May 18, 2012

Facebook On The Home Front

Priced at $38 per share, Facebook (FB) should begin trading soon. We’ll run a piece after the market closes, but if you just can’t wait that long, here’s the place to start the discussion and an opportunity to call the first day close.

UPDATE: Facebook closed the day at $38.23, up 0.61 percent on its first day of trading. We’re holding our follow-up piece until Monday Tuesday.

First Published: May 18, 2012 8:30 AM

Comments from "Plugged In" Readers

zynga down 13%, triggers circuit breaker

Posted by: nnona at May 18, 2012 8:46 AM

Opened at $42.05, dropped to $40, headed to $39.

Posted by: js at May 18, 2012 8:49 AM

Yay, 42! Now 43! Uh, now 41. 40. Hmm, 39. 38...

Znga down 13% to a new low? I wonder if the fact that znga provides 15% of FB's revenue is important?

Posted by: anon at May 18, 2012 8:52 AM

It looks like the bankers did a great job pricing this IPO. Should be interesting to see how this performs through the lockup.

Posted by: eddy at May 18, 2012 8:53 AM

the feeding/slaughter action begins

lol

Posted by: johnny at May 18, 2012 8:54 AM

Pandora, yelp, linked in, down around 7% after a similarly disastrous day yesterday. Splunk down.

Pass the prozac.

Posted by: tipster at May 18, 2012 8:55 AM

"It looks like the bankers did a great job pricing this IPO"

You're being sarcastic, right?

Posted by: nnona at May 18, 2012 8:57 AM

Nope. They priced it at $38 and that is where it is trading. Looked at LKND that priced at $45 and opened at 70 and popped from there to now only trade at $102. The bankers under priced LKND.

Posted by: eddy at May 18, 2012 9:04 AM

Wow, you're not being sarcastic, smh.

Posted by: nnona at May 18, 2012 9:07 AM

38...39...40

No need for Prozac after all. Thanks.

Posted by: lol at May 18, 2012 9:08 AM

Posted by: kg at May 18, 2012 9:10 AM

kg, awesome find

Most revealing is the "3 years after". There was a ton of roadkill around Y2K. Then what would be interesting would be 30 years later with AAPL...

Posted by: lol at May 18, 2012 9:18 AM

Could the fact that the market was down yesterday and today be caused by investors selling off existing holdings to get funds to buy FB? If so then expect the waters to slosh around for quite a few days until some sort of market equilibrium is reached.

Posted by: The Milkshake of Despair at May 18, 2012 9:23 AM

A trading price of $38 means the "real" price would be lower if not for that comfy $1 billion cash cushion the underwriters are willing to tap to make sure the floor is $38.

Hence the term underwriter.

Posted by: DataDude at May 18, 2012 9:24 AM

My new hero is Mark Pincus. Sold hundreds of millions of znga at 12 just before it started on a long tank.

FB will bounce around, I'm sure. Bankers priced it brilliantly to maximize dollars for FB rather than IPO flippers.

Posted by: anon at May 18, 2012 9:29 AM

c'mon you guys, this was trading on Sharespost at $42 3 months ago. That puts it at $45-50 now. Add in a couple of buckets of hype and this has to close sharply higher than where it is now.

Anything less than $50 is a disaster. It will close well above that.

Posted by: tipster at May 18, 2012 9:29 AM

$50 would be a disaster?

lol. Only 1000+ millionaires minted overnight. That's one disaster.

Posted by: lol at May 18, 2012 9:40 AM

I think the disaster that tipster refers to is the PR disaster of a much hyped IPO not delivering a large first day gain. Consider what would happen if it closed at $39. That would be a gain that minted many millions but would be a flop in terms of an IPO.

Posted by: The Milkshake of Despair at May 18, 2012 10:36 AM

"Personally, I think Zynga will be a monster IPO."

Posted by: eddy at November 9, 2011 4:18 PM

"Seems like ZYNGA is going to climb after all. We'll see. Wonder whether the CW at Zynga HQ was, "Just wait until the Facebook filing.""

Posted by: [anon.ed] at February 2, 2012 8:19 AM

"zynga down 13%, triggers circuit breaker"

Posted by: nnona at May 18, 2012 8:46 AM

Posted by: ReadingForRealtors at May 18, 2012 10:36 AM

What is the purpose of an IPO? Most people would tell you that it is to raise money for a company to further expand. If that is the purpose, then having the stock end trading close to the offer price means it was a "good IPO."

If you believe that leaving billions on the table for the hype you get surrounding a large first day pop is worth it, than prices near IPO price would make it a flop.

I believe the former. You can buy a lot of advertising for $5B.

Posted by: NoeValleyJim at May 18, 2012 10:44 AM

Tipster: "c'mon you guys, this was trading on Sharespost at $42 3 months ago. That puts it at $45-50 now."

Yet 3 months ago you were talking about how FB was declining at 5% per week which would put it at $20-25 now.

Please make up your mind.

Posted by: Rillion at May 18, 2012 11:01 AM

And slash and hack goes the editor.. while Tippy continues to make shit up.

[Editor’s Note: Try attacking the facts or argument rather than the individual. Others can do it, you can too.]

Posted by: R at May 18, 2012 11:03 AM

"You can buy a lot of advertising for $5B."

Now if only someone would buy that much advertising on FB and it might be worth the price its trading at!

Posted by: Rillion at May 18, 2012 11:05 AM

NoeValleyJim - I agree that an IPO that closes close to the offer price is technically a success and a sign that the analysts' crystal balls were quite clear. I was referring to the hype, bump, and dump style of IPOs that have occurred in the tech sector.

Posted by: The Milkshake of Despair at May 18, 2012 11:36 AM

Attack "the facts or the argument"? On a post from Tippy? Wouldn't there have to be facts in his posts in order to do so?

Or should I just say "a friend of mine" or "as I understand it"? When Tippy puts forward facts, I'm happy to argue them. But when he makes shit up....

[Editor’s Note: Let’s see, you could counter tipster’s statement of what will constitute success or even argue that perceptions of the IPO’s success are less important than the wealth created, both of which others seem perfectly capable of doing.]

Posted by: R at May 18, 2012 11:42 AM

Straw poll: so where do folks think the valuation will be 6-12 months from now? Materially up, materially down, or kinda flat? Just curious.

Posted by: Legacy Dude at May 18, 2012 12:06 PM

Yes, NVJ, big success. fb REEEEAAAALY needed the money. I heard they were rummaging through the seat cushions in the sofas in the employee lounges they were so starved for cash.

Face it, 39.14 at noon is an unmitigated disaster and not what anyone expected. It's under its last sharespost price. I literally was expecting double this price by noon.

I can't wait for the "Downfall" knockoff videos of this disaster. Traders on Wall Street are calling it fp (faceplant). It's a catastrophe. Meanwhile, the nasdaq is off another 1%, after losing 2% yesterday. Yelp, Lnkd, Zynga, all down.

And look at the tone of the posts here. The bears are dancing in the aisles, and the realtors are FURIOUS!! That tells me all I need to know.

The underwriters will decide on a closing price in about a half hour, and in the final minutes, will buy like crazy to get to that point, so I doubt it closes this low. But I never expected this in a million years.

Posted by: tipster at May 18, 2012 12:14 PM

So today, the first day of trading, nobody can short.

But Monday, all bets are off. So get on your short shorts. We may be headed below $38.

Posted by: DataDude at May 18, 2012 12:18 PM

profit taking in the last hour? Where is that Prozac again?

Posted by: lol at May 18, 2012 12:23 PM

"profit taking in the last hour?"

Right, because it can't go below $38 today (underwriters floor), but can go below $38 Monday (who wears short shorts).

Today's close prediction: $38.01

Posted by: DataDude at May 18, 2012 12:30 PM

"Traders on Wall Street are calling it fp (faceplant). It's a catastrophe."

"The bears are dancing in the aisles, and the realtors are FURIOUS!!"

"an unmitigated disaster"

Ed: Are these the 'facts' I'm supposed to be arguing against? I'm not sure.

Posted by: R at May 18, 2012 12:42 PM

Is it possible today's low number of MLS listings is in any way connected to FB's debut?

Are sellers/agents waiting to see how ridiculous (or not) the open was before pricing new inventory?

Other theories?

Posted by: DataDude at May 18, 2012 12:53 PM

"I literally was expecting double this price by noon."


Just another wrong.

Posted by: Eddy at May 18, 2012 12:58 PM

So what else you guys got? Buy now, before that profit powerhouse, Twitter, goes public?

Posted by: tipster at May 18, 2012 1:03 PM

Wait, Tippy, you're the one who said this was going to be double, up to 75 today!

I said it was overvalued.

So what you got?

Posted by: R at May 18, 2012 1:12 PM

"Face it, 39.14 at noon is an unmitigated disaster and not what anyone expected. It's under its last sharespost price. I literally was expecting double this price by noon."

I had a custody client call at 10am and wanted to buy 100 shares for an account. After we discussed where it was trading (it was at about 41 at the time) he placed an order with a limit at 39. Clearly not everyone was expecting it to have doubled by noon and some knew it would be back down off the highs for the day by the time it closed. Would he have been better off putting the limit all the way down to 38? Yes but he was getting pressure from his family to make sure he got some shares.

As for it being a disaster, I think that is a bit of an overstatment.

Posted by: Rillion at May 18, 2012 1:17 PM

Should be interesting to see how this performs through the lockup.
Lockup? Around 57% of the shares offered in the IPO were from insiders -- pretty amazing results. I joke; obviously there is still a large number of shares that can't be traded. Perhaps Thiel can now buy some more SF 'incubator' homes...

Posted by: EBGuy at May 18, 2012 1:21 PM

I've heard:

Flopbook
Failbook
Fakebook

But zynga! wow! The funniest part of all is that when Pincus and the insiders sold at $12, and extended the plebe-employees' lock-up period in the process, it was purportedly so that there wouldn't be a big flood of shares hitting the market post-lockup. Way to screw your employees ...

As I stated here about a week ago, dot-com bubble 2.0 has already started to deflate. FB proves my point.

Posted by: anon at May 18, 2012 1:24 PM

Facebook closed the day at $38.23, up 0.61 percent on its first day of trading. A plugged-in DataDude came close with a prediction of $38.01. We’re holding our follow-up piece until Monday.

Posted by: SocketSite at May 18, 2012 1:34 PM

@NVJ:

"What is the purpose of an IPO? Most people would tell you that it is to raise money for a company to further expand. If that is the purpose, then having the stock end trading close to the offer price means it was a "good IPO.""

That may have been true with Apple, Microsoft, etc. I think, at least since mid-90s, the purpose of the IPO is 99% to unload this crap onto the mutual funds & other sucker investors.


Posted by: wrath at May 18, 2012 1:39 PM

People already successfully won arguments with Tipster using those points, ed. NVJ in particular, repeatedly. But he doesn't acknowledge anybody else and posts A LOT of vague, rude rants. It's boring to have to always be remedial, and Tipster banks on that with his repetitive polemic. Your have a soft spot for Tippy and it continues to read strange the way you hold others to better standards.

Posted by: anon1 at May 18, 2012 1:48 PM

Yawn. Close at 38.23. Boring. But boring good.

A new 100B company is now trading publicly. And it is local. This is the big news.

Whatever tipster, anon or other seriously depressed/angry posters can say is mere noise.

Congrats to all parties involved. A big day.

Posted by: lol at May 18, 2012 1:51 PM

"dot-com bubble 2.0 has already started to deflate. FB proves my point."

A successful IPO valuing Facebook at ~$104,000,000,000 and ~110 times earnings proves the supposed bubble has started to deflate?

Posted by: R at May 18, 2012 1:55 PM

Yep. Facebook was worth MORE in the last private market stock sale in April. It opened at $42 and ended up down 9% from that. And it held its 38 price only because Morgan and Goldman bought a sh**load at 38 near the end of the day.

NASDAQ did not crash in a single day in 2000. But that's when bubble 1.0 started to deflate. Took about two years. We've seen the peak of this one.

Posted by: anon at May 18, 2012 2:07 PM

FB = will turn out to be just another wall street scammer deal

Posted by: johnny at May 18, 2012 2:24 PM

I heard the same after GOOG did its IPO and added 100 over 100 of share price. The massive uptick proved the IPO was underpriced, which probably deprived GOOG of capital.

Maybe they right-priced FB?

Posted by: lol at May 18, 2012 2:26 PM

@lol:

no, you're wrong; no one ever said the GOOG deal was a wall street scammer and it wasn't; not even close.

FB is no comparison to the economics of GOOG when GOOG went IPO. GOOG's growth (quarterly and annual) was accelerating at its IPO and beyond for several years.

FB's core is decelerating. No question any banker on the FB deal would tell his significant other that fundamentally, FB at 38 is a Pig - only the slaughter will come next but most likely not until post Nov election - until then, the government will do everything in their power to keep numbers elevated and they will likely succeed, but after ... watch the Nature of the Market take over and destroy the bloat

Posted by: johnny at May 18, 2012 2:43 PM

So the government is propping up Facebook now?

Posted by: R at May 18, 2012 2:45 PM

@R

indirectly it is, but it is indirectly propping up the entire public equity market, not only FB, but everything and the government making this attempt to prop up the economy to the fullest extent possible - no question about it

Posted by: johnny at May 18, 2012 2:49 PM

So then the whole economy is a pig that's going to slaughter? And after election the slaughter comes?

Posted by: R at May 18, 2012 2:57 PM

YES, that is what will happen - a huge slaughter consistent w/08

and btw, zuckerberg aint no brin or page

Posted by: johnny at May 18, 2012 3:02 PM

I thought for sure it would finish somewhere around $48.00-$52.00 per share.

Selling it on a Friday seems like it was a huge mistake, had it gone up investors would have had 2 days to worry about what happens Monday?

Does anyone know how long the lock down time is?

Posted by: inclinejj at May 18, 2012 3:20 PM

91 days for one group with about $10B.

Posted by: anon at May 18, 2012 3:29 PM

Did anyone else notice that it was the worst trading week for stocks so far this year? In that light, the FB IPO seems like it went pretty well.

Posted by: kic00 at May 18, 2012 3:40 PM

Still laughing at johnny's posts. I couldn't find the keys for the giggles. Facebook IPO is a government conspiracy. I now can say I've read everything. My life is complete at last. Thank you Johnny.

Posted by: lol at May 18, 2012 3:53 PM

@lol

love that i made your life complete!

it's not a conspiracy whatsoever ... it is just sad that citizens like yourself have no clue on how the government, including the Fed Reserve do nothing but destroy citizens financial lives.

at any rate, no need to reply, in the fullness of time, "lol" will realize the wisdom of the comments.

nothing personal against FB, but in the fullness of time reality will show FB as a Pig

FB is only a symptom of the government elevating current economics in the pursuit of the government and its wishes

printing 2 trillion dollars out of thin air off a base of 800 billion is something that "lol" does not have the "power" to do - only the government does and in the short and long run, it is bad policy and bad for individual human beings

Posted by: johnny at May 18, 2012 7:19 PM

@johnny, you seriously need to take the tin foil hat off. I'm sure you have great theories on Area 51, 9/11, and some other crazy government conspiracies. But please do not pretend that you are on some higher plane of understanding when it comes to understanding the markets. We are all aware about the role of goverment as it relates to the market. But if you, or tipster for that matter, really knew what was going to happen with 1000% confidence than you could / would have made untold millions. Instead, you make up crazy insane ideas or theoretical trades. So please go out and put a major short on FB, scan the trade slip and upload it so we can all watch in awe of your amazing market predicting powers rather than constantly have you make your calls the next day like a Monday morning quarterback. I'm sure tipster has some theoretical trade of FB on the private markets at $50 and picked up a bunch more at 42.23 on the public markets.. Keep us posted guys.

Posted by: Begood at May 19, 2012 8:50 AM

@Begood:

hey, no worries. it's just my opinion and worth no more or less than yours. i'm not out to prove anything to anyone, including you. the fact you write what you write here though reflects your insecurity and lack of confidence, in my opinion.

hey, i could be wrong, but i doubt it. 30x sales for fb is dumb. it financials are not even accelerating, they are decelerating both quarterly and annually.

hey, the government manipulation of the economy is nothing new. it's 100 years old and traced back to the origination of the Fed Reserve. if creating 2 trillion dollars off a base of 800 billion in less than 4 years is not manipulation, then what is??

if the dollar being worth 95% less today than what it was when the Fed Reserve was created by the government 100 years ago is not a reflection on the manipulation of the economy by the government, then what is??

i just focus on facts and draw opinions from the facts.

finally, i ain't showing you any of my trades - no way jose

later

lol


Posted by: johnny at May 19, 2012 9:48 AM

in the short and long run, it is bad policy and bad for individual human beings

So I am kind of curious, why do you think that inflation is bad for people? The standard of living over the last one hundred years has gone up by about 10 times for the average American.

During the hundred years before that, when we were on the gold standard, the standard of living of the average American went up 3 times.

Why do you think we were so much more economically successful after the creation of The Fed and adoption of modern financial techniques?

Go back and read what the economy was like before the government started "manipulating" it and get back to me.

Posted by: NoeValleyJim at May 19, 2012 10:12 AM

@NoeValleyJim:

tell me the source of your numbers?

when you do, i will "get back to you"!

Posted by: johnny at May 19, 2012 10:56 AM

Angus Maddison, The World Economy: A Millennial Perspective is a good reference.

You can see a summary of sorts online here:

http://eh.net/encyclopedia/article/steckel.standard.living.us

Posted by: NoeValleyJim at May 19, 2012 11:15 AM

Your Jedi mind tricks are useless. And a weak defense of your jibberish by attempting to base it on 'facts'. Are you actually suggesting that modern monetary policy is a farce? Just admit your out of touch with reality and that your opinion is of no more value than anyone else's or go on record with your position. No one expects you to share your trades because there are none. Just Internet persona with too much free time.

Posted by: tinfoilhatguy at May 19, 2012 11:56 AM

not a website. show the facts.

"modern monetary policy" is a farce and will be proven such in the fullness of time

lol

Posted by: johnny at May 19, 2012 1:23 PM

saying "in the fullness of time" and "pig to slaughter" constantly is especially repugnant from somebody who admittedly has zero save opinion

Posted by: anon1 at May 20, 2012 10:03 AM

@anon1:

lol!!

let's keep the dialogue going ... it will be a great experiment!!

Posted by: johnny at May 20, 2012 10:07 AM

The World Economy: A Millennial Perspective is a book, not a web site. Perhaps I was not being clear.

You can use it at the library, but they will not let you take it home, if you can't afford the $54 it costs at Amazon:

http://encore.sfpl.org/iii/encore/record/C__Rb1910592__SThe+World+Economy%3A+A+Millennial+Perspective__Orightresult__X4?lang=eng&suite=pearl

http://www.amazon.com/The-World-Economy-Perspective-Development/dp/9264022619

It is probably worth a look, you might disabuse yourself of some of that Austrian nonsense.

Posted by: NoeValleyJim at May 20, 2012 11:43 AM

@NoeValleyJim:

Nah, your lack of respect is enough evidence (lack thereof) for me.

I'll circle back w/you when the evidence is clear - assuming you'll still have an Internet connection!!

loads of lol!!

Posted by: johnny at May 20, 2012 12:25 PM

d*mn, down to 34 already. FB wasn't supposed to tank until after I bought put options!

And znga at 6.75!

Party's over.

Posted by: anon at May 21, 2012 7:12 AM

The New York Times' Gretchen Morgenson called around to some brokers and asked them what they thought for her story, Facebook Gold Rush: Fanfare vs. Realities and this for me was the money 'graph:

Indications are that Facebook was bought primarily by individual investors, not institutions. Indeed, institutions that had invested early were big sellers in the I.P.O. To many market veterans, this showed that the smart money was getting out while the getting was good.

I'm not going to try to predict the closing price today, or the closing price at the end of the lock up period for that matter, but having an IPO for a company that doesn't need the money, has been trading widely on secondary markets while private and just wants to let insiders cash out doesn't seem to be a good thing for retail investors, even if they "want in".

Options start trading on what date again?

Posted by: Brahma (incensed renter) at May 21, 2012 7:42 AM

johnny,

I think you're rewriting history on GOOG. There was the same hype from the media as well as the same denial from people on MBs. A similar thing happened here, except FB tried to get the pricing more accurately now, because the GOOG IPO's underpricing stole the company from some valuable monetizing.

And about the government conspiracy to inflate. It's not a conspiracy, it's a policy for growth and we should be grateful the Fed is not trying to shrink the economy into oblivion like the Dutch/Luxemburger/German technocrat idiots in Brussels. They all have the same square glasses, the same suits, the same thoughts, and the same wish for pain for themselves and for everyone. They killed the economy by promoting fantasy derivatives and now these non-elected morons want to punish the innocent...

Posted by: lol at May 21, 2012 8:52 AM

"A similar thing happened here, except FB tried to get the pricing more accurately now, because the GOOG IPO's underpricing stole the company from some valuable monetizing."

If you think Facebook tried to plan what's happening now, you are smoking some serious crack. With some angel dust sprinkled on top. And chugging down a Kool-Aid chaser to help with the cotton mouth.

Posted by: nnona at May 21, 2012 9:06 AM

FB's privacy policies: great for FB, bad for its users.

FB's IPO strategy: great for FB, bad for its investors.

FB's stock grant policy (switching from options to RSUs since 2007): great for FB, not as good for its employees.

Now that's a formula for long-term corporate success!

FB is no GOOG. Not even close. But kudos to the insiders that have struck it rich by fleecing the muppets.

Posted by: anon at May 21, 2012 9:23 AM

@johnny Suit yourself.

Check out some of LMRiM's ramblings if you want to see how well the Austrian's predictions have worked out. He claimed that we would be in a deflationary depression by now and there was nothing The Fed or anyone else could do about that.

Most of the apocalyptic doom sayers have crawled back in their holes.

Have to give tipster props for calling the FB IPO correctly. It seems like Second Market has completely changed the way price discovery happens around IPOs. Here is an interesting graphic Second Market put together of FB growth:

https://www.secondmarket.com/facebook-on-secondmarket/

It looks like with today's drop, we are back to Feb 2012 valuation. I believe that $34 was the low end of the range that FB set for is IPO.

Posted by: NoeValleyJim at May 21, 2012 9:37 AM

"I believe the former. You can buy a lot of advertising for $5B.

Posted by: NoeValleyJim at May 18, 2012 10:44 AM"

"95% yoy increase? That has got to be some kind of record.

Not exactly an apple, but I would have thought the demo job would lower the value, not increase it since no one can get financing anymore.

Posted by: NoeValleyJim at April 7, 2012 10:00 AM"
http://www.socketsite.com/archives/2012/03/buyer_and_dbi_beware_1.html

Guy Thinks this FacePlant was Intentional
Guy didnt Blink at a +95% YoY but First Sale was not arms length
No Offense But Equals Pretty Gullible

Money Quote: "91 days for one group with about $10B."
Insiders Cant Even wait 6 months to $$$ out

Posted by: ReadingForRealtors at May 21, 2012 9:52 AM

nnona, care to substantiate?

Posted by: lol at May 21, 2012 10:00 AM

lol, Google's IPO may have had hype, but it was deserved. And I seem to recall their IPO took the form of a Dutch auction, not banksters setting pricing in a back room, so I don't see how it could have been deliberately under priced. I agree with you that what wound up happening produced the effect of "leaving money on the table".

Posted by: Brahma (incensed renter) at May 21, 2012 11:00 AM

FB = Pig and in process of being slaughtered just like LNKD and ZNGA and many others.

social media is/was a bubble
in 2000 it was Internet
in 2008 it was Real Estate
in 2012 it is social media

none of these bubbles would have occurred had it not been for misinformed and dumb monetary (and fiscal policy).

Europe is comparable but not completely. The EUR is dysfunctional because there is not legal system that binds - all parties are "sovereign" countries - and the sovereign countries under pressure should simply redeem their EUR and custody their EUR in another bank, best offshore, and encourage their leaders to default on their debt, leave the EUR, issue their own currency and afterward citizens should then repatriate their inflated EUR for their newly issued sovereign currency.

problem solved but only the "1%" or less have any balls

Posted by: johnny at May 21, 2012 2:25 PM

Heh. I just logged into my account at the electronic brokerage I use to see what was what and got this message on a splash screen/page:

Facebook
[brokerage's name] continues to deal with the aftermath of Friday's market issues in delayed processing of orders for Facebook (FB) stock. As they did then, [brokerage's name]'s systems continue to operate normally. Although some executions were reported back from market makers over the weekend, we are still waiting for final responses on other orders. This is an industry-wide issue and we are working aggressively to address it. We appreciate your continued patience.

I like that they were classy enough (or just litigation averse?) to avoid mentioning the problems at NASDAQ with regard to trading in this stock. I'm getting deja vu, like this kinda thing happened in the recent past.

Posted by: Brahma (incensed renter) at May 21, 2012 2:37 PM

Down another 7% so far today, 17% overall. Not priced so well after all.

Posted by: shza at May 22, 2012 7:42 AM

Lot's of interesting things around this IPO. Increasing price range and share allocations while at the same time having the lead underwriters reportedly cutting FB earnings estimates pre-IPO - and not publicly disclosing this information, and then rumors that bankers were buying shares Friday to keep the price above $38. I have to say that I stand corrected on the bankers doing a great job here. Sort of a disaster. It's going to be a long 12 months for anyone long FB. The IPO process is tricky but its not this tricky.

Posted by: eddy at May 22, 2012 9:32 AM

Down another 7% so far today, 17% overall. Not priced so well after all.

It depends on your point of view. In the point of view of FB, they collected quite a bit of funding. Maybe more than they should have, probably. Then again it's much better than undercollecting like GOOG.

Today it's a listed stock with all the fog and hype that it implies.

Posted by: lol at May 22, 2012 10:19 AM

They just need to pull the listing from the market, reset DOM to zero, and relist at $30. Problem solved.

Posted by: anon11 at May 22, 2012 10:20 AM

decent analogy.

FB 5/18/12 = D9/D10 2006-2007

The correction has been about the same, but the FB bubble sure corrected more quickly!

Posted by: anon at May 22, 2012 10:25 AM

@eddy- Timely Insights
Love to Hear youre thoughts on WebVan and Enron

"It depends on your point of view. "
Lets See how many Guys "Leave to Spend More Time With Their Family" over this Great Pricing Job

Posted by: ReadingForRealtors at May 22, 2012 10:38 AM

Sorry, lol, you're wrong.

When netscape went public, individual investors had high hopes for something new. They didn't quite understand it, but its potential seemed limitless. The underwriters doubled the originally estimated netscape offering price and the stock doubled again the first day.

That gave individual investors all the greed they needed to jump into the next one, and the next and the next. They didn't know how to read a balance sheet and they didn't care, they were IN.

So what did that do? #1. It increased the money that came INto tech. Now, instead of fully experienced investors who were already fully invested in tech jumping to a new company by pulling money from a different one, it added new money to the market.

#2. It allowed companies who would not have been able to pass scrutiny to go public. The investors weren't looking at the balance sheets, they didn't even know what one was. Pets.com? Sure.

#3. Investors knew there would be a ready market. The public got into a greed frenzy that fed upon itself. There was going to be a ready supply of investors willing to take any POS public because they knew they could sell it off to the public for more than they paid.

Morgan Stanley blew it. BLEW it. None of these things will now happen. The public got burned, the hype soured immediately and so none of the three things that occurred last time will occur this time. The public is going to run away from the next one, no new money will come in - each company will just cannibalize wealth from the others, and the investors are going to drive much harder bargains. It wasn't facebook's responsibility to keep the party going, it was Morgan Stanley's and they blew it.

It was, to a lesser degree, in Facebook's interest to leave money on the table, too. The initial floats of stock in an IPO are small. You sacrifice some money on the table in return for selling follow on offerings in a positive environment. You WANT to leave money on the table at first because you are selling so little of the company. That provides you favorable publicity so that you can sell follow on offerings easily. You lose money on 10% to make money on the other 90%. They got more money than they otherwise would, but here's a newsflash: THEY DIDN'T NEED THE MONEY!! They succeeded at the one thing they didn't need to succeed at.

So everyone blew it and now the area will suffer. My businesses and others like it will all suffer. Growth will be much less than it could have been. They blew it. Everyone blew it. Down another 5%.

There will be some accounting tricks played and things will look good at the first earnings announcement, but the experienced investors understand it, and know that you can't keep those tricks going for long. You stop ordering office supplies, cut your outside developers, etc., just to goose your earnings a bit. Doesn't last and everyone knows it. They blew it.

A couple of companies made it out: notably Zynga. The order of the IPOs was a choreographed dance. They wanted the weaker ones out first. They knew fb was a black hole that would suck up lots and lots of money. But they could have had a large source of idiot investors to throw money into that black hole and lots left over. They blew it.

The standards for who goes public will now go up. The valuations will go way down. Investors will not make the same mistake again. They only went through with it because they figured the public would atone for their sins. Morgan Stanley blew it. Big time. Like Zynga employees, who mostly got nothing - they took much lower salaries to get options, that for most, proved to be worth less than the salary given up, the employees of fb will take it on the chin.

fb dropped another 1% while I wrote this. BLEW IT.

Posted by: tipster at May 22, 2012 10:59 AM

FB isn't going out of business anytime soon and certainly isn't a fraud. The Day 1 of the IPO looked good out of the gate and soured very quickly. Riholtz has some great things to say on the subject and largely echos my sentiments. It really is quite the story for all the wrong reasons. I'm not sure Tipsters doomsday scenario for future IPOs is accurate. And if FB can pop out two consecutive quarters of solid earnings (i.e., beat estimates) and the stock recovers than you will be surprised how people will have short memories. That said, in an election year with lots of economic uncertainty, it is going to be a long road.

There are still lots of good companies in the pipeline and I've always said that using FB IPO as a direct proxy for SF Real Estate was red herring. The fact is that these companies are here, doing well and fostering a legitimate industry around technology. It doesn't help that FB is trading lower but, again, FB is not going out of business, and will be a major force in the bay area for quite some time.

Posted by: eddy at May 22, 2012 11:50 AM

^^^very true

I'll add that nobody knows where FB will be 1 month, 1 year, 10 years from now (yup, not even tipster-the-world-weary-all-cognizant). What counts is that they're a viable business, they're listed, they are very decently financed, they enjoy a great brand recognition and a fabulous following. Not many players anywhere can claim that.

Posted by: lol at May 22, 2012 12:05 PM

It also appears that the troubles at NASDAQ played a role in the drop on Monday. There were a lot of sell orders on Friday that never got executed by NASDAQ.

http://finance.yahoo.com/news/exclusive-q-hedge-funder-bet-184159786.html

"Anonymous Hedge Fund Manager: Monday morning comes. The stock is trading at $38.25. NASDAQ calls brokers and says we cannot take a position in this stock.

NASDAQ has rule that says this is how we handle computer f--kups. NASDAQ rule 4626. It says if we f--kup we'll pay it. They have a kitty of $3 million that they'll payout.

So they told us: You need to fill out a form that says what you thought you sold it at and what you actually sold it at. The message was: If you haven't sold it, sell it.

Business Insider: That's a shocking allegation. Did NASDAQ say "sell your Facebook stock" or did you just infer that?

Anonymous Hedge Fund Manager: Their form is very basic. It has two pieces: W hat you should have sold it at and what you did sell it at. The form had to be in by noon. You couldn't send them a form if you didn't sell it. Your form that was due by noon would be incomplete. That forced everyone to take a loss.

We had to make a decision. We said book a loss and go to NASDAQ. In a heart beat, the stock goes to $36 because there was tremendous selling pressure in those 30 minutes."

Posted by: Rillion at May 22, 2012 12:21 PM

Part of the reason that FB has such a strong following is that its members are not aware of the subtle drain that participating in FB places on their ability to interact with the market. Once FB members come to the realization that they're being duped there could be a big PR problem. When FB members come to their senses they'll want compensation or they will switch to an alternative that doesn't exploit their members or at least offers better compensation.

Posted by: The Milkshake of Despair at May 22, 2012 12:30 PM

Maybe instead of guessing the price, we can guess the *excuse* for why it's down another 8% today?

Posted by: tipster at May 22, 2012 12:34 PM

Ok, but now it's Tuesday and it's trading at 31.

I do love the forthright (albeit anonymous) admission of fraud by that guy though. I wonder what he said he "thought he sold it at."

Posted by: shza at May 22, 2012 1:27 PM

I'm sure he thought he sold it at $42!

Posted by: Rillion at May 22, 2012 1:31 PM

At this point, what matters is the price at the end of the employee group's (first?) lockup period. Using what 'anon' wrote above at May 18, 2012 3:29 PM, I'd call the first day that employees can sell 17 August, also a Friday.

That's plenty of time for the speculators to get cold feet and head for the exits.

Posted by: Brahma (incensed renter) at May 22, 2012 1:35 PM

FB = Pig in process of being slaughtered.

a Wall Street scammer deal

LOL

just wait until Q1 2013 and see what happens to these "social" pigs

Posted by: johnny at May 22, 2012 2:02 PM

johnny: if you want to comment, please try to come up with something new.

Posted by: R at May 22, 2012 2:11 PM

c'mon, you guys, it's only down 26% in three days. You all talk as if that is really bad. I tell my wife how lucky she is - Priscilla Chan's husband just lost about $4 billion in two days, and I've never done anything nearly that bad.

So it looks like I missed out on my short opportunity, unless it rises above about 35. If it falls below about 16, I would buy. Between 16 and the current price? Too much dumb money interested in it and thus it's too much of a gamble so I'll sit out.

Posted by: anon at May 22, 2012 2:15 PM

Foresight-Eddy

"Personally, I think Zynga will be a monster IPO."

Posted by: eddy at November 9, 2011 4:18 PM

It looks like the bankers did a great job pricing this IPO. Should be interesting to see how this performs through the lockup.

Posted by: eddy at May 18, 2012 8:53 AM

"It looks like the bankers did a great job pricing this IPO"

You're being sarcastic, right?

Posted by: nnona at May 18, 2012 8:57 AM

Nope.

Hindsight-Eddy

"Riholtz has some great things to say on the subject and largely echos my sentiments."

"While it only took one day to confirm what many investors had unsuccessfully tried to argue for years—that Facebook was over-valued—the drama and battling over the social media giant has really only just begun. In fact, investor Barry Ritholtz of Fusion IQ says, in the attached video, that he thinks the problem started long before the shares officially came to market."
http://finance.yahoo.com/blogs/breakout/plenty-blame-share-faulty-facebook-ipo-ritholtz-172334833.html

"Thus, what we see are a series of bad decisions made by Facebook’s executives going back many years. The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange. The stock broke syndicate on Monday morning, and I would not be surprised to see it eventually cut in half from the way-too-high offering price."
http://www.ritholtz.com/blog/


Hmmm
None Of eddys "friends" at facebook told him about the problems going back Many Years till today...
After The IPO Flopped

Posted by: ReadingForRealtors at May 22, 2012 2:21 PM

The muppets got Face-rooked.

On the plus side, realtors at open houses will finally stop talking about "the Facebook IPO". Time for a new talking point.

Posted by: El Bombero at May 22, 2012 2:52 PM

Here's a joke I heard today:

Facebook is going to start offering a new type of employee stock option... puts.

Posted by: NoeValleyJim at May 22, 2012 3:06 PM

@R:

repetition, repetition, repition

necessary for success

look at yourself, R!!

lol

Posted by: johnny at May 22, 2012 3:13 PM

What would constitute success?

Posted by: sparky-b at May 22, 2012 3:19 PM

@sparky-b:

simple, being right whether its having the right answer or prediction

Posted by: johnny at May 22, 2012 3:27 PM

"What would constitute success?"

Not Getting Subpoenaed Three Days after IPO.....

"May 22 (Reuters) - Massachusetts Secretary of Commonwealth William Galvin has issued a subpoena to Morgan Stanley over an analyst's discussions with investors on Facebook.

"The Securities Division has put out a subpoena to Morgan Stanley in connection with the analyst's discussion with certain institutional investors about the revenue prospects for Facebook," a spokesman for Galvin's office said."

Posted by: ReadingForRealtors at May 22, 2012 3:27 PM

ReadingforRealtors,

Not the success of the IPO but

"repetition, repetition, repition
necessary for success" as written right above my comment.


johnny,

Being right doesn't require repetition of your 'Pig to slaughter' line or your 'fullness of time' line. So if you just want to be right, great it is in writing on this site and we shall see when and if it comes true.

Posted by: sparky-b at May 22, 2012 3:34 PM

@ sparky-b:

hmmmm ... let's see ... I said FB was a pig before it went pub at 38; it's down 18% in 3 days

hmmm ... I said LNKD was a short at 117 ... let's see ... in just a couple weeks the trade is + 14%

hmmm ... I said ZNGA was a pig prior to going pub and its down 50%

and their is more but you can do your own search of "johnny"!!!

LOL!!

Posted by: johnny at May 22, 2012 3:43 PM

johnny,

I am not saying you are wrong, and neither was R, just that you are repeating yourself over and over. SO, we got it, you don't like these stocks.


As far as searching what you said, I think you also said the entire economy is a pig for slaughter and the Sea Cliff house you bet eddy would be lucky to get 50% of its list price. But you didn't keep repeating it over and over so it's fine by me.

Posted by: sparky-b at May 22, 2012 3:56 PM

Did the fat lady sing? Did she? I guess it's not over yet then.

Posted by: lol at May 22, 2012 4:00 PM

@ sparky-b

OK. sorry for the oversight, YES, the entire US economy is also a pig headed for slaughter. my prediction is post Nov election but during sometime Q1 2013

think about this, Sparky ...

from the founding of America until 1995 the federal government accumulated 5 trillion dollars of debt, yet since Obama became Prez, it has taken just 3 years to tack another $5 trillion

the pig is fattening up, baby!!!

lol!!

re: Sea Cliff - let's see what it clears at before commenting again

more lol!!!!

Posted by: johnny at May 22, 2012 4:03 PM

johnny,

Why not predict it will be Dec.21st, timing perfectly with the end of the world.

Super LOL, the fullness of time won't be that much time at all.

Posted by: sparky-b at May 22, 2012 4:32 PM

@eddy, fb isn't about to go out of business, but it didn't need to: FB has, in three days, lost about twenty times the market valuation Pets.com lost from its peak to its bankruptcy.

Posted by: tipster at May 22, 2012 4:42 PM

"On the plus side, realtors at open houses will finally stop talking about "the Facebook IPO". Time for a new talking point.

Posted by: El Bombero at May 22, 2012 2:52 PM"

I vote every buyer going to an open house this weekend actually use the old meme in a completely non-ironic way. Could be worth a few laughs, if done with a straight face.

Posted by: anon11 at May 22, 2012 4:47 PM

@eddy, fb isn't about to go out of business, but it didn't need to: FB has, in three days, lost about twenty times the market valuation Pets.com lost from its peak to its bankruptcy.

Posted by: tipster at May 22, 2012 4:50 PM

Good thing we live in America and can change our opinions. The fact that FB had some questionable issues on their IPO revealed only after the first day, over the weekend and throughout the first part of this week are enough to make anyone change their opinion. I'm sure Johnny with his insights and trades is the one buying at 130 Seacliff at a 50% discount. Buy high / sell low, right? Still waiting for those trade slips rather than internet claims to fame.

Posted by: eddy at May 22, 2012 6:17 PM

@tipster, what is your point? FBs value is based on some pretty serious growth projections. They may or may not hit them and investors beliefs will largely drive the value over the short term. I suspect you know how valuations work and the difference between how FB earns revenue versus pets.com.

Posted by: eddy at May 22, 2012 6:31 PM

This, for me, was the most succinct summary of the situation; from the Guardian, Reality dawns for Facebook investors, first and money 'graph:

We will only know what the market thinks Facebook is really worth when the IPO dust has settled, which will take several weeks or months. But Monday's 11% fall in morning trading is an encouraging development. It suggests that reality is dawning already that Facebook was grossly overpriced at 25-times last year's revenues – yes, revenues, not profits. That valuation was asking for trouble, and it's good that it has arrived sooner rather than later.

El Bombero, as I alluded to above, I don't expect real estate agents to stop talking about the impact of the Facebook IPO on the local market until after the lockup period expires.

Yes, Facebook isn't going out of business anytime soon. Yes, a lot of insiders and early investors were able to cash out even if the amount didn't "pop".

But if a mega-hyped IPO like Facebook doesn't go over spectacularly, then it'll be that much harder for the next, lesser-hyped company to pull in the "dumb money". And that can be a good thing.

Posted by: Brahma (incensed renter) at May 22, 2012 6:34 PM

@ sparky b

you ask why not predict w/precision Dec 21?

because I am not that smart. I am also not predicting the end of the world either. what I am predicting is a serious economic contraction consistent with 2008.

you don't have to believe my view, but mocking my view w/out countering my view w/facts of your own is a red flag on your part

Posted by: johnny at May 23, 2012 7:16 AM

johnny,
You think it's after the election but then not until early 2013. December 21st falls between those, so I was recommending you just fine tune your prediction a bit more to coinside with the Maya Calender. (insert funny face here)
"I am also not predicting the end of the world". Your "fullness of time" line has a religious connotation having to do with the second coming and depending on your view of how that will go down it may be the end of the world. (insert sad face here)

"you don't have to believe my view", okay I won't.

"mocking my view", see above. I was making a joke that seems to have gone over your head.

"countering my view w/facts of your own",
strawman. You don't have any facts, just pigs.

"red flag on your part", in regards to what? All I said was you keep repeating yourself and it wasn't needed. That is a fact, as you say I can do a search for "johnny".

Now let me get back to buying up as much FB stock as I can get my hands on.



Posted by: sparky-b at May 23, 2012 8:39 AM

johnny,

You're making a prediction based on belief and you're asking sparky who contradicts you to counter your prediction with facts. Did I read it well? Sorry I'm laughing so hard tears get in the way.

This is on the same level as the rapture craziness. No-one could really contradict that, simply sit back and enjoy the embarrassment of the doomsayer.

Just like the Rapture idiots, you have 3 tries!

Posted by: lol at May 23, 2012 9:37 AM

Fun trading day. There is so much demand to short fb stock, and virtually no supply, that the price of borrowing the stock to short it has spiked to 28 percent (normally it's under one percent)!

To short a stock, you have to borrow it from someone who has specifically made it available by stating they will not be selling it themselves any time soon. It takes three days to get the actual stock after you buy it. Thus, today is the first time that anyone who bought it at the IPO actually had it to make it available, and almost none of them are doing so - they may want to sell it themselves. Thus, there is almost none available to lend to "the shorts" who will borrow it, sell it and then buy different shares later (at what they hope will be a lower price) to return it to the lending owner.

Because there is almost no supply yet, and thus, no shorts, Morgan Stanley will take advantage of the lack of pressure to buy what it can to try to stabilize the price over the next few days to terrify the potential shorts.

A lot of funds who don't get the stock at the IPO will stay away from a new issue for the first five days to allow the price to stabilize. It is those funds who will usually commit to longer holds, and thus, make their stock available for shorting. Thus MS knows they have between today and next Wednesday to use whatever money they have to try to push up the price because the money will go farther in this period than it will later. So they'll buy to boost the price a little each day if they can, to make the shorts think it's on an upward trajectory.

A week from this Monday, more stock will be available to short and we'll see who wins the battle of wills.

Posted by: tipster at May 23, 2012 11:34 AM

@ lol

not a problem. I'm "anonymous" just like u and everyone else on this site

lol

enjoy the sunny day

Posted by: johnny at May 23, 2012 12:53 PM

Just a follow-up to what tipster wrote above 5/23 at 11:34 AM and what I wrote 5/21 at 7:42 AM…from the Los Angeles Times' 'Money & Co.' blog, Bears punish Facebook stock as options trading begins:

The social networking giant's stock price closed down $3.07, or nearly 10%, to $28.84 on Tuesday. The precipitous drop began when Facebook went public May 18; since then shares have fallen 24%.

…Options traders swept into the market Tuesday and placed bets that the stock had more declines ahead, including some who felt it might slip another 42% before stabilizing. Tuesday was the first day for options trading on the stock.

In the short to medium term, I'd be willing to predict that it won't go below $24 per share within the next two months, but it might be a rocky road getting there.

Posted by: Brahma (incensed renter) at May 29, 2012 3:13 PM

At this point, what matters is the price at the end of the employee group's (first?) lockup period.

I obviously don't have any way of knowing whether or not FB is going to go the same way, but it looks like Groupon is trending downard at the end of the lockup period. From The Chronicle with Bloomberg earlier today, Groupon stock tumbles as IPO lock-up period ends:

Groupon's stock is tumbling as insiders are selling their shares after a post-IPO prohibition was lifted.

Employees and other insiders are required to wait before selling their stock following a company's initial public offering. Groupon's lock-up period expired on Friday. The company went public on Nov. 4.

Shares of Chicago-based Groupon Inc. fell 93 cents, or 8.7 percent, to $9.71 in midday trading Friday. Earlier, the stock was as low as $9.53. That's the lowest since its IPO, which priced at $20.

of course, the S&:P 500 as a whole is down substantially today, but still.

Posted by: Brahma (incensed renter) at June 1, 2012 11:56 AM

Brahma, Splunk is down 16%+ today after it's first earnings statement. Earnings are getting a much bigger look. It's not just the social media companies getting hammered, it's everyone who can't deliver on the earnings expectations.

Posted by: tipster at June 1, 2012 1:12 PM

point taken vis a vis Splunk and others that may have missed earnings expectations. But not for Groupon.

From CNBC.com about two weeks ago (I'm assuming that there is no more recent earnings announcement for/from Groupon), Groupon Earnings Top Forecast; Shares Jump:

Groupon reported quarterly earnings and revenue that beat Wall Street's expectations on Monday, sending its shares higher in extended-hours trading…the company posted first-quarter earnings excluding items of 2 cents per share…Analysts had expected the company to report earnings excluding items of a penny a share on $531 million in revenue, according to a consensus estimate from Thomson Reuters.

Emphasis added. So the story about Groupon really seems to be more about the increase in supply of available stock and demand for those shares either declining or staying steady.

Posted by: Brahma (incensed renter) at June 1, 2012 5:39 PM

sad how so many remain fascinated by these inflated pigs that are "changing the san francisco landscape"

what a joke

you want to make money in this new "social media" BS? ... short the heck out of em

party is over

Posted by: johnny at June 1, 2012 7:39 PM

"Those who can prove their worth, thrive. For several years, management has called all-hands assemblies every quarter where a handful of Zynga's high performers are each awarded $100,000 worth of vested stock."

http://www.cnbc.com/id/47650503

Posted by: ReadingForRealtors at June 4, 2012 9:08 AM

Post a comment


(required - will be published)


(required - will not be published, sold, or shared)


(optional - your "Posted by" name will link to this URL)

Remember Me?

(you may use HTML tags for style)


Continue Perusing SocketSite:

« A Foreclosed Upon Noe Home Sells For Over...What Wells Was Owed | HOME | Two-Year Payout For Evicted Tenants Accelerated And Approved »