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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.
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).
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
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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