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SEC Calls For Review of Facebook IPO
beaverdownunder writes "After losing another 8.9% of its IPO value in its third day of trading, SEC Chairman Mary Schapiro has called for a review of the circumstances surrounding Facebook's IPO on the NASDAQ late last week. Unable to sell Facebook short, investors have instead taken to short-selling funds that owned pre-IPO shares as revelations come out that the underwriters involved revised their Facebook profit forecasts downward in the days before the offering without similarly revising the opening share price. Meanwhile, Thomson Reuters Starmine has come out with a post-party Facebook estimate of a meager 10.8 per cent annual growth rate, valuing the stock at a paltry $US9.59 a share, a 72 per cent discount on its IPO price, signaling that the battered stock may not have found the bottom yet."
I'm sick and tired of these banks screwing over the little guy.
JPMorgan Chase, Goldman Sachs, these companies truly represent the epitome of corporate greed and corruption in america.
That said, a stock is like anything else. people will pay what they think it is worth. If they don't think it is worth it, they should not pay!
I could bid $100/share for FB right now and I would find lots of people willing to sell it to me at that price. If I feel it is worth that much, I shouldn't complain later when I find out someone would have sold it to me for only $10/share.
It's a lot like salary. If I accept an offer to work for $100K/year, I do so believing that is a fair value for what I offer, and I should feel good about it. If I later find out that my neighbor in the next cube offer, who has the same qualifications and start date that I do, managed to negotiate for $200K/year, I shouldn't complain. I'm still getting what I agreed to, and what I agreed was a fair price.
Bottom line - lots of people are just bitching because they didn't get rich quick, for doing nothing, like they thought they would. Too bad for them.
*Somebody* was a naughty little corporation, and didn't pay enough in "campaign contributions", lobbying , and political favors, hmm?
Let their example send a warning to you others out there that think you can just go around doing business without us getting our "vig", like it was a free country and open & fair marketplace or something!
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
They need to take a look at the Instagram deal:
http://www.bbc.co.uk/news/technology-17658264
The deal was Facebook buys Instagram for mostly FB shares. The pair of them talked about the deal being worth $1 billion, and it was nuts. Buying an app with so few user for $1 billion made no sense. The real game here was that Instagram would PRETEND that it really was a $1billion deal and thus the shares were worth that much.
It's a trick similar to a mock auction, where a third party accomplice pretends the things being sold are of high value while knowing they are low value to create an inflated perception of value. There's been a lot of these dog IPOs lately. SEC seems to be turning a blind eye to them, and letting investors get ripped off. IMHO SEC will just whitewash this one too.
Actually, MS came out with a statement indicating that the all IPO members (both retail and institutional investors) received updated guidance during the roadshow via a revision to the S1, and that the pricing of the IPO included that guidance. The analyst opinion was simply reflective of the revised guidance.
You'd have to be pretty stupid to assume that analysts wouldn't revise their opinions based on the change in guidance.
Well, you'd have to be pretty stupid to participate in the IPO in the first place, let alone invest in the stock. The thing was overpriced, the talking heads said it was overpriced, a simple high school math calculation would tell you it was overpriced, most people KNEW it was overpriced... and bought it anyway hoping for another 'sure bet' circa the internet frenzy leading up to the internet crash circa ~2000.
In some respects this is a good thing, it brings a much needed dose of reality to fuzzy-brained armchair investors.
If you want to complain about something you can complain about the NASDAQ screwing up the opening and not providing trade confirmations for 3+ hours to investors whos money was locked up and who could only watch the price start to drop without knowing whether they even owned shares, or being able to sell.
-Matt
To be fair, in the days and weeks ahead of the IPO I can't remember anyone thinking USD 38.0 was a reasonable price for this stock - it was obviously overvalued in relation to the company's revenues and arguably overvalued in relation to its growth potential. Everyone I know knew this, so I can't imagine people purchasing the stock at the opening price except for greedy speculators who hoped they could make a quick buck on the FB bubble before it popped. Regardless of what Jim Cramer et al will say in the coming days it's very difficult to feel bad for anyone who lost money betting on this overvalued IPO.
To make things worse, FB has to do the same things google has been doing for years in order to grow like google. Though far from perfect, gmail, gdoc, mobile are great. It is really hard to see how FB can out-do that. When google went IPO, its future seemed ahead. This time it seems FB just jumped the shark.
but the goal for Zuck was to cash in and get out. Has he done that? If so mission accomplished. we all know its always been about him....
Of course he did. That was the whole point of this IPO: they wanted to cash out before it burst. The money to be made out of it was already made by the original owners, at expense of the investors. There was not a single reason to believe FB was priced fairly and not overvalued, and no clear indication on how FB could make enough money in the future to justify a 100B valuation. After the market experiences in the last 15 years, I cannot believe how many bought into the hype of this.
How could you, in about 80 comments now, miss the great Zuckerberg quote: "Dumbfucks, they trust me!"?
You say that the information didn't come out to every one but nevertheless there was plenty written over the last few weeks saying that Facebook was overvalued. There was no shortage of warning signs so it is hard to feel sympathy for those who lost money on this. Caveat Emptor and all that.
You don't have to pay any income tax at all - there are plenty of places that don't charge it. Go live on the Cayman islands and make your fortune there - I don't think they have any income tax or capital gains tax, so you can keep 100% of your money!
Of course it's a bit more difficult to make your money without an educated workforce, or lots of infrastructure, or developed labour and financial laws, or trade connections, or any of the other things that government provides for business. But who needs any of that? People who make money make it entirely through their own effort and talent and don't owe one iota of a debt to the government.
On the other hand if you want to make use of the advantages that government spending provides in order to make your fortune it behoves you to pay the tax that finances that spending.
An excellent response, the situation is 100% analogous.
I was born in a thief-provided hospital, educated at a thief-endowed school and the villains even gave me money for college and I'm sure the same goes for most of us.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."