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Well, if you've been living under a rock, you may or may not know that Facebook had it's IPO on Friday of last week.

The quick and dirty stats:

-Facebook was valued at $38 a share...which made it's value about 88 times its actual earnings. In contrast Google trades at about 18 times earnings, and apple at 13 times earnings (red flag 1)
-After making modest gains to start (touching $40 a share), the stock started to free fall. At this point, underwriters (the huge banks that bring the stock public) started buying shares to keep it from falling below the initial $38 price on its first day (basically...it looks WAAAAYYYY bad if you bring something public and it falls below the IPO price on day 1. It means the banks fucked up. Red Flag 2)
-Mark Zuckerberg and several other facebook insiders sold a lions' share of their stock on Day 1. Zuckerberg himself made over 1 billiion off of it: http://www.marketwatch.com/story/facebo ... ry_popular (RED FLAG 3...if the insiders of the company / principal investors are saying SELL SELL SELL, that means they have little confidence in the stock price rising and are trying to get their money now)
-There were issues with the NASDAQ trading...as trading was supposed to start promptly at 11AM but there were "technical errors" and trading didn't start until 11:30AM. Many minor investors had their trades not go through, or ended up buying shares at a price higher than they originally intended (Red flag 4)

-Facebook has since fallen to about 31-32 a share
-Facebook is now facing a lawsuit ( http://www.nydailynews.com/news/money/f ... -1.1083145 )...saying that certain big time investors (Bank of America, Morgan Stanley, etc.) were given insider info about the companies revenues...which is why so many of them dumped the stock so fast after the IPO.


So what does this mean?

-The entire IPO system is broken and a scam run by big banks and various insiders to profit hugely off of a flimsy stock.
-Zuckerberg and his minions became millionaires and billionaires off of the stupidity of the masses. I knew Facebook was shit...their revenue model is shit...which is why I didn't let my money anywhere near it. That said...people got fucked over by bad information and a false valuation. That's just wrong.
-PROTIP: There are very few internet companies that should go/be publicly traded. The market is too volatile, and the revenues/growth unproven (Yeah...buy Google...but they are an internet backbone with loads of revenue streams and growth potential. Facebook? Not so much.)

The Occupiers definitely have a point. This is an example of the system simply being FUBAR.

Zuckerberg doesn't care. The man can afford to buy a small island.

We are the 99%.

I'm pretty disgusted with the whole situation myself.

On the one hand, investing in something like that is foolish and risky, and a fool and their gold are soon parted, so I don't feel THAT bad for the people who invest in facebook without investigating all they could ahead of time.(or at least enough to make the risk/reward based on how little or much they are going to invest worthwhile.)

On the other, allowing the public to start buying stock in your company, offloading all of yours right before you let your company crumble, and then making off with the profits is a dishonest dicky move of the highest order. I dont mind someone making astronomical profits, but to do it by misleading their customers is horrific.

I'm so glad I deleted my Facebook when I was 18.

Anyone who didn't see this coming the moment Facebook went IPO is fucking stupid.

No. Really, REALLY fucking stupid.

Aestu of Bleeding Hollow...

Nihilism is a copout.

I never understood the IPO thing.

In that, the mass rush to buy said stock.

In the vast majority of cases, the prices comes down after the IPO.

Probably has something to do with a fear that supply will run out.

In any case, if these people want to lose money, or make less than optimal investments, be my guest.

The purpose of an IPO is to raise money for a business, so they can use that money to do business and make money for their investors.



The number of shares for sale is limited. If the company is expected to be profitable then the shares are a lucrative and coveted investment, driving prices up.

Supply is limited because too great a supply dilutes profit per share and control of the company. Also see: "poison pill".



The blather about the free market on TV confuses some people because they fail to understand that financial instruments are grounded in tangibles, and not just "supply and demand". The point is not the market value of the shares, it's what they represent, the profitability and relevance of the business.

That said, anyone who bought into this hype is stupid.

Aestu of Bleeding Hollow...

Nihilism is a copout.

Aestu of Bleeding Hollow...

Nihilism is a copout.

Fair point - but I never said facebook was a fantastic business model...just that they created jobs and paid taxes. Which they have done.

Unfortunately I didn't see this complete screw job from Zuckerberg and Co coming.


Hindsight is 20/20. I'm just glad I knew enough not to buy any of that terrible stock

Remains unproven. We do not know how many of their workers are domestic nor do we have reliable financial information.



Hmm. Is that so.

Aestu of Bleeding Hollow...

Nihilism is a copout.

$38 was the biggest bargain ever

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Not really, not only is the stock way overvalued based on the holdings of FB and its future potential earnings (which no one can accurately predict, mind you, it wasn't that long ago when everyone was on MySpace, remember?), because of the way the sale was structured Zuckerberg maintains complete control of the company and the other investors get no real say in how its run. FB has pretty much tapped as much in advertising as they'll ever be able to demand (or so I'm told), and their next attempt at raising their revenues is going to revolve around selling your data. The tin-foil hat brigade is going to love that. Buying the stock in the company at this point is like coming in on the tail of a pyramid scheme.

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Jubber

AKA "The Gun"
AKA "ROFeraL"

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Aestu agrees with Jubber post, time to check your bunker's supply of canned goods

EDIT: It's also very possible that Zuck chose this moment to go IPO (long after the company became an going concern and therefore does not need startup capital) because he believes that Google+ will win in the end.

Aestu of Bleeding Hollow...

Nihilism is a copout.

time to move to google+

I would never invest in anything if i couldn't see, black and white, how the fuck it makes money - let alone money to justify those kinds of share prices.

That's the problem with facebook. They make money on advertising, yes. However, in terms of long term growth...their advertising performs like dogshit when compared to Google and other internet companies. It's almost comical how bad it is.

So that aside...they have some deals with game companies (Zynga) and get some kickbacks here and there.

They are going to try this "featured post" thing where you could pay to h ave your post show up on all your friends' walls (this will fail miserably). They can never charge for facebook, because people will just move to another site.

So yeah - really not a good long term business plan.