Investors Pummel Facebook

Interesting ..

http://online.wsj.com/article/SB10001424052702303610504577417911775222058.html?mod=WSJ_hp_LEFTTopStories

http://www.latimes.com/business/la-fi-facebook-beseiged-20120524,0,1622347.story

Saw this coming. Anyone who ACTUALLY thought facebook was worth $100 BILLION was a fucking moron. What is facebook? What do they sell? Where is their money coming from? They're just an overhyped geocities.

For all intents and purposes, they're a new kind of web portal.

As far as the valuation, they aren't Google but they are putting together one hell of a database...however, unlike Google according to their TOS it's completely consensual, which means they can do whatever they want with the information they've gathered without having to worry about the repercussions.

I was asking what data was facebooks IPO based on. Branding? Hopes and dreams of what facebook COULD do with all that data? They currently dont do squat with it aside from ad revenue, which in the grand scheme of ad revenue they're only taking a tiny slice of the pie. 100B was hype. Nasdaq and facebook thought they could just say it was worth 100B and people would believe it. Now that everyone's actually thinking about what they're ACTUALLY worth they're coming up with a MUCH lower number. I feel awful for the initial investors that were suckered into facebook and wallstreet's trap and have lost billions of dollars in a matter of days.

http://www.businessinsider.com/what-is-facebook-worth-2012-5

Then again, it's not like it's the first time people have paid inflated IPO prices...it's greed coming and going, but you'd think they would have learned this lesson by now.

Don't these people remember the dot com bubble? Same shit just better marketing.

FB has been around for a while, so it's not like people indiscriminately snapping up whatever stock they can. At the very least it has a track record.

I'm not for people getting screwed, but let's say you had $100K to invest and were looking at the IPO of FB...if you weren't totally convinced that getting in on the ground floor was a sure thing upon completing your research, I would feel about as much sympathy for you as I would if you had put all the money on a single bet at a casino and hoped for the best.

Then again, it's not like it's the first time people have paid inflated IPO prices...it's greed coming and going, but you'd think they would have learned this lesson by now.

I have trouble with this.

Do you have any particular insight in to who is investing in these stocks, how much money they have, how much money they need (in an objective sense) and a knowledge of what they are doing with their money?

In terms of economics I lean towards conservatism (and ignorance). I see much more value in building economic behaviour in a country than just giving it aid and forgiving debt. Of course aid and debt relief can help but more so if it creates jobs. Opportunity to work and increase your quality of life is what should be made available to as many people as possible. In that respect capitalism and business is beneficial.

Gina Rhineheart became the richest woman in the world yesterday, ostensibly earning $2m an hour. My first reaction was that this is obscene. But a more considered reaction would be how many jobs, roofs over heads and public revenue would be lost if she wasn't making that much money?

When we view investing, or using money to make more money, why is it simply considered as greed rather than simply a cog in a larger machine that provides opportunity? I understand that at the extreme barriers can be built that protect riches and reduce opportunity. But the same can be said for the other extreme, the business that these richies run and own employ thousands directly and millions indirectly.

I don't earn anything fantastic and I have investments. Am I greedy because I invest? Or am I not greedy because I'm not rich? If it is the later, what is the threshold of wealth when investment shifts from making prudent financial decisions to simply being a matter of greed?

Any investment is risky, IPOs more so...would you buy a car sight unseen based on a good review and the premise that if you don't get it now at this never-to-be-repeated LOW LOW PRICE, you'll live to regret it? IPOs don't really trade off of calculated risk, it's all about cashing in while you can.

Somewhat off subject- I do a bit of reading about what's going on in the financial world since I'm interested in what's going on with the euro/EU situation, and I came across this today-

Door Opens For 2-Year German Bond Yield To Go Negative

NEW YORK (Dow Jones)--For the first time, the two-year German bond yield may dip below zero, a rare occurrence in the global fixed-income universe and one that flags growing fears over the future of the euro zone.

As fears are rising over the prospect of Greece leaving the euro zone, global investors have rushed into assets they perceive as the best to protect their capital. Bunds and U.S. Treasury bonds have been the primary safe harbor, and the strong demand has sent yields, which move inversely to their prices, to record or near-record lows.

The most striking manifestation of that this week is the two-year German bond's yield, which Wednesday touched a record low of 0.02%. At the same time, Germany sold a same-maturity bond with a zero coupon, basically allowing the nation to fund itself with almost free cash.

Given the yield's proximity to the zero barrier, some fund managers and analysts say any signs of further stress in the euro zone could send it into negative territory. That would mean some investors are willing to incur a small capital loss in exchange for the market's safety and liquidity, as riskier assets like stocks could fare much worse if the crisis deepens.

"It is quite possible that in a panic situation, people would pay for safety," said Stuart Thomson, a fund manager who oversees about GBP72 billion ($113 billion) at Ignis Asset Management in Glasgow. "Clearly, if there is a crisis with Greece withdrawing from the euro zone, it is highly possible that the bund yield would go below zero."

In recent trade, the yield on the two-year German bond known as the schatz, was 0.034%, trading lower than the 0.293% yield on the two-year Treasury note, 0.248% on the two-year U.K. gilt and 0.104% on two-year Japanese government bond.

So far, negative bond yields have occurred with the debt of several nations, including the U.S., Japan, Switzerland and Sweden. But typically it has been seen in securities maturing in one year or less, such as was the case with U.S. Treasury bills, not a two-year maturity.

Longer maturities with negative yields also exist for Treasury inflation-protected securities, but unlike the conventional bonds, a negative TIPS yield doesn't mean investors take losses to hold the debt because the value of TIPS will be adjusted by the future inflation rate.

Steven Major, global head of fixed-income research at HSBC Holdings PLC, said the two-year bond's yield falling to negative 50 basis points or even negative 100 basis points "is not impossible," especially if a scenario emerges that the euro zone breaks up and Germany brings back its own currency.

Calling this currency-redenominated risk, Major argues there are some investors that would hope to make 30% to 50% in currency gains on the resurrection of the deutsche mark. For buyers who bought the two-year bond auction Wednesday, a negative yield would be offset by significant capital gains from price appreciation, he said.

Others, however, are seeing Germany's extra-low bund yields as a deterrent to buy. John Stopford, London-based co-head of fixed income at Investec Asset Management, which manages $100 billion in global assets, is buying higher-yielding Norwegian government bonds as an alternative safe haven. And Pacific Investment Management Co., one of the world's biggest money managers, has been cutting back its holdings of bunds due both to the market's overvaluation and what it sees as the longer-term concerns over Germany's fiscal health.

Scott Mather, the head of global bond portfolio management at Pimco in Newport Beach, Calif., argues that to save the euro zone, especially to keep Greece in the bloc, Germany will be forced to spend more taxpayer money to support Greece and other peripheral euro-zone countries. And under a scenario where Greece leaves the euro zone, the ensuing defaults on its euro-denominated debt would subject Germany to financial losses on the money it has plowed into the Mediterranean country over the past few years.

"Germany's balance sheet will not be as pristine as it is. This is a longer-term risk, but it is something investors need to be aware of," said Mather, even as a deepening crisis would mean in the short term that investors might continue piling into bunds at these extremely low yield levels.

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I experienced the dot-com crash a little differently than most. I was a legal messenger at the time, and about six months before the crash was widely publicized there were tons of antitrust suits involving IPOs that were essentially pyramid schemes. I'm no financial wizard, but it seemed to me that people should have been a little smarter than to invest in companies that had no real salable product short of an idea and a web page.

That's the kind of greed that I'm talking about. Does it apply to Facebook? I guess it depends on how the stock was represented and the motives of the buyers.

You haven't said why investing is an act of greed.

All you've done is discuss levels of risk and its relation to diligence. Poor people with no money can take unexplored risks. Risk alone is not indicative of greed.

Investing in and of itself is not indicative of greed...maybe what I'm questioning is how greed plays into IPOs on both sides of the picture. Or maybe it's not greed..."largely unwarranted optimism" could be more accurate.

Maybe, "Greed causes people to take greater risks that would otherwise seem pointless".

Investing in itself is definitely not an act of greed, unless you consider the accumulation of any amount of wealth, whether for basic needs or otherwise, an act of greed. Investing is just another form of work; you are essentially putting your earned money to work to generate additional income/wealth. And investing is most definitely work as it requires due diligence, research, analysis and time to successfully perform. The act of putting money into the stock market without the aforementioned 'work' is pure speculation, not investing...

These days there is an ever present aspect of greed in the stock market; it comes from Wall Street and is entirely one sided. The days when Wall Street investment firms strived to make money for their clients went out the window when the firms became public. Investment managers once had a large stake in the success of their clients and the relationship they had with them, but as shareholders demand ever increasing earning and revenue, these public companies have bowed to their beck and call and have turned into stock peddlers rather than investment advisors, pushing whatever product will make the most money and commission for the FIRM rather than the client. This is no more evidence than in IPOs. It is completely irrational for individual INVESTORS to get involved in an IPO. By the time the public has the opportunity to buy a stake in the company, a large premium is already baked into the offer price. Large institutional investors, funds and insiders have all already bought stakes at prices far lower than the IPO and have spent the bulk of their effort to market and hype the IPO in order to raise greater capital, increase commissions and/or increase the value at which they can dump their interest.

IPO's are a fool's game. With all the hype leading up to the offering date, it only takes a hiccup to send the overvalue, over-hyped stock plummeting (FACEBOOK) It is only after such a fall, whether it be a few days, weeks, quarters, or years that an intelligent investor should even consider investing. You think people would learn but it seems Wall Street's cheerleaders always manage to convince them that this time will be different.

I am honestly rooting for facebook to become a penny stock.. the fact that the underwriters had to step into to support the price on the first day, that NASDAQ completely blundered the entire offering and that Morgan Stanley decided to let some people in on the fact that revenue was declining while leaving others in the dark just shows the folly of IPOs and exemplifies how the whole operation is a greedy pump and dump by wall street on the individual investor..

Now that facebook has gone public it is only a matter of time before shareholders expect greater revenue and profits, which will lead to increased advertising (the only source of revenue...), which will lead to increased dissatisfaction by the site's users because they don't want to be bombared with Ads like myspace, which will in turn lead to less use and eventually less revenue and profits and the rise of a NEW social networking site! Which users will flock to because of the lack of annoying advertisements... and the cycle repeats..

Maybe, "Greed causes people to take greater risks that would otherwise seem pointless".

funny how people forget what risk entails once they get a taste of a big return... people see apple pop and they easily forget about all the losses that came with the dot com/technology bubble.. not wanting to miss the next big thing can drive people to do irrational things..

funny how people forget what risk entails once they get a taste of a big return... people see apple pop and they easily forget about all the losses that came with the dot com/technology bubble.. not wanting to miss the next big thing can drive people to do irrational things..

Apple's not an information technology company. They make computers, not websites, so there's really no connection to them and the dot com boom.

Facebook however is incredibly similar to the dot com boom, except it's one company creating the entire bubble. Its actually the biggest single-business bubble in history. They make a billion dollars a year in ad revenue and attempted to sell a hundred times that in shares. Apple shares, for comparison, sell for only sixteen times over their revenue. Google's only 14 times.

If you bought shares in facebook at the original $38 a share price, you wouldn't see any return on investment until facebook took home 10% of all ad revenue in the world. $1 of every $10 spent on advertising across every media platform would have to be spent on facebook real estate. That's a bet economists would predict as "highly unlikely." Hahah. It's not impossible, but still the new share price of $28 is a much more reasonable wager. I wouldn't tho. That type of growth requires exponential growth over the next ten years, while predictions for facebook's growth actually shows slowing.

Here's the issue with facebook, and one they HAVE to overcome or the company, their investors, and wallstreet is gonna feel the pain: how to gain more ad revenue.

General Motors spends a lot of money on ad revenue and while their way of spending that money is a bit "oldschool" with TV commercials, they're slowly moving those tv commercials to youtube and google based websites. In fact, GM is pulling their ads from the superbowl. That's six million dollars going to someone else. It makes sense for them to do this. Google and youtube are products that people use to look up information, so sliding in advertisments with that information is an easy hit.

Facebook's format doesnt allow usage of TV commercials in quite the same way. Things on facebook need to be more personable. There's actually a great story about this, and how your data on facebook is used here:

http://www.npr.org/blogs/money/2012/05/22/153300390/facebook-now-what

GM already jumped ship on FB, basically saying ads on face book aren't productive.GM Says Facebook Ads Don't Work, Pulls $10 Million Account

Most of the analysts that I have heard speak on the tech side are saying that the way people use social media is shifting away from web based portals to mobile device apps. It's not too Complex to plaster 20 ads for Nike, Dr. Pepper and Nokia on a webpage. The framework of a mobile app is a bit different. Yes ads can be incorporated in to apps, but not at the same saturation level as a webpage, and there is not as much screen space for things like Media bars. Now there are accusations of cooking the books and insider trading being thrown around.

http://www.wsws.org/articles/2012/may2012/face-m24.shtml

I think this is just the tip of the iceberg, this shit is gonna get ugly.

Apple's not an information technology company. They make computers, not websites, so there's really no connection to them and the dot com boom.

 

Facebook however is incredibly similar to the dot com boom,.

With the correction is 2000, more than just dot-coms were affected, it was a broader technology bubble..

The internet was a major advance in technology, causing more than just the internet to become overvalued. All of the big name tech/computer companies became inflated by the bubble and then felt the pain when it popped. Companies like DELL fell from 55 to 17, INTEL from the 70s to 20s, MICROSOFT from 58 to 30, HPQ from 46 to 22 and CISCO from 75 to 16. I'd say there is some relation but I wasnt saying that AAPL was going to collapse, I was simply saying that when people see certain companies, like apple, take off they tend to forget the losses of recent history and want in on the 'next big thing,' i.e. an over-hyped facebook. The thought of 'steady eddie' returns becomes unbearable when in hindsight you realize you could have invested in 10,000 in apple 10 years ago and it would be a near 550,000 now. Of course everything is crystal clear in hindsight.

@evil. I've been reading/hearing a lot about the switch to the mobile platform as well, which creates some new obstacles for FB as you say. How much Ad space is there on a cell phone screen? Plus with the move to mobile platforms, more people are using facebook as a utility like email rather than a social network, just logging in to check messages/leave a comment quick not spend the amount of time browsing and 'creeping' as they normally would on a computer or tablet.

Funny CNN Money article title, about sums up a lot of people's thoughts toward the whole situation:

Facebook IPO: What the %$#! happened?http://money.cnn.com/2012/05/23/technology/facebook-ipo-what-went-wrong/index.htm

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