Facebook falls flat in public debut

[psi2941]

I would call being valued at $100Billion and staying steady at the IPO price pretty good

u should not be any type of trader. even a little boy knows this stock is way over priced. Its PE ratio is 100! Your better off investing in FRN.

Apple's PE ratio is 13
Google's PE ratio is 20
Microsoft PE ratio is 10
Oracle's PE ratio is 13

its growth potential doesn't even look good. at least google, apple, Microsoft, and oracle all have development department. facebook only has a new design development, no new ideas or products.

 

[Dforkus]

u should not be any type of trader. even a little boy knows this stock is way over priced. Its PE ratio is 100! Your better off investing in FRN.

Apple's PE ratio is 13
Google's PE ratio is 20
Microsoft PE ratio is 10
Oracle's PE ratio is 13

its growth potential doesn't even look good. at least google, apple, Microsoft, and oracle all have development department. facebook only has a new design development, no new ideas or products.

There are no hard and fast rules in investing, more like rules of thumb, but one of my favorites is that when you hear terms like "everybody knows that..." or "even a little boy knows..." whatever this universal truth that "everybody" allegedly "knows" might very well be wrong...

That said, I still think the big tech play is apple, actually less than a 12 PE and less than 10 if you price in their 110billion dollar plus cash hoard.

 

[awake]

California, AKA "Greece USA", was hoping for a big windfall on this IPO (through capital gains). That was probably the only driving reason it was offered to the public - a politically orchestrated money infusion out of desperation.

 

[angelatc]

Have you looked at the graph? High frequency trading occurred at 40 and 38, Morgan Stanley probably holds half of the traded shares of facebook now because they didn't want to lose face since they brought the stock to the market. This sucker is going down next week. fair value? 6 bucks. Trololololo.

Having worked on an IPO desk, I can assure you that it's not so easy to prop up the stock price. There's certainly an amount of stabilization to be done, but when the stock decides it's going to tank, it tanks.

I don't understand why Facebook demands such a premium, although I wonder - is part of it a signal that the market is starved for IPOs?

 

[Voluntary Man]

Facebook, meet Faceplant.

can't wait for that exhibitionist fad to die a painful death. what's next, people walking around with their flies open?

 

[angelatc]

its growth potential doesn't even look good. at least google, apple, Microsoft, and oracle all have development department. facebook only has a new design development, no new ideas or products.

Yes, and a customer base that really doesn't care for it. Netflix had the happiest customer base in the world, but managed to screw it up. OTOH, Facebook doesn't have a happy customer base. I have never heard anybody say they love Facebook.

 

[thoughtomator]

I would click LIKE on this thread

 

[brandon]

People loved facebook before the death of myspace.

Facebook has done an excellent job at integrating and embedding their software all throughout the web. There's several sites that I use that I don't even have a login for other than by going through facebook. Some of these I even spend money on, like chess.com.

I don't think facebook is that great, but I do think they are here to stay for at least several more years.

 

[fatjohn]

There are no hard and fast rules in investing, more like rules of thumb, but one of my favorites is that when you hear terms like "everybody knows that..." or "even a little boy knows..." whatever this universal truth that "everybody" allegedly "knows" might very well be wrong...

That said, I still think the big tech play is apple, actually less than a 12 PE and less than 10 if you price in their 110billion dollar plus cash hoard.

Apple the big play? It's already the largest company in the world by market cap and what do they make? hipster gadgets. There is almost no difference between an iphone or a galaxy phone except the price. Once the going gets though for hipsters they wont update their phones anymore for every release. Apple is hype and its stock is a perfect example of a bubble perhaps waiting for a final blowout to 1000 but then staying years below it's current level.

 

[thoughtomator]

I don't understand why Facebook demands such a premium, although I wonder - is part of it a signal that the market is starved for IPOs?

It doesn't demand a premium, as the rapid evaporation of its market cap is demonstrating.

Things are a little different today in terms of the ability of TPTB to artificially support a stock price, with the vast majority of the volume being HFT.

 

[angelatc]

Even at $33.50, the stock is still commanding a huge premium, IHMO. But then again, I have very little financial interest in companies that don't actually produce anything.

 

[angelatc]

Apple the big play? It's already the largest company in the world by market cap and what do they make? hipster gadgets. There is almost no difference between an iphone or a galaxy phone except the price. Once the going gets though for hipsters they wont update their phones anymore for every release. Apple is hype and its stock is a perfect example of a bubble perhaps waiting for a final blowout to 1000 but then staying years below it's current level.

Apple is a luxury brand. Their continued success is a matter of retaining that status, no doubt. Hard to do, this staying trendy thing.

 

[furface]

Apple is a luxury brand. Their continued success is a matter of retaining that status, no doubt. Hard to do, this staying trendy thing.

Apple's market is growing in 2 places:

1. Seniors in the US & Europe.

2. China & other places in Asia. There was an interesting story about a teenager in China who sold a kidney to buy an IPhone. OK, it's a stupid thing to do, but it tells you something about the strength of that brand in China.

I mentioned this before here about the Senior market in the US and got some flak for it. Go to an Apple store and take a look at the customers there. They aren't hip young kids. They're old farts who can't figure out how to use Android, Windows & Linux.

IPhone & IPad are equivalent to those big key cell phones that advertize to your grand parents. That's their market, not tech savvy geeks.

In China it's a status brand, but in the US it's something else. If Samsung can get better software and do better marketing in China, Apple will have problems, but I doubt they can do either.

 

[angelatc]

Apple's market is growing in 2 places:

1. Seniors in the US & Europe.

2. China & other places in Asia. There as an interesting story about a teenager in China who sold a kidney to buy an IPhone. OK, it's a stupid thing to do, but it tells you something about the strength of that brand in China.

I mentioned this before here about the Senior market in the US and got some flak for it. Go to an Apple store and take a look at the customers there. They aren't hip young kids. They're old farts who can't figure out how to use Android, Windows & Linux.

Heh - you might be talking about me.

My mom just bought a new home computer. She went with an Apple. I hate it because it's not really compatible with anything I do. Assuming that I had an Apple, I'd probably soon hate Windows just as much.

But as for branding - my kids won't settle for just any old mp3 player - no. They have to have iPods.

Of course, I must admit that I got a Zune a couple of years ago, and it wouldn't do the one thing I wanted it to do, which was allow me to rip my CD audio books so I could listen to them. I could buy audio books from audible, but I couldn't import any of the CDs my Mom sent me when she was done. So it never, ever got used. And now they're obsolete anyway.

We had a Creative MP3 player, but the company opted not to update their software to make it Vista compatible, so I'll never buy anything from them again.

So if I decided to buy another portable media device, I'd probably go for an iPod.

 

[furface]

Heh - you might be talking about me.

I apologize. You have to admire what Apple has done in the phone and pad business, though. Android devices are getting better, but they're still much more clunky and problematic.

But my kids won't settle for just any old mp3 player - no. They have to have iPods.

IPod Touch seems to be popular with kids in a status way. I'm not sure how many parents are willing to make the jump to an IPhone with $50/month+ service charges. My oldest son bugged me for an IPod touch for a while, but I held him off and now he wants an Android phone which I'm going to get him.

I got him a Nokia phone previously because I wanted to write some apps for Symbion. Nokia, being the idiot company they are cut their developers off and jumped ship for Microsoft. Nokia's an interesting company. You could almost make an argument against European socialism just demonstrating the stupidity of Nokia's business moves. Compare them to Samsung and see how much better companies in non-socialist countries are run.

Nokia's problem? The company is constantly forced to rearrange its business plan to feed the monstrous socialist beast in Finland.

 

[Anti Federalist]

Having worked on an IPO desk, I can assure you that it's not so easy to prop up the stock price. There's certainly an amount of stabilization to be done, but when the stock decides it's going to tank, it tanks.

I don't understand why Facebook demands such a premium, although I wonder - is part of it a signal that the market is starved for IPOs?

Even at $33.50, the stock is still commanding a huge premium, IHMO. But then again, I have very little financial interest in companies that don't actually produce anything.

Agreed.

More malinvestment if you ask me, huge amounts of increasing worthless FRNs looking for a place to go, as opportunities to invest in companies that really grow and produce things shrivel up.

 

[Seraphim]

Yes. This.

Zerohedge did a comprehensive article about how HFT bots, largely massive investment banks like Goldman Sachs, stepped in at key points and bought up masssive amounts of the stock....only to support the IPO release valuation...it didn't even result in a pop to the upside.

Give it 18 months. Facebook will be much like Myspace. Capital depreciation to the Nth degree.

Have you looked at the graph? High frequency trading occurred at 40 and 38, Morgan Stanley probably holds half of the traded shares of facebook now because they didn't want to lose face since they brought the stock to the market. This sucker is going down next week. fair value? 6 bucks. Trololololo.

 

[furface]

fair value? 6 bucks.

I haven't been following the thread closely, so I don't know what numbers have come up. Here's what I think. At $35 FB is about 100X earnings I think. Google is traded at about 20X earnings. FB's upper range should be Google's P/E. The reason is that FB shows every sign of losing revenue & market share and Google is still growing. This means an 80% reduction which is an upper limit of $7 per share.

What's worse is that I get the feeling that a lot of hard core FB users are also FB investors. You could end up getting a triple whammy effect:

1. FB users lose confidence and sell their shares.
2. They also leave FB because they're pissed.
3. FB's business goes down and the cycle repeats until it approaches zero.

 

[angelatc]

Agreed.

More malinvestment if you ask me, huge amounts of increasing worthless FRNs looking for a place to go, as opportunities to invest in companies that really grow and produce things shrivel up.

I saw an interview with a CEO a couple of weeks ago, and he said they had no intention of taking their company public, because to do so would seriously inhibit their ability to strategize for long term growth at the expense of short term profits. That's one of the side effects of the instant gratification we demand as a society, I guess.

 

[tttppp]

I saw an interview with a CEO a couple of weeks ago, and he said they had no intention of taking their company public, because to do so would seriously inhibit their ability to strategize for long term growth at the expense of short term profits. That's one of the side effects of the instant gratification we demand as a society, I guess.

Sarbanes-Oxely is another reason not to go public.