Slashdot Mirror
Facebook IPO Stumbles Out of the Gate
Facebook's much-hyped IPO kicked off today, but an anonymous reader points out that things didn't go quite as smoothly as investors hoped. "Public trading didn't get underway until about 11:30 a.m. ET, half an hour after it was supposed to. The delay was likely caused by the huge amount of interest in the stock – especially by retail investors. In the first few minutes of trading, Facebook shares were only up between 5 and 10 per cent and by noon were essentially back down to the IPO price of $38. Many observers had expected the stock to double in price by the end of the day, if not sooner." The NY Times has a data visualization showing how Facebook's IPO compares to other tech IPOs throughout the years, and how the first day of trading treated all of those companies. Meanwhile, the debate is lively over whether the social networking giant will be a good investment. "The banks helping take Facebook public want us to value this 8-year-old upstart at as much as $104 billion, more than Disney or Kraft Foods, though those companies earn three and four times more. That top valuation is also more than 100 times Facebook's earnings last year, versus 13 times for the average company. At such a high price, it will take years for this so-called earnings multiple to fall to a more reasonable level, and that's assuming the company can maintain its torrid earnings growth."
Facebook hasn't yet really spent time on monetization. Their primary goal has been quick growth and they have greatly succeeded in that. Yes, there are ads and similar, but they are not yet at the level they could or even should be. Thus it's useless to try to compare to Facebook's earnings. And this is how the game is played, and what even many slashdotters want - make a great service first, and only then focus on profiting. It's not like Facebook is going to run out of cash, they still have great income and assloads of banks and venture capital ready to kick in if needed.
I do have to applaud Mark Zuckerberg. He is definitely a geek that made it, and at such an young age too. I know slashdotters are jealous and hate him, but boy is he something. He even shows the typical geeky attitude of wearing whatever clothes he wants, even to business meetings with banks! Give the guy some credit where due.
(points) Ha ha!
Whatever, I got in early, expected small fall and shorted. Made $3.23 per share and bought for $25000. Nothing spectacular, but overall a nice profit for a day's work.
A bunch of investors throwing tons of money after dot-com companies on the belief that these companies, despite having no earnings, would somehow grow big. Then in 1999-2000 the bubble burst.
Today's investors are not going to make the same mistake of going after another dot-com company that has almost no earnings. The memory of 13 years ago is still too fresh. (Plus many of them are probably short on cash due to the ongoing recession.)
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
announced this IPO, I was skeptical. Then they amended it, eight times (I think). Now, it seems to me that we've blown a rather large bubble - as the article says, this 104 billion is 100X their earnings last year. I wonder which set of retirees or naive persons will lose their asses on this one when it pops.
I remember when, recently, myspace was quite large. Does anyone else have a myspace page still? Now imagine if you owned 100 shares of that company. . . . . Now imagine your investment person has most of your retirement tied up in that company. . . .
Thoughts?
I'm bummed out that Put options on this overpriced turkey won't start trading for six days. (The mechanics of genuine Shorts are too ugly for my taste.)
A company issues an IPO and the closing price ends up at the same price as the IPO price? Not only is this not "stumbling out of the gate", but it means it was done right. If the price jumps too much, the founders of facebook lost out on a lot of money. If it drops, then the initial investors were suckers.
Whether Facebook is able to increase earnings remains to be seen. My gut is it will increase substantially, but not enough to justify the current P/E ratio once risk is factored in. But others think the opposite. So, the investment bank did a very good job in pricing.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
FB knows your stated desires. GOOG knows you're hidden desires. FB gets you when you're goofing off. GOOG gets you when you're actively seeking something and you're ready to buy.
GOOG is undervalued.
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN, to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
"Flyin' in just a sweet place,
Never been known to fail..."
They NAILED the IPO, and neither undersold the stock(like LinkedIN did) and lose money that way nor did they value it too high and scare off any potential investors. I'm surprised and impressed.
Sure, for the guys holding the stock at FB it's a letdown, but the company nailed it.
She: Hey, are you a traitor? Me: No, I'm atheist.
Paid to post.
The press coverage of Facebook's IPO is completely idiotic. For years the investment banks have been sticking it to companies doing IPOs. If the stock gets sold at $38 and it ends the day at $100, that means the company *should* have raised more than twice as much as it did. And it means that the employees participating in the IPO also got shafted. The people who benefit in that scenario are the privileged investors who get to buy at $38 and sell a few hours later at $100.
If Facebook ends up close to $38 at the end of the day, it will be a rare example of the stock having been priced correctly at the start. Where it goes from here is anyone's guess, but I have increased respect for Zuckerberg. Google had a different IPO process but also didn't give away a lot of money. They knew what the banks were trying to do to them.
3 comments in your entire account history and they are all in this article. You stink.
I went to eat some animal crackers and the box said, "Do not eat if seal is broken." I opened the box and sure enough..
I'm terrible with money (poor impulse control, I don't think it's because I'm credulous, stupid, or have poor instincts although I guess I wouldn't know), so I don't have the cash to invest in this, just like I didn't with Google or Apple, when people were poo-poohing that stuff too. I realize there's confirmation bias and all, but I haven't made a prediction that turned out wrong yet (I thought people were crazy for buying MS stock in early 2000, that's the only other thing I've been willing to predict), so I'm posting this to give me an opportunity to be wrong:
Buying Facebook stock now will result in making a bunch of money.
If I'm wrong in 5 years, feel free to rub my nose in this post.
<xml><I><am><so><damn>Web 2.0</damn></so></am></I></xml>
Eh, nowhere it stays Facebook's shares crashed. In fact it raised quite fast, and then again lowered down to slightly higher level than the initial $42.05. Let's not also forget that Facebook valued them very highly to begin with, which is one of the main things even slashdotters are crying about - it's not going to rise much higher, since they probably put it into a sweet spot already.
Facebook has no revenue potential as a media company. The idiots that believe in Facebook are clueless wall-street tech nerds, not savvy media professionals. Social media sucks to build brands with.
Why would any advertiser place their ads on Facebook next to a picture of their friend from high-school throwing up, when they can place their ad in traditional print media next to a picture of Kate Moss in Vogue or on TV next to Leighton Meester in Gossip Girl?
This is the fundamental problem with social-media: it's value as media is very, very low. The only possible ads that may possibly work with social media are transactional local ads, NOT national advertisers with brand names to protect.
Of course, most people aren't media professionals, and will buy into the hype and think Facebook has miraculous untold trillions to make from advertisements, causing this IPO to skyrocket.. but wait a few years, when advertisers start to pull out as they all try and fail in their attempts to market through Facebook.
Seriously, Facebook is the equivalent to the comments section on YouTube or any other mildly retarded site that relies on public input. Why would any intelligent advertiser place their ad in media created by average people, instead of by professional producers?
Anyone can reach billions of people for cheap. (ever try email marketing?) The problem is reaching the billions of people in a positive way for your brand. Do it wrong, and it becomes brand-destroying SPAM.
I like Facebook and all, it's just that I don't think they'll be able to compete against the REAL advertising industry. They need to do something else to monetize, like sell Facebook credits or photo hosting or other media..
has no clothes....
No comments about Zynga, the makers of Farmville, tanking?
Twice during the day (so far), their stock dropped more than 10% in 5 minutes and resulted in a halt to trading.
http://money.cnn.com/2012/05/18/markets/facebook-social-media-stocks/
Learning HOW to think is more important than learning WHAT to think.
I'm curious if price discovery is accurate right now since NASDAQ isn't delivering execution notices for FB orders. I know eTrade was down earlier (even the public website) and Fidelity has a notice that FB trades are stuck and have been since it started trading.
All that makes me curious how many orders are stuck out there in limbo land? Will people find out tomorrow that the order they thought was cancelled got filled?
Seems like a big screw up that NASDAQ doesn't want anyone to know about. I don't think you could have mishandled an IPO any further.
Natural != (nontoxic || beneficial)
Can anyone who keeps more track on the stock market tell me if my suspicion that the stock buyers are slowly learning that a hyped (tech) IPO initially only benefits those already with stock?
The stock market really feels like a game and people are slowly learning the rules.
Also, I think part of the problem with facebook is that it is so well known. A large part of the US (and the world) has a facebook account so most people know what the deal is about. I think that many can accept that there is value in the company in itself and the service for the users. However I also think that many find it problematic to "monetize" on it. Since the company really only have one product, the site, thinks can get sour quick if the users start to leave.
+1.18 / +3.10%
If they close in the red there first day of trading, what will it mean to investors and facebook?
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Face what?
Ubuntu Unity
.
I wonder if Mr. Zuckerberg knows that the Internet has beat him to it.
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN, to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
Your link doesn't support your statement at all. Do you have any actual proof of your claim?
As of this moment, FB shares are trading at 38.58 and falling Open at 42, down to 38 ... That's twice it has dropped to 38 ... and I'm wondering if this time there will be no rescue.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
. this is the rough equivalent of having a public stock offering of an actual video game, and I'm not talking about the company that makes the video game (ie. which is something salable), I'm talking about the video game itself.
I'm no expert but if the shares don't go up much doesn't that mean they were valued correctly from FB's point of view? Whereas if they were valued low and shot up, FB doesn't benefit as much. It just benefits those who bought/got the stock at the start.
http://www.nytimes.com/2011/05/21/opinion/21nocera.html
A huge opening-day pop is not a sign of a successful I.P.O., but rather a massively mispriced one. Bankers are rewarding their friends and themselves instead of doing their fiduciary duty to their clients.
opening.
1) They have all the users there going to get. So not a whole lot of user growth potential
2) Total add earning about 3 billion
3) The seemed to undermine the emotional buying frenzy by starting at 38.
The Kruger Dunning explains most post on
Sure, which is why a lot of the pundits were predicting before the markets opened this morning that at the end of day one the shares would close at roughly double the opening price. Quite a few people are eating their words with a side order of humble pie tonight.
I suspect Facebook is in significant trouble now. Today should have been a spectacular confidence booster that set the tone for future offerings and investment. In reality, it's been a damp squib, and that's going to make a lot of people think twice about investing.
You can never tell with these things, because what happens over the next few weeks will be based far more on market sentiment than any fundamentals, but I wouldn't be surprised to see the stock price trickle away over the next few weeks with very few winners. Even Zuckerberg's position won't be safe if that happens, because he's responsible to investors now, and they won't be happy if that's the direction things go in.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
If it stays at what it was priced. Frankly I think the price is high but the market says I'm wrong. I'm not sure why folks thought it would double.
Wow - the stock sucks as much as the product. Would could guess?
I've seen a few comments suggesting that the failure for the stock to rise above the IPO price is a sign that the stock was right priced at the opening.
I don't understand this statement. Is it possibe for the stock to go significantly below the IPO price at this point? I'm sure that the employees with stock options are locked in, and unable to share. Not sure if similar agreements exist with the early investors, but I suspect they do.
How is this right pricing? Seems like the stock really can't go any lower.
Actually.. oddly enough that would mean that facebook priced its IPO perfectly. Ideally an IPO comes out at near or at the price the market will pay for the stock -- that is -- maximizes the value to the company for selling its shares. If the stock price had doubled today that would be good for investors that bought into the initial subscription to the IPO, but BAD for Facebook, and bad for Facebook's owners that sold off in the intial round of sales.
What makes media happy and what makes the company successful are not always the same thing.
-GiH
IPOs are often intentionally undervalued because that is how the people who invested before the IPO (i.e. the people whose investment helped make the company successful in the first place) make money.
I am TheRaven on Soylent News
Facebook IPO Crashes Nearly 10% After $42.05 Opening Price - and the Underwriters had to STEP IN, to prevent a free-fall in decline. That is - no matter what you'd spin it - a market manipulation.
Bubble, meet needle!
As far as market manipulations go this IPO may have been cleaner than others. There does not seem to have been an artificial shortage of stock designed to inflate the price. So far it looks like there was plenty of stock made available and that the opening price is matching the markets willingness to pay. Keep in mind that this has been a pretty bad week for the market and much of a stocks price reflects market risk and industry risk, it is not all about the company risk.
Whether an IPO is successful or not should not be judged by whether a day 1 speculator may a killing. Where the price goes in the coming months will define whether or not the IPO was successful.
Many /. commentators, including the OP, don't know shit about the stock market.
Eagles may soar, but weasels don't get sucked into jet engines.
Very true. However, the hype was like nothing Ive ever seen for an IPO. That means that it is likely overvalued. But yes, Facebook played it nicely. The investors are the ones that will get screwed.
I think investing in Facebook does not make any sense. I am the only one? For what I can tell they do not have a clear way of making money other than getting $ from people interested on speculating about their future (all I have hear so far about how they will make money is completely unsupported by any reality check), and it will be increasingly difficult for them to grow their user base or to get money from their current user base. Since their business model is not clear, as it is not clear why do they need the money now, the only reason I can see they did an IPO is to cash out. My guess is that the money to be made by FB has already been made by the original owners, and it will be loss for investors from here on. I would not touch their stock with a stick.
The article linked to does not support your assertion, says nothing about underwriters stepping in, nothing about freefall, nothing about decline, nothing about manipulation.
Why is that?
"better ways of doing things eventually just replace the inferior things" - Linus Torvalds 09-08-07
Uhm ... no. That depends entirely on how the sale is structured.
Insiders aren't even allowed to sell (usually) on IPO day unless their sale was worked into the subscription. Even long after they have to announce their sale a few weeks ahead of time before being allowed to sell. (VC guys would be the definition of insiders).
Ultimately, the only people that make money on a baddly priced IPO are the folks that get in on the initial IPO subscription (outside buyers). That's not good for the company, and it dose nothing for the owners and initial capital investors.
This is one of those rare times in life where you should know exactly what you're buying. An overpriced ticket to ride on Mark Zuckerberg's crazy train. GL.
Nice spin, but they're poised to close even, or maybe 1c above offering. The only reason it hasn't gone through the floor yet is likely because there is a large volume of limit buys and sells at $38.00 -- people who want to get out if the price hits offering, and people who will only buy at the offering price.
https://www.eff.org/https-everywhere
No, the people who invested before the IPO are making money by selling shares in something that was privately held before. If you mean they undervalued it deliberately so people who "got in on the IPO" can make a quick buck (those are premium clients) then that may not be in the best interest of the company that's going public.
Actually.. oddly enough that would mean that facebook priced its IPO perfectly.
From the news I heard, the underwriters had to step in today to assure the stock didn't go below the IPO price. The pricing of the IPO was not as "perfect" as you assert.
It's no different than selling you car (har har). If you sell it on craigslist and the buyer re-lists and sells the next day for twice the price, would you feel you had done well for yourself?
Im no stock genius..far from it.. but to me (puts straw in corner of mouth and starts to chew) seems like a big game of duck duck goose when you produce no tangible, as in I can touch it, product. So I buy it, you buy it, he buys it, she buys it and last one to sell.. well.. theres your goose.
As far as FB goes.. I have to say Im surprised theres not more ducks lining up to play the game, but then again, the CDO's pretty much knee-capped all the big money and I suspect they are still licking their wounds.. (spits out straw)
If it weren't for the fact that the underwriters had to artificially prop it up by putting millions of buy orders in at 38.00.... If it weren't for that, it would've gone significantly lower.
it never went past $43. wouldn't say it raised quite fast either, it kind of burped and then plummeted, then the underwriters stepped in to stabilize the price (twice). it's actually doing very poorly; you can watch all the excitement at; http://www.nasdaq.com/symbol/fb/real-time
It needs to close at around $43 or $44 for the IPO to not be considered a failure.
Can't Facebook be replaced? What about Diaspora: https://joindiaspora.com/
I don't see the hype in Facebook. Why should my data be controlled by Zuckerberg?
This link is much better and gets right to the point: http://www.marketwatch.com/story/morgan-stanley-goldman-got-53-of-facebook-shares-2012-05-18
More Twoson than Cupertino
I think I smell another Fed Reserve - Wall Street bubble blowing, monetizing the thetans.
Sadly this is not a meme, it's a neologism. Basically, something that children do all the time: make up word that mean whatever they want them to mean...
A meme is a reduction of a cultural phenoma into a catch phrase, where culture (in this context) requires as a group much larger than 1 person.
It's inherently an interaction between individual parties. Services that provide social interaction are doing what could otherwise be done with protocols and local servers if not merely clients. Advances in software will burst this bubble.
Indeed, no one company should control all the information, and we well recognize that privacy is a major concern, so we have forces that will push us in the direction of developing the protocols and software.
Or so I think. How are things coming along?
What is also interesting is that Zynga's stock dropped 23% during the day, and ended the day at -13%. Nasdaq actually had to stop trading on Zynga twice to keep the stock from dropping even further. And they bring in a lot of money for Facebook. So obviously Facebook's performance in the IPO has shaken a lot of people even in regards to one of their largest business partners.
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
It sucks to be a part of the Suckerborg collective...
I'm glad my friends in Zynga got out.
"Flyin' in just a sweet place,
Never been known to fail..."
er, call me crazy but isn't that what the UNDERWRITERS are actually for?
ie to write-UNDER the stock price a line labelled "you shall not pass".
Visit CryptoGnome in his home.
True, but I think your timeline is too short.
People buy stock generally to make money. There are some activist investors, but they'd buy to make a point, so they're not that price sensitive. So what's the path to make money?
They still teach you in some finance courses that you should price a stock based on the Net Present Value of what you think the dividends are going to be. This is also irrelevant, partly because hot tech stocks don't do dividends much (look at Apple) partly because investors don't think this way, and you'd be way out of sync with the market.
So, the thing people think about is, i'm going to sell this down the road for a huge hunk of cash. Why? because people want it. Fundamentals be damned, people want this stock. So.... if the stock doesn't bounce high on day 1, then you seriously dent the expectations I can sell for a huge chunk of cash later. You damper enthusiasm, which is a feedback loop for your stock value (we already know we're well beyond fundamentals with Facebook stock by this point). Your stock value will suffer. I understand your point (supply meeting demand, no consumer surplus and all that) but i'm sure there are facebook folks worried about this.
"There's a sucker born every minute." P.T. Barnum (maybe)
A year from now, this bubble will have burst. Not a moment too soon either.
"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand". -Milton F.
By holding onto the wealth generated, and not paying the wealth out to shareholders, you reduce the tax liability for your shareholders, often for years and years.
While it can reduce tax liability, not paying a dividend does not necessarily result in the best return to investors. (you sort of mention this) Retaining the cash only makes sense if the company can generate a better return on the cash than the investor can themselves. You are quite correct that it does avoid taxes but the goal is not to avoid taxes but to maximize return on investment. If the stock price stagnates for a sufficient period of time, the investor could do better even with low risk treasury bonds eventually even accounting for taxes. You are taking a risk either way.
I'd much rather not pay taxes as my wealth accumulates until such time as I need the income and the wealth is taxed at the lower "capital gains" rate and not at the higher "Marginal Tax" rates.
You are assuming the stock will appreciate sufficiently for the capital gains rate to matter. That is not even remotely a certainty, particularly when talking about stocks like Facebook.
If the market had supported the price then yes, but it was supported by the underwriters, with the record volume of trade its clear that people in the know were cashing out as fast as they could once it got pushed upto $42.
Who is still willing to bet that 42 is not the answer?
FB knows your stated desires. GOOG knows you're hidden desires.
Between the two of them, they could create one heck of a phone sex operation.
Yeah, but "FaceGOOG"? I wouldn't go for it. :-P
"What in the name of Fats Waller is that?"
"A four-foot prune."
Nobody gets Stock Certificates anymore. All trades and holdings are registered in Street Name. If you bought through eTrade, eTrade has your share as part of their gigazillions and is responsible for recordkeeping. Same if Fidelity, Ameritrade, anybody. It will cost you well over $100 to register it in your name, transfer & ship to you as a piece of paper.
Thus, no, not even worth it as toilet paper.
What's more significant is that Zynga crashed - down 17% and trading halted for almost an hour. If FB were so great, why did their BFF take a nasty shot to the head?
Let's call it what it is, Anti-Social Media.
Actually.. oddly enough that would mean that facebook priced its IPO perfectly. Ideally an IPO comes out at near or at the price the market will pay for the stock -- that is -- maximizes the value to the company for selling its shares.
In some weird hypothetical situation, this could be true, if the entire company was sold in one day, and then entirely removed from the market.
But that's not how it works.
They floated about 15% of the shares. Bear in mind, this IPO was for the founders & early investors, not for Facebook Inc. I'm constantly amazed how many people don't understand the difference between a corporation and its shareholders.
Anyway, that left about 85% of the shares unsold. In theory, the shareholders want to sell those shares at the highest price possible. But to do that, you have to generate market momentum. Underprice the IPO so the share value starts with an upward curve.
Instead, the founders & early investors OVERpriced the IPO, and in the last few days decided to dump MORE of their shares (which is a galaxy-class warning flag to anyone with half a brain).
This IPO was pure profit taking. The founders & early investors want to get out with what they can, while they still can.
Pity the facebook employees and private-exchange traders who can't sell their stocks during their 6+ month "lockup" periods. By the time they can dump the shares, it will be too late to make much, if anything.
If a company floats and the share price at the end of the day remains at about the launch price, it's successful.
If they'd charged less (resulting in large gains on the day) then the company would not have raised the funds it should have and existing shareholders would not have received a fair price for their holdings. A bunch of speculators making huge returns on day one is *not* a successful IPO.
If they had charged more (resulting in falls on the day) then they may have had problems shifting stock, possible discounting (causes problems) and be stuck with shareholders already annoyed about having lost money.
They nailed it.
A derivative website, riding the crashing wave of hip right on to the volcanic shores of soccer moms and granny pokes, which offers nothing to reality except the callous idea of a digital lifestyle portal and free corporate marketing: yeah that seams worth billions of dollars. Shocker. I like that people are still under this mis-assumption that facebook is / will / could change the world. Can it? Maybe if it had anything to offer other than millions of pages of basic online biographies with a constant input of narcissistic drivel.
Notables:
Set a record number of trades in 1 second: Over 12,000.
Over 1.5 million trades by end of day. SPY - often the most active, rarely breaches 1 million/day.
Nasdaq quotes went radio silent for 2 hours, but traded just fine.
Many other stocks were affected right before and after it finally opened (AAPL, NFLX, INTU for example)
Who seriously did not see this coming from 1000 miles away. I would not invest a cent in this IPO, especially when the head of the company spends a billion in aquisition without consulting his board.
Tomorrow is another day...
I don't see it either. Banner Ads as a revenue source? How turn of the century, good luck with that. I've never even noticed an ad on Facebook, much less clicked on one. 100:1 PE ratio? Insane.
Fool.
Money.
Bye-bye.
Never let a lack of data get in the way of a good rant.
This whole FB IPO reminds me of the stock scams that were floating around in inboxes a few years ago, where spammers would try and boost a stock price a bit by spamming people saying this and this stock is really great. On a much larger scale of course. They got everybody and their dog hyped on this. I've seen really smart people promoting it on their blogs saying that it was possibly undervalued. Really? They most likely placed their stocks just right in terms of raising as much cash for themselves, but I really doubt it will stay there. A rough estimate is that the stock is probably worth about $12-$15 with good prospects for a steady growth over the next few years, but once the hype has died, I doubt it will be $40 again for a long time.
Bottom line. All the people who lost money from any stocks this month, you can blame FB. Those Jews took your money. $18 billion in one day. A lot of people sold their other stocks to buy FB, this drove down overall stock prices. Even if you didn't buy FB stocks, those frigging Jews still took your money.
Twitter: @dainsanefh
Bottom lines. All the people who lost money from any stocks this month, you can blame FB. Those Jews took your money. $18 billion in one day. A lot of people sold their other stocks to buy FB, this drove down overall stock prices. Even if you didn't buy FB stocks, those frigging Jews still took your money.
Twitter: @dainsanefh
Awsome faceplant dude! Teeth intact? Better check and have a dental plan.
The "Street" will NOT be kind on Monday.
If FB can close above $0.05 on Friday next week they might be able to gain momentum to close above $0.06 in December, ... er ... before de-listing.
Snicker snicker ... LoL
In the case of an IPO it's even worse, you pay lots of money to someone for their supposed expertise in selling the car at a good price for you. They list it at a low price, their friends buy it and resell it for twice the price.
Gravity is going to hit the stock like a boulder come Monday. A huge percentage of the float was purchased by the underwriting bank to prop the stock above 38, if this would not have been underwritten it would have plunged. Now watch come Monday and next week. News of the lawsuit hits, a contingency for that outcome in a 50% settlement would be 7% in market cap alone, and a lot more if you deduct from earnings considering the insane earnings multiple this thing was priced at. Morgan Stanley going to take a big hit as the underwriter when the thing starts to tank.
Here is an interesting link: http://www.zerohedge.com/news/fadebook
And my favorite quote I saw in the media, "It is like they threw a party and nobody came".
And the irony of the whole thing is that by pricing at the very top of any conceivable valuation and increasing the size of the float in the last days, it would almost appear it was intentional, or were they smoking something?
Zynga halted trading several times yesterday, and closed over 15% down.
Real men don't need signitures!!!
What is also interesting is that Zynga's stock dropped 23% during the day, and ended the day at -13%. Nasdaq actually had to stop trading on Zynga twice to keep the stock from dropping even further. And they bring in a lot of money for Facebook. So obviously Facebook's performance in the IPO has shaken a lot of people even in regards to one of their largest business partners.
It's reasonable to assume a strong correlation between the success of Zynga and Facebook and when no facebook shares were available publicly buying Zynga shares was the next best thing; now that the "real thing" is available these investors sell Zynga to buy facebook.
Zynga shares carry the business risk of Zynga and facebook but the main opportunity is almost entirely dependent on facebook. Zynga wins if facebook wins, but Zynga fails if facebook and/or Zynga fail. Better to invest into facebook itself (now that this opportunity is open to the public) for the same opportunities but less risk.
What I don't understand is why they don't spread out the IPO over a week or two, continuously selling at the going rate.
Due to NASDAQ glitch people couldn't get trade confirmation until the time the market was almost close. I suspect that's where the second drop was coming from small investor with cash but no share aren't placing any order because they know the order will be delayed for hours.
Those who thought FB would double from $38 on the first day were smoking. At $38, FB is already valued around 104B -- doubling this means the valuation will be over 200B, larger than Google. While FB may get there eventually, there's just no way for this to happen on the first trading day.
LET THEM EAT ASTROTURF.
Facebook may yet be overpriced. Morgan Stanley and its fellow underwriters of the IPO undoubtedly spent millions of dollars, maybe hundreds of millions, propping up the stock Friday so it wouldn't fall below the $38 offering price, as that would have been a huge embarrassment. No one knows how long they'd continue to do so.
Additionally, in about a week the shares become eligible for short-selling, which could place more pressure on the price. A few months from now, insiders prohibited from selling their own share will have the green light, and millions more shares will enter the marketplace. The question in coming weeks may no longer be how high Facebook can soar, but how low can it go?
http://www.latimes.com/business/money/la-facebook-fail-20120518,0,5818946.story
"Flyin' in just a sweet place,
Never been known to fail..."