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Facebook Shares Retreat Below IPO Price
First time accepted submitter gtirloni writes "Just days after wrapping up the biggest initial public offering in Silicon Valley history, shares of Facebook slumped 6% and tumbled below their issue price on Monday, a troubling signal for the newly-public social network. Facebook broke below its $38-a-share issue IPO price in the wake of a highly-anticipated offering that raised more than $16 billion, the second-largest domestic IPO after Visa's 2008 debut. Shares of Facebook were recently off 6.44% to $35.72."
Looks like it actually got down to -12% within an hour of opening. From the sounds of it, NASDAQ royally screwed up this IPO and there's probably unexecuted orders lying around which is likely going to result in some very hilarious realized losses. Look, if Goldman Sachs is securing hundreds of millions of dollars in shares ahead of time and cashing out during a tech IPO, you as an individual are probably already too late the party. Of course, that's investment advice from an anonymous idiot on Slashdot but it looks like they will be one of the few parties laughing all the way to the bank (as usual).
My work here is dung.
This result was expected based on what happened on Friday. It was reported that the underwriting investment banks were propping up Facebook's share price on Friday to keep it above the IPO price of $38, so as to help their clients avoid losing money on the first day. Now that we're past day 1, the banks have stopped buying shares at the apparently overvalued price, which makes sense -- after all, if the banks are buying at $38, then they stand to lose money when they sell at a lower price in the future. In other words, Facebook should've already been trading at something less than $38 on Friday, but it wasn't because the banks wouldn't let it.
My userid is prime!
If the stock moves significantly up after the IPO, this means that the company did not sell enough stock.
Instead, if the price remains flat, or even goes down, this says that the IPO was priced perfectly: all the revenue from the IPO goes to the company and/or the insiders selling the shares, rather than the IPO bank backer's insiders who got the inside track on the "hot IPO"
We should have all IPOs be like this IPO.
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How expensive is marketing information per lead these days?
From my experience from about a year ago Facebook wants to charge about US$0.25 per click for a US high school aged audience, US$0.30 per click for a US college aged audience and US$0.35 per click for a US 25-45 year old audience.
Because at the very least, you'll be likely to beat inflation with your investments. Money put under the mattress loses value as the value of a dollar goes down, and savings accounts don't pay much either.
I read an article that gave numbers for the three investment banks (taken from facebook's disclosures).
The numbers totalled $11.6 billion, out of the $16B facebook raised. So, the investment banks bought most of the shares. Some of that is probably for their investors.
I wonder how much the banks will lose from propping up the price.. FB is down 12% today, which means the banks' stock lost over a billion dollars in value. That wipes out everything they made in fees (a few hundred million, IIRC).
Not if your shares were among the ones being sold as part of the IPO.
AFAIK, In most IPOs, the shares sold are generally "treasury" shares (shares owned by the company) or institutional shares (owned by venture capitalists and pension funds that invested pre-IPO) so that the proceeds go to the company and the early round investors. Of course some early insiders/founders may own significant blocks of preferred shares that become part of the IPO process by being converted to unrestricted shares and sold to increase "float" (the number of outstanding shares), w/o diluting share value, but for most IPOs, you can usually count those employees and directors on your fingers.
For most typcial employees, they might sell your vested shares as soon as normal trading opens and that might be very near the IPO price (or pinned to the IPO price depending on the generosity of the brokers that coordinate inside sales for the company and their ablity to make market and block trade), but they are generally not part of the actual IPO subscription allocation process.
Can you describe exactly, how Fox News was "trying to prop up the stock"? What actions were they taking?
I noticed that before the IPO, both on Fox New and their Business channel, that many if not most of their analysts were saying that FB was over valued on this IPO....that they just didn't earn enough to justify that IPO price.
I try to scan and watch most all the major news channels, to get as clear a picture I can on the news with the different spins different networks put on it....but with respect to the FB IPO...they didn't seem to be trying to prop anything up, if anything I was hearing them say the opposite.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
I'm amazed at how many writers in the press, and on /., seem to think that Facebook Inc. was the sole seller in the IPO, and furthermore that they sold all of their shares. Unbelievable cluelessness.
As a public service, here are the numbers:
2,559,318,652 total FB shares (100%)
421,233,615 shares (16.5%) were sold in IPO
180,000,000 shares (7%) were sold by Facebook Inc (43% of IPO)
241,233,615 shares (9.4%) were sold by investors/founders (57% of IPO)
In the earlier filings, the investors/founders were going to sell fewer of their shares. But at the last minute, on May 16, they increased their take by more than 53%, dumping another 83,818,263 shares because the risk profile is waaaay too high for any smart money.
Writers who say "Facebook raised $16B in this IPO" are either disingenuous, or clueless. Facebook Inc raised less than $7B. The other $9B went into the pockets of the pre-IPO investors/founders.
This IPO was clearly overpriced, for the benefit of investors & founders who want to get out while they still can. The numbers don't lie.
The people who will get most screwed by this are Facebook employees, and pre-IPO private-share-exchange buyers, who have a 6-month or more "lockout" period before they can sell FB shares to whomever wants to catch a falling knife.
At $20, it's still valued with a P/E ratio of 50. For comparison, Apple's P/E is 13.5 and Google's is 18.58. To bring Facebook moderately in line with those numbers, they have to more than double earnings. I don't see the magical fairy dust that'll allow them to do that in the short term.
Because it only makes sense to buy it back if you're reasonably sure it's going to go back up again. You buying a stock just because it's been tanking lately may just mean you've fallen into the Value Trap: http://wiki.fool.com/Value_trap
Facebook never deletes photos. Upload a photo, save the URL for the photo and delete the image. Go back months later and pull up the URL, the photo is still there.
if you steal from one source, that is plagiarism, if you steal from many, well, that's just research.
It isn't a wild-ass guess by any means. A P/E of 30 is considered to be high in this industry. Anything over that usually marks the stock as a poor buy. The Facebook offer price had a P/E of about a hundred, making it a really, really poor buy unless the stock got pushed up by irrational buying. So a high price for that stock (P/E of 30) would be about a third of the offer price, or about twelve or thirteen bucks per share, and a P/E in the high single digits would generally be considered a strong buy, at or around three bucks per share. To call this stock ridiculously overpriced is something of an extreme understatement.
Now to be fair, the P/E doesn't tell the whole story—some might argue that the forward P/E is a better metric—but I haven't bothered to calculate the forward P/E because the regular P/E is such utter insanity that further study of the stock is pretty much moot.
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