appears to have bungled Facebook's opening by mismanaging order flow.

 

I thought Facebook's IPO would overcome this folly because I was betting on America's often unwarranted optimism. I saw the IPO as a Rorschach test that people would read into whatever they wanted.

 

"It is one of the most interesting companies that ever existed," Duke University's Dan Ariely told me. "So there's the freedom to create any story you want."

 

How's this for a story? Nearly one out of every seven people on the planet is hooked into the social network, so it can basically do anything: Facebook will end all wars once everyone on the planet becomes "friends;" Facebook will replace fossil fuels since we never have to meet anyone in person anymore.

 

What other company in history became a hit Hollywood movie before its IPO?

 

Mr. Ariely is a professor of behavioral economics, a field that probes the depths of human irrationality in the marketplace. For a while it looked as though irrationality would overcome every obstacle in Facebook's path. But underwriters stepped in to support Facebook at its $38 offering price. It opened Friday at $42.05 and closed at $38.23.

 

I saw Facebook's IPO as an escape from global misery. A chance to pretend things weren't so bad. An opportunity to ask "what if?"

 

/source: http://online.wsj.com/article/SB10001424052702303360504577412062324658978.html?mod=googlenews_wsj

=== === ===

 

 

The destruction of FB's share price, would be a triumph of truth and light against Wall Street Media hype.

Let's help it along !

If the WS underwriters wound up eating a loss, wouldn't that be wonderful

Share this post


Link to post
Share on other sites

FB's BIG PROBLEM : The Institutions gorged on the trade BEFORE the IPO

 

FB / Facebook's Trading on Day One ... 1day-trade : 2-days : 5-days : 10-days

 

fbday1.png

 

Why did Facebook get a relatively slow start out of the trading gate? One possibility is that the investment bankers who priced the stock considered the history of private trading in the shares before the offering. Facebook was unusual in this way, Laszlo Birinyi of Birinyi Associates pointed out last week.

 

“There was trading before the I.P.O., so many investors have some feel, some idea of pricing,” he noted. Most offerings are priced based upon what the company and its bankers guess the stock will fetch.

 

Indications are that Facebook was bought primarily by individual investors, not institutions. Indeed, institutions that had invested early were big sellers in the I.P.O. To many market veterans, this showed that the smart money was getting out while the getting was good.

 

/more: http://www.nytimes.com/2012/05/20/business/in-facebook-stock-rush-fanfare-vs-realities.html

 

 

WHY was the important fact (that Institutions ALREADY OWNED FB) not SHOUTED FROM THE ROOFTOPS by the media?

Because they are mostly paid-for whores

Share this post


Link to post
Share on other sites

FB has bounced from those "it's ugly" lows, dragging the Dow back up too

 

If FB closes DOWN on the day,

Will all the other Social Networking Cr@p get hit too ?

 

"Zynga halted again" - twice already today

On FB's IPO Day : FB got off lightly

=======

FB--- / Facebook : $38.23 + $0.23 +0.61% / OHL: $42.05, $45.00, $38.00

GRPN / Groupon : $11.58 - $0.83 - 6.69% / OHL: $12.49, $12.50, $11.33

LNKD / LinkedIn : $99.02 - $5.93 - 5.65% / OHL: 106.17, 109.50, $96.60

YELP / Yelp Inc.- : $18.64 - $2.63 -12.36% / OHL: $21.26, $21.89, $17.70

ZNGA / Zynga-A : $ 7.16 - $1.11 -13.42% / OHL: $ 8.47, $ 8.79, $ 6.40

Twitter (Private)

===========

4-stocks, ave. drop : - 9.53% : That's a big bubble going "Pop!"

 

 

The Web-ster sheeple were too optimistic:

 

 

Twitter predicts Facebook's first closing day price

 

Early crowdsourced prediction puts end of day price for Facebook at $54. So the shares have a ways to go yet.

 

by Eric Mack | May 18, 2012 9:17 AM PDT

 

The Facebook IPO is off and running on the NASDAQ exchange. When the social network's stock started trading under the ticker symbol FB just around 11:30 a.m. Eastern today, the first trades of the new stock came across at $42. About the same time, the crowd of prognosticators on Twitter were predicting the stock would end the day at $54.

 

/source: http://news.cnet.com/8301-1023_3-57437110-93/twitter-predicts-facebooks-first-closing-day-price/

 

They believed the hype, and FB closed -29.2%% below their expectation.

 

boxing-inflatable-clown1.jpg

 

Quite a number of Private Equity Bozos holding Social Media stocks, are going to have to writedown their investments, if this meltdown continues.

 

Private-equity firm Cerberus Capital Management owns 8.7 percent of FB.

But the greater impact will be the indirect knock-on effect which may come from lower valuations

Share this post


Link to post
Share on other sites

FB 'BOUGHT OFF' EVERYONE on Wall Street - with record ipo fees

 

Who's the fool in the Facebook IPO? It may be you

 

Bankers' fees for the flotation total about $100m. Is Facebook being conned – or is it ultimately someone closer to home?

Share86

 

So who's the sucker in Facebook's initial public offering (IPO) today?

Any banker will tell you that there is a fool in every trade, which is why you must always know who the fool is, because if you don't, the fool is probably you.

 

A range of candidates suggest themselves, of whom the most obvious is Facebook. Earlier this week the New York Times reported that the company is paying the bank Morgan Stanley around $35m for its work on the deal. Practically every other major global bank is in on it, too, bringing the total bankers' fees to an estimated $100m.

 

Why would Facebook pay so much? In its continuing Voices of Finance series the banking blog spoke to a former managing director at a major bank. For years he was the opposite number of those currently managing Facebook's IPO, making £1m a year. It's simple, he says. Corporations pay such huge fees because the global investment banks form "a cartel".

 

According to free market theory lucrative fees attract newcomers, which drives down prices. But the barriers to entry for new banks are huge, and CEOs at corporations would "rather pay up than go into business with somebody no one's heard of. Reputation is decisive. What's important for a CEO is getting the deal done, not keeping costs down; what's $50m between friends?"

 

There's an analogy with selling your house, he says. "In the supermarket you diligently compare the price of two packets of tea, with real estate agents you suddenly put up with huge fees. You know they are all the same and do nothing special. But you just don't dare doing it without them." He adds: "If corporations saw how easy most of our work was, they would weep."

 

But why did Facebook engage so many banks? Two reasons, says the MD, one openly talked about, one an open secret: "Banks have different client bases – relationships with particular investors. More banks means more coverage. Two: each bank has research analysts writing reports for investors recommending them to buy or sell a share. With all the top analysts from all the big banks on board, you won't get dissenting voices".

So is Facebook today's fool? Not so fast. Buying off dissenting voices is a necessary element in creating the impression that the IPO is unanimously popular and incredibly oversubscribed, and therefore "hot". The MD: "If a share was really 'hot', we'd give it to big institutional players in exchange for favours. Allocating 'hot shares' is essentially giving someone money – you know the stock price will shoot up once trading starts."

 

The favours from big players were never explicit, he explained. Institutional investors would give his bank extra business, say, directing trades its way so the bank made commissions. Or they'd help the bank out by placing an order on another IPO that wasn't hot.

 

/more: http://www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog/2012/may/18/facebook-ipo-banks-role

 

Let's expose the corrupt practice here.

 

Even Zuckerburg was duped, because he still has most of his shares,

and will have to live with what may be a big disaster in the future share price.

Share this post


Link to post
Share on other sites

Negative articles are beginning to come out

 

Banks spend big to prop up Facebook shares on first day of trading

 

19F_FACEBOOK_IPAD--525x400.jpg

 

The banks working on the massive $16 billion IPO, including Morgan Stanley, JPMorgan Chase and Goldman Sachs, did their duty by buying up large blocks of Facebook stock toward the end of the day to support the price.

 

Facebook shares opened up 11 percent at $42.05, and traded as high as $45, before running out of steam, disappointing investors hoping for a big first-day pop. The shares closed up just 0.6 percent at $38.23.

 

Without the bank bailout, Facebook’s IPO would have been a loser on the day, Wall Street insiders said.

 

The heavy buying, however, cut into the banks’ already meager fees on the deal. The underwriters agreed to accept a smaller cut — just 1.1 percent of the $16 billion Facebook raised in the IPO — in order to land the high-profile assignment.

 

After splitting $176 million in fees, the firms likely spent more than they made in fees by buying the swooning stock. Sam Hamadeh, CEO of research firm Privco, believes the banks spent around $380 million on Facebook stock.

 

“On the heels of JPMorgan’s $2 billion ‘hedging’ trading loss, tThe underwriters have used up all the fees they made on the Facebook deal just to buy and prop up the stock to prevent a busted IPO,” said Hamadeh.

 

Another source said that the banks took a substantial hit yesterday, which started strong despite glitches that delayed Nasdaq trading in Facebook shares by 30 minutes past their 11 a.m. scheduled debut.

 

While there was plenty of finger-pointing yesterday, many blamed the bankers for setting the price too high to allow for upside. The IPO share priced at the high end of the $34 to $38 range, which had been raised from an initial range of $28 to $35.

 

The bankers were wary of pricing the shares too low, leaving money on the table and leading to an outrageous first-day pop. They were shooting for a modest first-day gain in the range of 5 percent to 10 percent.

 

Still, some observers heaped scorn on Facebook insiders who dumped their shares, saying it was a red flag that weighed on the stock.

 

Read more: http://www.nypost.com/p/news/business/street_saves_face_s8IeRdFUeQrmKDe2S7MhBK#ixzz1vOv5MqJR

Share this post


Link to post
Share on other sites

Facebook Flops: Look Out Below!

 

By ANDREW BARY | Barrons

 

The most anticipated tech IPO of all time fell flat on Friday, finishing up just 0.6%. If underwriters don't support the stock, Facebook could fall below its offering price.

. . .

The big question is whether the underwriters will continue to support the stock this week.

. . .

If the deals don't trade well initially, institutions often sell quickly to lock in whatever profits they can. That might have been the case Friday as Facebook trading volume was heavy at 574 million shares—21.4% of the Nasdaq composite's total volume.

 

It may turn out that Facebook ends up fizzling like General Motors (GM), which went public in a highly touted IPO in November 2010 at $33 and now trades at $21. The lack of a big "pop" in Facebook prompted a sell-off Friday in social-networking stocks like Zynga (ZNGA), Groupon (GRPN), and LinkedIn (LNKD) and contributed to an afternoon decline in the major averages.

 

/MORE: http://online.barrons.com/article/SB50001424053111904571704577410421435718852.html?mod=BOL_hpp_mag

 

FB has been "trading" as a unquoted co. for a long time

 

FBvsSandP500-590x430.png

/source: http://blogs.ft.com/tech-blog/2012/05/facebook-ipo-liveblog/#axzz1vP7zK5kC

 

Where's the support?

 

BA-AY828D_faceb_D_20120518181203.jpg

 

The chart suggests $30-31... maybe

 

Or Lower:

 

Investors, beware. There could be an enormous amount of stock for sale between now and year-end, when capital-gains taxes may rise, because lock-up restrictions on 1.8 billion shares expire between August and November. Existing holders paid an average of just $1 per share. Heavy sales could pressure the stock

Share this post


Link to post
Share on other sites

I find this interesting - Facebook flotation: How the others fared

 

In short - a BBC report on previous tech IPOs - but where the only examples gives are the ones with multiple-fold returns (google, yahoo, linkedin, etc). Where are the groupons, pandoras, zyngas or lastminutes? Let alone the webvans, pets, etoys, etc...

 

Hopefully this is just dreadful journalism - I do wonder, however, if the author has put a nice spreadbet on the price going higher on the IPO...

Share this post


Link to post
Share on other sites

FB down about $5 today !

 

That's more than 12%

Share this post


Link to post
Share on other sites

Really?

 

Looks pretty weak to me ... FB-update

 

== ==

FB / Facebook's Trading ... 1day-trade : 2-days : 5-days : 10-days

Share this post


Link to post
Share on other sites

Really?

 

Looks pretty weak to me ... FB-update

 

No, I "liked" your comment that it's down 12%! (I should've quoted it). I think it is/was way overvalued at £100 billion. It'll be interesting to see how it plays out over time, perhaps a giant pump and dump.

Share this post


Link to post
Share on other sites

...It'll be interesting to see how it plays out over time, perhaps a giant pump and dump.

Indeed.

I think it is a P&D operation.

 

Too many institutions had already bought it BEFORE the IPO

They were all busy "talking it up" to the press, hoping to sell it higher

Share this post


Link to post
Share on other sites

Looks pretty weak to me ... FB-update

FB close: $34.03 -4.2018

Percent Change: -10.99%

 

For unhappy Facebook shareowners who weren't paying attention:

 

Facebook originally set a price range of $28 to $35 for its IPO, which would have valued the company at $95 billion at the high end. Last Tuesday, though, it increased the price range to $34 to $38 per share, valuing the company at as much as $104 billion.

 

Then, responding to extraordinary demand from prospective investors, the company announced on Wednesday that it would add 84 million shares to the offering. The shares came entirely from the company's early investors — such as Goldman Sachs and venture capitalist Peter Thiel. The fact that these investors were offloading more stock instead of hanging on to it may have served as a warning sign to new investors.

 

"The late addition of 84 million shares to the offering overwhelmed demand, limiting the first day price," Pachter said in a note to investors.

 

/source: http://www.google.com/hostednews/ap/article/ALeqM5jyqy0up35_If5VbyV9Lnpp6hPQtQ?docId=16d75666ffb245f7aaf176d897fb145d

 

Next time, keep ontop of the news, and maybe read threads like this one

 

There's an old saying on Wall Street: "When the ducks quack, feed them!"

The retail investors quacked and Wall Street fed them all they could eat.

Share this post


Link to post
Share on other sites

PEAK OF SELFISHNESS - Are we now past it ?

 

This is a selfish social media bubble. TechCrunch's Alexander Haislip reiterated this point quite well over the weekend. "Facebook’s rise is great for Zuck, but unless you’re among a privileged few, it isn’t good for you," he wrote, explaining that the social network doesn't add much to the economy -- a point we've made before. From Haislip:

 

 

The wealth created by Facebook gets concentrated into the hands of a few—some of whom have refused to pay taxes on their gains—instead of being recycled into the greater economy. And the computer makers that supply Facebook rely on components imported from other countries, sending capital abroad and weakening our balance of trade.

 

And with the stock going the way it is, not only will the rest of the economy miss out on the benefits of a bubble, but other social media companies will miss out, too. Facebook's big IPO debut was supposed to further hype social media as a thing in which to invest. When Facebook got its big valuation, the stock market was supposed to eat up anything "social media." Facebook's thud just ruined those chances for everyone else. We saw how Facebook's stock effected Zynga on Friday. Even if Facebook recovers and goes on to be the next Apple of the stock market, the rest of the social media world won't.

 

But, it's not even clear Facebook will recover. See, there's another selfish thing about the social network: It doesn't add much of anything to the world.

 

/more: http://www.theatlanticwire.com/technology/2012/05/facebook-droops-and-bubble-bursts/52600/

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×