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

[drbubb]

MINUS another Two Dollars

 

Real-Time Quote

FB: $32.03 -2.00 / -5.87%

= = = = = = = = = =

 

Facebook’s in trouble, that’s what.

Now in the crosshairs of public scrutiny, everybody’s taking potshots. And the warnings are just beginning:

. . .

Facebook’s billion ‘friends’ in denial — deja vu the 1999 bubble mania

Behavioral economics is the new “psychology of denial.” Yes, it’s like falling in love. You can’t hear, can’t see the warning signs. Till after....

 

There are four main reasons for this pervasive psychology of denial among Main Street’s 95 million investors: First, investors hate admitting we’re irrational and ill-informed, cling to the fiction they’re rational. Second, optimism is the investor’s worst nightmare, but Americans still act optimistic no matter the odds. Third, Wall Street loves investors who are irrational, uninformed and optimistic, they’re easy to manipulate. Fourth, American investors are by nature trusting folks, want to believe Wall Street’s telling the truth, even though most of the time they aren’t.

. . .

 

Could our friendly Facebook really bring down the economy?

Global economy-killer? Yes, Facebook has now been added to my list of global macroeconomic triggers (deadly unpredictable Black Swans like the dot-coms in 2000, subprimes in 2008) that the denial system driving the collective brain of American investors will simply tune out, till it’s too late. Till a crash takes the economy down again.

 

And, yes, it may take years, or trigger in 2012. We watched the same kind of buildup to the 2008 crash for a few years in advance, as credible warnings were ignored. Yes folks, Facebook is that dangerous to our economy and to the global economy.

 

You think I’m kidding? Not one bit. In fact Facebook is now one of my top-12 economy-killing triggers, any one of which could ignite a firestorm.

 

/more: http://www.marketwatch.com/story/how-facebook-could-destroy-the-us-economy-2012-05-22?link=MW_story_popular

[drbubb]

ZUCK's WAY may be the old way

 

Even before Facebook announced its IPO, the company had two divergent cultures: the hacker way and the Sheryl Sandberg-led corporate minded side, which we learned about via an inside look at the social network from Fortune. "This is a company that operates as two symbiotic halves," wrote the magazine's Miguel Miguel Helft and Jessi Hempel. "One, Zuckerberg’s world, is a meritocratic, coder-led organization that develops the Facebook site; the other, which is charged with making money out of it, is subordinate," they continue. As Facebook moves from small start-up, to giant public company, the Zuckerberg ethos, which he calls the "hacker way," has to answer to the Sandberg-led side. Or it at least has to consult with the money-making schemers when buying up the competition. "These sorts of fast decisions, commonplace among scrappy, private start-ups, get trickier in the more structured world of multibillion-dollar public corporations where Facebook will soon operate," write Raice, Ante and Glazer.

 

But Facebook isn't yet operating in that more structured world and Zuckerberg took advantage with this Instagram deal, leaving the financially driven side out of it. Sandberg knew about the deal, a source told Raice, Ante and Glazer, but she wasn't involved. This one Zuck did alone, taking just three days for solo negotiations with Systrom. "Companies generally prefer to bring in ranks of lawyers and bankers to scrutinize a deal before proceeding, a process that can eat up days or weeks," explain Raice, Ante and Glazer. This was a three day process, with Zuckerberg "negotiating mostly on his own," bringing Systrom down from $2 billion to the final $1 billion price tag. The board, including Marc Andreessen, the second to invest in Facebook ever, didn't know about any of it until after the two had already struck the deal. "Facebook's board did vote on the deal, according to people familiar with the matter, though it was largely symbolic," write Raice, Ante and Glazer. Zuckerberg went rogue, something he won't have as much freedom to do come IPO day.

 

/more: http://www.theatlanticwire.com/technology/2012/04/instagram-was-mark-zuckerbergs-last-hurrah-facebooks-hacker-king/51267/

[drbubb]

FB close: $31.00 -3.03 / Percent Change: -8.90%

 

Meantime:

NEW YORK (CNNMoney) -- Regulators are looking into a report that Morgan Stanley, the lead underwriter for Facebook's initial public offering last week, shared a negative assessment of the social network with major clients ahead of the IPO.

 

/story: http://money.cnn.com/2012/05/22/markets/facebook-ipo-morgan-stanley/index.htm

 

== ==

(It's the 1% versus the 99%, yet again):

 

Facebook IPO shows galactic divide between investors

 

NEW YORK | Tue May 22, 2012 6:33pm EDT

 

NEW YORK May 22 (Reuters) - It's no surprise to anyone that big investors get preferential treatment on Wall Street.

 

Investors expressed disappointment, skepticism and even shock on Tuesday after learning that an analyst at lead underwriter Morgan Stanley cut his Facebook revenue forecasts in the days before the company's initial public offering - information that apparently did not reach small investors before the stock went public and subsequently tumbled.

 

The divide between the research and retail arms of big Wall Street firms has always been deep. A former Morgan Stanley broker described the relationship as being "like Venus and Mars," an allusion to a best-selling book about the inherent differences between men and women.

 

As more details about Facebook's IPO emerge, investors have been finger-pointing, complaining and speculating about what's next for the company, Morgan Stanley and the Nasdaq, which had trouble executing trades on the day of Facebook began trading publicly.

 

Reuters reported late Monday that Morgan Stanley cautioned major clients about revised revenue expectations in the days leading up to the stock's market debut. Facebook shares tu mbled 8.9 percent on Tuesday, closing at $31, or more than 18 below their offering price.

 

"Night and day the institutional clients get things that we don't get," said a Morgan Stanley broker who found out about the revised analyst forecast second-hand from media reports published Tuesday. "It's a big issue."

 

/more: http://www.reuters.com/article/2012/05/22/facebook-investors-reactions-idUSL1E8GMDOC20120522

[drbubb]

"Our mission is not to 'do an IPO', it is to connect the world"

 

 

"Your best friend is suing you for $600 Million."

[drbubb]

3 Reasons Facebook Stock Won’t Soar.

 

Like Facebook, Google is a purely online business with a dominant market share. It makes most of its money from advertising and turns a high percentage of each revenue dollar into operating profits. Its stock was also initially panned by many as too expensive.

 

But there are also some important differences between the two companies that may prevent Facebook from producing a Google-like performance over the next eight years. Here are three.

 

1. Facebook is nearly twice as expensive as Google was following its own stock market debut.

 

When Google came to market in August 2004, it had booked $2.3 billion in revenues over the prior four quarters. The stock ended its first day of trading at a price that valued Google at $27 billion. Those numbers make for a price-to-revenues ratio of about 12.

 

Facebook ended Tuesday with a value of $85 billion, and it has brought in $4 billion in revenues over the past four quarters. That’s a price-to-revenues ratio of 21.

 

Google has found a way to multiply its revenues 17 times since its initial stock offering, to $40 billion. If Facebook can do likewise, investors should expect its stock to do half as well, considering that it’s starting at nearly twice the price. That would nonetheless provide a handsome return for investors. But it may be unrealistic to expect that kind of revenue growth from Facebook.

 

—

2. Google has already plucked the low-hanging fruit.

 

Back in 2004, newspapers and magazines together captured 43.8% of advertising spending, versus just 3.7% for websites, according to Zenith Optimedia. That gap has narrowed. This year, 27.3% of advertising dollars are expected to go to newspapers and magazines, and 18.2% is expected to go to websites.

 

The shift from print to online advertising will continue, but not as quickly.

 

3. The world only needs so much advertising.

 

http://blogs.smartmoney.com/advice/2012/05/22/3-reasons-facebook-stock-wont-soar/

[Peppa Pig]

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

I read that the IPO was taken up mostly by retail investors. Does this not tell us all we need to know:-)

[THEBIGMAN]

Here you all go: This has the grubby fingerprints of investment bankers the world over all over it:

 

http://www.businessinsider.com/exclusive-heres-the-inside-story-of-what-happened-on-the-facebook-ipo-2012-5

 

And more details leak out: http://www.businessinsider.com/facebook-selective-disclosure-2012-5

 

I will eat a tulip bulb tonight in solidarity with the suckers that forgot the first rule: Caveat Emptor!

[drbubb]

Here you all go: This has the grubby fingerprints of investment bankers//

And more details leak out: http://www.businessinsider.com/facebook-selective-disclosure-2012-5

 

I will eat a tulip bulb tonight in solidarity with the suckers that forgot the first rule: Caveat Emptor!

Facebook basically pre-announced disappointing second quarter results, but this information was only shared with a handful of the investors who were considering investing in the IPO

 

Read more: http://www.businessinsider.com/facebook-selective-disclosure-2012-5#ixzz1vnGbtTwD

 

Looks bad, very bad.

Is someone going to wind up in Jail for this?

 

Facebook CFO, David Ebersman.

[THEBIGMAN]

Is someone going to wind up in Jail for this?

 

I believe the usual protocol is to attempt to make a scapegoat out of the office tea-boy. Unless you're particularly corrupt (e.g. Ken Lay, Bernie Madoff), this tactic has a high probability of success.

 

Either that or they'll try this old chestnut:

 

http://www.youtube.com/watch?v=rnqQhUdXgvI

 

[Peppa Pig]

Here you all go: This has the grubby fingerprints of investment bankers the world over all over it:

 

http://www.businessinsider.com/exclusive-heres-the-inside-story-of-what-happened-on-the-facebook-ipo-2012-5

 

And more details leak out: http://www.businessinsider.com/facebook-selective-disclosure-2012-5

 

I will eat a tulip bulb tonight in solidarity with the suckers that forgot the first rule: Caveat Emptor!

100 x earnings. Oh please take my money I want in.

[Perishabull]

100 x earnings. Oh please take my money I want in.

 

There's even a FB stock page on Facebook. Perhaps the folks who bought into the recent IPO can console themselves and exchange stories with one of the 43 people who 'like' this page.

 

 

Someone's posted the following on the 'FB stock' page;

 

excerpt from CNBC.com;

 

"Facebook's Stock May Keep Falling: 'There's No Bottom'

Call it the Friday Facebook Fiasco — or a more colorful alliterative of your choice. Regardless, the chaotic opening of the much-hyped social network's stock scared away investors on Monday—and may keep them away.Talk also lingered over whether <a href="http://data.cnbc.com/quotes/fb">Facebook [FB 32.59 0.59 (+1.84%) ] could monetize its 900-million-strong user base, as well as whether CEO Mark Zuckerberg really cared enough to make sure his shareholders are happy.

 

Overall, the twin worries of Facebook's pricing combined with the shaky mechanics of its trading to create a pungent air of uncertainty around the company.

 

As a result, Facebook opened Monday below its $38 Friday open and moved sharply lower through the day.

 

"They should have delayed it," says Dave Rovelli, managing director of US equity trading at Canaccord Genuity in New York. " They shouldn't have opened until 1 o'clock (Friday), until they fixed the glitch."

 

 

 

The Nasdaq exchange, which houses many of the market's biggest tech names, had trouble matching orders Friday morning and missed the expected 11 am Facebook kickoff.

 

Nevertheless, the stock made a quick move higher at the open, but then meandered through most of the session before finishing modestly higher at $38.23 on a powerful move from underwriter Morgan Stanley to defend the opening price.

 

Now, the stock faces nothing but questions as a market love affair quickly turned to estrangement. Underwriters were left powerless to support the price because the stock opened well below the $38 breakeven level, and rumors swirled that lawsuits would be forthcoming from those who didn't get orders filled properly.

 

"All the buy-side institutions are shorting it. You can get a borrow on it and everyone's leaning all over it. There's no bottom," Rovelli says. "The next catalyst is going to be earnings, which is three months away. So there's no reason to jump in here. You're catching a falling knife.""

 

 

[drbubb]

Let's be CLEAR on this:

 

Any media source that was hypeing FB at the time of the IPO

 

Should be regarded as a Shill or Media whore - not as legitimate media

 

And they should be treated accordingly : No respect, ignored, forgotten, and rubbished

[Peppa Pig]

Facebook should be in singe digits. Best guess about 7.although i wouldnt touch it above 5. I just cannot fathom this situation.

[Perishabull]

http://www.youtube.com/watch?v=7lgO1183C6g

 

So where's the flaw?

 

Well, as far as I gather Facebook is some quite neat code on a server with a large following. At the moment it almost seems still quite cool. Except now that everyone's using it, that could be it's biggest flaw. At some point it may no longer be 'cool' and the next crop of coding kids may trounce it completely with their 'scripts', a bit like Banksy doing one over on Hirst;

 

 

In less than half a generation it could be consigned to the annals of history.

[drbubb]

"Recognise the Flaw"

 

I would have loved to short FB on day one, but that just seemed too risky.

Had puts existed, I would have bought them

 

I week that may live in infamy:

 

 

Is Zuck a skier ?

[drbubb]

I read that the IPO was taken up mostly by retail investors. Does this not tell us all we need to know:-)

Facebook flop hurts small investors' trust in stocks

 

Reuters) - Just when brokers thought Mom-and-Pop investors were getting excited about the stock market, along came Facebook.

 

The 17 percent plunge in Facebook's shares since its ballyhooed debut last Friday, coupled with Nasdaq's mishandling of opening day trading, is spooking the very investors who had seemed the most intrigued by the offering, said Wall Street executives.

 

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

 

"The Facebook IPO is another in a series of data points that feed concerns that the financial markets are not a safe place to be for individual investors," said John Taft, chief executive of Royal Bank of Canada's U.S. wealth management division, one of 33 underwriters of the offering.

 

Brokerage firms have been fighting to restore investor confidence in the markets since the financial crisis of 2008, but trading volume has remained stubbornly weak. Market-shattering events such as the Flash Crash of 2010, the Bernard Madoff scam, last summer's downgrade of U.S. government debt and the European sovereign debt crisis have been pushing investors out of equities into cash or bonds that yield near-zero returns.

 

Anticipation of the Facebook IPO had created a stir of public interest in the offering and in stocks in general. Now, its failure is expected to drive more retail investors away from stocks and further depress trading volume, which lowers revenue at brokerage firms.

 

"YOU OWE ME"

 

Investors poured $33.5 billion of net new money into U.S. stock mutual funds in the first quarter, according to Thomson Reuters Lipper. In the last three weeks, however, they pulled out $16.3 billion.

 

"The Facebook flop didn't help," said Jeff Tjornehoj, Lipper's head of Americas research.

 

"The perception was that something good was going on," said Anthony DeChellis, chief executive of private banking Americas at Credit Suisse, which also had a small portion of the Facebook underwriting. "It could have gotten people interested in the next IPO, but the conversation now is, 'You owe me because of Facebook.'"

 

/more: http://www.reuters.com/article/2012/05/25/us-facebook-retail-idUSBRE84O14A20120525

 

=== === ===

 

A horseshiter, whoops - a broker, who put his client into FB deserves to lose business.

The negative signs should have been obvious to anyone with experience

[Perishabull]

Had puts existed, I would have bought them

 

 

Is that fairly typical for an IPO? Market makers only providing options at some point after the debut?

[drbubb]

Lessons for the Greedy - many will not forget this one

 

 

Facebook Investors Are Bitter, Ponder Next Move : FB's new logo?

 

"I figured: Nothing ventured, nothing gained," said Hines, 61, a retiree and private investor in Boston.

 

Now, he wishes he'd listened to his misgivings. Instead, Hines watched with dismay as the stock languished on its first day, then slid on its second. On Tuesday, determined to unburden himself of a nagging headache, he sold his shares at $32.76, taking a loss on his investment. He declined to say how many shares he'd bought.

 

"I was upset with myself for having been drawn into it," Hines said. "I knew it was grossly overpriced. I could feel it a couple of days before."

 

His son, Brad, also bought shares on the first day, at about $40.50, and was also irritated – with himself and with the investment banks that priced the shares.

. . .

"With a good IPO, the investment banks leave room for the pop," said Hines, a social media consultant. "They didn't do that in this case."

 

/more: http://www.huffingtonpost.com/2012/05/27/facebook-investors-facebook-ipo_n_1548710.html?ref=money

 

The main problem IMHO was that many institutions already owned it BEFORE the IPO,

and because of the bad news at the time of the launch, they saw the IPO as just

a chance to unload the stock.

 

Now there's a big lawsuit, and a Lesson imbedded in investor memories.

 

The new few big web companies that want to go public will pay for this

in a lower IPO price. The bankers will have trouble feeding the hype

[drbubb]

Lessons for the Greedy - many will not forget this one

Facebook Investors Are Bitter, Ponder Next Move : FB's new logo?

Timecapsule Video:

http://www.businessweek.com/video#video=Y4ZDdtNDqg8TphAEAOglHtKLFrYXycEh

 

(go 32/32 minutes in - They talk about the coming Facebook roadshow)

 

There is plenty of nonsense about how FB wanted a "blue chip investor base."

"They want to get the right people in."

"Facebook's IPO could get done in almost any market environment.

It is likely to have a significant coattail effect."

(har-dee-har-har ! what delicious irony!)

 

Instead, the institutions learned enough to sell out to "dumb" retail investors.

[THEBIGMAN]

Good article at the Fool: http://www.fool.co.uk/news/investing/2012/05/29/the-tragedy-of-facebook-how-wall-street-robbed-mai.aspx

 

To be honest, the only people coming out of this whole affair smelling sweeter than roses are the ones that didn't touch this turd with a ten-foot pole.

 

Even the gullible punters who mindlessly dumped their whole net worth into FB stock deserve little sympathy. They were greedy fools too, looking to get rich quick for little effort. They saw that Google and Apple had done rather well of late and couldn't be bothered to do their own research. And boy, were they dumb. They naively trusted some knob-head broker - a profession that makes estate agents and "quality" used car salesman look like the soul of probity. They too, deserve everything they get. Caveat emptor!

 

Looks like the various investment banks have performed the biggest mass-mugging in recent years. I wonder if they'll use their ill-gotten profits to bolster their balance sheets, or if they'll award themselves monster multimillion dollar bonuses this year. Hmmm.... Let me think.....

Ben Graham advised retail investors to keep away from IPOs. Timely advice. Now we know why.

[Perishabull]

Facebook IPO as explained by the resident;

 

http://www.youtube.com/watch?v=jc3_uQHBXUk

[drbubb]

FB has cracked $30 !!

 

$29.55 now, down over 7% today

 

===

In edit:

 

Close: $28.84 Change: -3.07

Open: n/a / High: 31.69 / Low: 28.65

Volume: 77,936,632

Percent Change: -9.62%

 

They need a new symbol, maybe:

 

LFB, for: Losing Facebook

 

Anyone who bought it in the IPO has lost face, and lost money

 

--Facebook shares hit new low as options trading begins

 

--Shares also have been hit by ongoing negative sentiment

 

--Facebook options are second-most actively traded individual name Tuesday

 

/more: http://online.wsj.com/article/BT-CO-20120529-713253.html

[lyb]

To console myself, for seeing once again gold stocks retreating again, I look at the facebook stock.

-8.5% ! This is one more lesson never to invest on something you do not wholly understand.

Does anyone have any guess what the real value of FB is?

[Peppa Pig]

To console myself, for seeing once again gold stocks retreating again, I look at the facebook stock.

-8.5% ! This is one more lesson never to invest on something you do not wholly understand.

Does anyone have any guess what the real value of FB is?

More importantly, don't invest in something that is not supa cheap. Facebook might be worth about 12 bucks. That is assuming the brand is truly competition proof, as with eBay and Google and amazon. Otherwise, worth about 6 bucks. I would interested in Facebook between say $4 -$8. I restate my original belief that this stock will trade in single digits.

[Peppa Pig]

Good article at the Fool: http://www.fool.co.uk/news/investing/2012/05/29/the-tragedy-of-facebook-how-wall-street-robbed-mai.aspx

 

To be honest, the only people coming out of this whole affair smelling sweeter than roses are the ones that didn't touch this turd with a ten-foot pole.

 

Even the gullible punters who mindlessly dumped their whole net worth into FB stock deserve little sympathy. They were greedy fools too, looking to get rich quick for little effort. They saw that Google and Apple had done rather well of late and couldn't be bothered to do their own research. And boy, were they dumb. They naively trusted some knob-head broker - a profession that makes estate agents and "quality" used car salesman look like the soul of probity. They too, deserve everything they get. Caveat emptor!

 

Looks like the various investment banks have performed the biggest mass-mugging in recent years. I wonder if they'll use their ill-gotten profits to bolster their balance sheets, or if they'll award themselves monster multimillion dollar bonuses this year. Hmmm.... Let me think.....

Ben Graham advised retail investors to keep away from IPOs. Timely advice. Now we know why.

 

Hasn't the fb IPO been just totally astonishing !!!