20 replies to this topic

[abarbarian]

Facebook shares drop 11 percent

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“We’re very bullish on Facebook, but the share price just wasn’t justified,” said Rick Summer, an analyst at Morningstar. “It was overvalued.”

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Share prices would have plunged immediately if not for the intervention of Morgan Stanley and at least one of the other banks underwriting the company’s public offering. They bought stock to prop up the price, and it closed Friday just above $38.

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“The people who have to worry are the people who bought the stock on Friday,” Summer said.
Indeed, the drop is likely to anger investors, and it led Monday to a round of speculation about why Facebook isn’t worth as much as some people thought.

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Even so, many analysts spoke highly of the company, which has evolved from an idea hatched in a university dorm into a company that, even with yesterday’s losses, is valued by the market at $93 billion, roughly the same magnitude as an established American icon such as McDonald’s.

Still these folk will not give a stuff if they managed to sell their shares on opening day. Why were they selling ? Well to give the small investor a chance of course.

Who is selling Facebook shares?



QUIZ -- What do dot.com South, Sea Island and Facebook have in common ?

Answer -- Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles

Edited by abarbarian, 22 May 2012 - 09:38 AM.

[LilBambi]

Sadly it could be true...particularly for investors!

[abarbarian]

LilBambi, on 22 May 2012 - 10:10 AM, said:

Sadly it could be true...particularly for investors!

Sadly if large investors take a large drop it will have a knock on effect for all of us as we are talking big numbers.

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even with yesterday’s losses, is valued by the market at $93 billion, roughly the same magnitude as an established American icon such as McDonald’s.

[ross549]

Honestly, it is going to take time for the price of Facebook to stabilize. Facebook is under a great deal of scrutiny since it is the largest IPOs to date. Things will settle down.

Overvaluation is a bit of a misnomer. Facebook employees decided on what they thought the best prcie for the shares would be. If they had been low, then they would be upset since they undervalued the company. Without having any idea whatsoever the *perceived* value of the company would be (share price is driven by stockholder confidence, right?), I would say Facebook did well, if the shares saty at the current price.

FB stock info

Looks like the stock price is on the rise again. Look at how much it is jumping all over the place.....

Adam

[abarbarian]

ross549, on 22 May 2012 - 11:11 AM, said:

Honestly, it is going to take time for the price of Facebook to stabilize. Facebook is under a great deal of scrutiny since it is the largest IPOs to date. Things will settle down.

Overvaluation is a bit of a misnomer. Facebook employees decided on what they thought the best prcie for the shares would be. If they had been low, then they would be upset since they undervalued the company. Without having any idea whatsoever the *perceived* value of the company would be (share price is driven by stockholder confidence, right?), I would say Facebook did well, if the shares saty at the current price.

FB stock info

Looks like the stock price is on the rise again. Look at how much it is jumping all over the place.....

Adam

All I have to say is

Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles Bubbles

[LilBambi]

If you go to at least page 8 and continue from there on a search for initial public offering rocky start, it is not at all unusual for IPOs to have a rocky start.

Not only that, despite the rocky start, they made more than many companies are worth in the first couple days!

Did some research a bit on it because i was thinking more like abarbarian on it, but the more I look, the more it seems rather normal.

[ross549]

Well, the stock market is entirely based on speculation. Everyone is trading because they *think* something is going to happen. There are no guarantees.

Adam

[LilBambi]

Yes, it's smoke and mirrors. And like I heard forever growing up, buy low and sell high and don't play any more than you wish to lose. Kinda like the Casinos in that regard. Sad so many have lost that sense that the stock market is volatile. It still is, and many found that out the hard way in 2008.

[abarbarian]

Looks like Facebook did not play fair with small investors.


Were Facebook investors misled?


Whilst this may be old news it will have an impact on the future.

GM pulls paid ads from Facebook

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According to the Wall Street Journal, GM has been reviewing the effectiveness of its Facebook strategy since early this year. And while it's decided that it's worth keeping a presence on Facebook through its own pages, it says it's going to pull all its paid advertising.
"Executives determined their paid ads had little impact on consumers," it says.
It currently spends about $40 million per year on Facebook advertising, says the WSJ, or which Facebook itself gets about $10 million.
Even for Facebook, this is a lot of money: GM has been one of the company's biggest advertisers in the past. Facebook made around $872 million from advertising during the first quarter of this year, out of total revenues of $1.06 billion.

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Parrish says that one global consumer goods company told Forrester recently that Facebook was getting worse, rather than better, at helping marketers succeed.
"We wish we could predict this IPO would serve as a new beginning for Facebook’s marketing offering, and that a new focus on becoming a grown-up business would inspire the company to put even half the energy into serving advertisers that it does into serving users," she says.
"But we doubt Zuckerberg's going to wake up any day soon having acquired a taste for advertising, or even a proper understanding of it."

This story caught my eye whilst perusing the BBC so I followed it to here

Facebook share drop: more than meets the eye

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With the Facebook IPO not even a week old, the writs have already hit the fan, with a lawsuit aimed at Morgan Stanley, Facebook and its founder Mark Zuckerberg already filed. The lawsuit accuses them of concealing the company's weakened growth forecasts ahead of the IPO on Friday.
Morgan Stanley is also facing an investigation over possible securities fraud. It is accused of not warning all investors of a more negative assessment of the company's prospects produced by one of its own analysts. While clients of the bank received the research, other potential investors remained uninformed.

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Facebook shares have fallen every day following the botched IPO, even though Morgan Stanley has supported the price by purchasing stock. The Daily Telegraph suggests that the bank may have spent so much money trying to maintain the company's stock price that it had spent almost all of the bank's fees from the deal.

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Were Facebook to burst a bubble of its own making, the knock-on effects on the tech sector could be severe. If that happens, then it will have only itself to blame, along with some institutional backers that should know better than to pursue an all-too-visible high-risk strategy.

Edited by abarbarian, 23 May 2012 - 01:57 PM.

[ross549]

GM pulling their ads is a non-story to me..... GM was not a company that would have benefitted from Facebook advertising that much anyway. You are not going to click ad GM and and immediately buy a car. The ad would only be to build a brand, which GM has successfully done in the past through TV and radio. Remember "The Heartbeat of America?"

Adam

[LilBambi]

Hmm, not so sure on that. Did you see how much advertising they were pulling?

General Motors Pulls Advertising from Super Bowl - AutomotiveDiscovery.com

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General Motors recently announced that it is pulling $10 million in Facebook advertising. Now they have also decided to pull Super Bowl advertising. With thirty second commercial spots costing $3.8 million for next year’s big game, the automaker just can’t justify spending that much when it puts drivers at risk for paying higher prices on vehicles to cover the costs.

[ross549]

I suppose I should have said it had nothing to do with Facebook. I had heard they were pulling other ads. No surprise to me, considering the company is in trouble.

[frapper]

ross549, on 24 May 2012 - 04:28 AM, said:

No surprise to me, considering the company is in trouble.

I thought Obama saved them?

[LilBambi]

ross549, on 24 May 2012 - 04:28 AM, said:

I suppose I should have said it had nothing to do with Facebook. I had heard they were pulling other ads. No surprise to me, considering the company is in trouble.

Very true Adam. It is not so much a Facebook problem as it is a GM problem. But their choices of the ones they were pulling has some significance, I think. But could be that they get enough from their television spots.

frapper, on 24 May 2012 - 09:34 AM, said:

I thought Obama saved them?

Don't get me started on that frapper.

[V.T. Eric Layton]

I un-friended my stock broker.

[LilBambi]

[Temmu]

the stock market is far worse than a crap shoot. (craps, the dice game.)
why? it floats on derivatives, a concept so mind numbing that ...
consider the 401k, a tax-dodge useful to the top .1% of the nation -
it was never intended for average folks.

put those 2 together and ooops!
o, wait, we just saw that a few years back...

[LilBambi]

yes...

[abarbarian]

Facebook shares dip below $29 to new low



Now what was I saying earlier.

Oh yes I think it was

Bubbles Bubbles Bubbles  Bubbles  Bubbles  Bubbles  Bubbles  Bubbles  Bubbles

[LilBambi]

Don't think that is very unique right now. The whole of the Wallstreet market for the last 3 mos the market has looked like that curve.

[Temmu]

doesn't matter much, he's a billionaire living in hong kong.  he's got his. i'm sure that's all that matters.