May 18, 2012

"How Big a Pop for Facebook's IPO?"

23 cents.

25 comments:

rick said...

Dud. I struggle with the business model. Advertising revenue is a big deal, but beyond that, I see nothing.

Plus a lot of disgruntled users, at least in my network of friends.

Jay Vogt said...

Wierd, in the old days that would have been (messy underwriter intervention aside) a fairly priced IPO. Too much of a pop and it suggests the IBankers left some of the value on the table at the offeror's expense. And for the benefit of . . . oh, who am I kidding, you know who.

edutcher said...

Facebook is already old hat.

A couple of friends went on LinkedIn because of Facebook's rep.

rehajm said...

Plus a lot of disgruntled users, at least in my network of friends.

This is the thing- the proponents are bellowing about how 'everyone's' on Facebook, but get a group of adults together in any situation and they say yea, they checked it out, but they don't 'go on' very often if at all. Facebook suggested they overestimate the number of regular/habitual users by about 10%. I think it's closer to 90%. PLUS, there's the 'nanna factor'- once your nana is on Facebook, it is no longer cool for you or your friends.

ndspinelli said...

What's 7% of $.23?

Charlie Eklund said...

23 cents?

Zuckers!

Seriously, over the course of the last six months or so, the number of posts by my (admittedly small) group of Facebook friends has tapered off noticeably. I don't know if that's a phenomenon unique to my group or more widespread than that. Perhaps Zuckerberg and company are cashing in at just the right time, in the style of Mark Cuban. Time will tell.

Portia said...

My wife was crazy about this FB stock. She is a user, but rarely, like me. When I heard they had 990,000 million users (nearly a billion) I said yeah, like you and I, hardly use it. Kids and young adults use it some what but it's not that big of a deal.

I assume the .23 is what it went up today? Big increase, now CNBC is trying to explain that. All the hype and .23 cents to show for it.

America's Politico said...
This comment has been removed by the author.
Jason (the commenter) said...

Some people are trying to give the Facebook IPO a positive spin. I assume they own shares themselves or are trying to support people who do. But look at the price of related stocks today. Zygna, which makes games for Facebook, fell 13%.

The bloom is off the rose.

Michael said...

Perfectly priced some would say. No huge pop indicating the underwriters did not intentionally underprice to attract favored clients. Huge volume.

Now the work begins to substantiate the deal.

This was no "dud.". Not at this price. Not with this market cap.

Bill said...

Apparently the underwriters had to buy back a chunk of the stock, to keep the price from falling below $38. We'll see what happens next week.

rick said...

No "dud" you say? The underwriters had to prop it up at the end of the trading day to keep it from going underwater. It was bouncing between $38.00 and $38.01 for about 20 minutes late in the session before skyrocketing to $38.23.

For all the anticipation and hype, this was a picture perfect "dud". You may prove to be correct later, but not today.

rick said...

Next week will bring the announcement of the Zuckerberg autobiography.

The big plus for me is seeing Eduardo Saverin flee to Singapore with his Facebook billions to avoid the punitive US tax code. Hopefully the lesson will be that investment $$$ are movable. Chuck Schumer (D-Media) skipped this portion of the course.

TWM said...

I use FB to talk to my family and some old HS friends. Past that I have given it not one thought, and certainly no effort to click through to advertisers, which I assume FB gets all it's value.

David said...

The underwriters held it above the issue price by buying in the market. Now they have a bunch of stock they did not really want. They may have to buy more but at some point it will have to trade on its own. There are also a lot of holders who bought in the private market before the IPO who will be cashing out. Then the underwriters will want to unload.

Expect a rocky road for FB stock for a while.

Then expect worse, when people figure out that they do not have a real plan to monetize the business.

Alex said...

Explain me Facebook's business plan to grow revenue to Google level.

madAsHell said...

1. Collect uderpants
2. ???
3. Profit!

madAsHell said...

aaarrrggghhh!!

UNDERPANTS, not uderpants!

...but I guess that's pretty funny too!!

Michael said...

David, Rick: the behavior of the stock and the required support on the first day would come as a surprise to any amateur who expects a stock, on opening, to trade up. You believe it is a dud. This is your opportunity to make some huge money by taking your current assts and using them to support a short position in FB. I would suggest you go all in because it is just such plunges that make the real money.

Almost Ali said...

Zuck is a dictatorial punk who would steal your eye-teeth, and the users know it. FB is like AOL in its early suckerhood - but with more dummies per capita than even P.T.Barnum ever thought possible. I mean, we're talking dumber than nails. 900-million of them! Incredible.

And I suppose adding a 1/2 inch to the iPhone screen is to make room for FB's adds?

rick said...

Thanks for the investment advice, re: selling short Facebook. Thank you, but no thanks. If FB went up like crazy on opening day, I would have shorted it. It didn't, so I didn't.

My take was with all the hype, it did nothing on opening day. A dud. I think some people have learned their lesson from the tech bubble.

I have better places to put my investment money, commodities (via ETF's) for one. Betting on inflation and against the dollar.

I assume you are all in on FB stock - hope you do well.

Jay Vogt said...

David and Rick, don't take Michael's advise (which he offered facetiously), but he's right for the most part.

In the end, this was a modestly overpriced offering. A dud for whom? Let's go down the list:

1. Zuckerberg etal - No way! They got as much out of the deal as there was to get at this time.

2. MS and their syndicate - Probably a push. Huge fees, and press and fees and relationships and fees. But, they did have to eat (from what i read) about 15% of the float. I'm sure they were ready for some of that action, but probably not that much. They do have some unloading to do. But it seems a manageable task.

Early purchaser/owners of FG the publicly traded security - To soon to tell. I have no idea how to value FB and even if I did I wouldn't care. It's not for me at 45XEBIT. Not saying its wrong it's just not for me.

Net/net - this was a somewhat overpriced IPO, but all in all a good deal for the sellers and pretty well managed by the bankers (it hurts to just type that). They probably over-hyped it a bit.

Michael said...

I dont own and wouldnt buy FB based on the governance arrangement. I also dont fully appreciate the model. What I do know is that it is not dependent on the cohort commenting here for its income.

ken in sc said...

I really don't understand how Facebook makes any money. Myspace has a lot more interesting commercials, and yet they are going down in flames. Facebook is probably next.

rick said...

@Michael "What I do know is that it is not dependent on the cohort commenting here for its income."

No kidding.