“Facebook Inc. shares got off to a rocky start in what has been the most highly anticipated initial public offering in history,” Joe Bel Bruno reports for The Los Angeles Times. “Facebook founder Mark Zuckerberg rang the Nasdaq opening bell from company headquarters in Menlo Park, Calif.”
“The stock jumped more than 10% in the first few minutes of trading. But then sellers swept into the market and that gain evaporated,” Bruno reports. “‘It’s a total disaster because the stock is trading right at the IPO price,’ said Francis Gaskins, editor of IPOdesktop.com in Marina del Rey. ‘They didn’t want that in a million years. A traditional IPO is up 10% or 15%.'”
Bruno reports, “The inauspicious opening suggests that retail investors paid close attention to reports of soft financials and big selling by insiders… There had been hopes that Facebook’s IPO would be a shot in the arm to the broader markets. But that too appears to have fallen by the wayside. Major U.S. stock indexes were all higher in the hours leading up to the public offering. Once Facebook shares began to weaken, however, so did the market.”
MacDailyNews Take: Facebook (FB) is currently trading at $38.13, +0.13, or +0.34%.
Read more in the full article here.
Stephen Gandel reports for Fortune, “Add taxes to the potential reasons the social network’s stock didn’t pop in its IPO. The issue is the $4 billion dollars that will be owed by Facebook’s employees as part of their stock windfall in six months. That tax bill is almost certain to lead to a wave of forced selling of at least 100 million of the company’s shares, and quite possibly much more, within the next six months. The risk of all those shares flooding the market was likely a weight on Facebook’s offering.”
Read more in the full article here.
Andrew Tangel reports for The Los Angels Times that Facebook underwriters are propping up the stock as it nears break-even marks: “The big Wall Street banks that brought Facebook public scrambled to prevent the stock from collapsing into declines.”
Tangel reports, “The underwriters averted a potential debacle by scooping up shares of the company during the Nasdaq debut. This propped up the stock, keeping it above the $38 offering price through most of the day. ‘When a deal gets priced and breaks price on the first day, that’s definitely a major embarrassment,’ said trader Andrew Frankel, co-president of Stuart Frankel & Co. “‘But it didn’t do that here – at least for the time being.'”
“The practice is pretty standard during IPOs, especially high-profile ones like Facebook. The big banks buy into a wave of selling as a way to prevent their customers from suffering big losses,” Tangel reports. “The stock bolted at the open to $42.05, but then quickly withered in the first hour of trading. It touched $38 several times, but eked out a small rebound…”
Read more in the full article here.
MacDailyNews Note: Next, Zuckerberg will be on the iPhone begging Cook for Ping integation.
Facebook is rubbish share. Now is the time for stupid people to help early investors or fb staff to cash out.
Then they should be fine given the number of stupid people on the loose these days…
🙂
Fortunately Mother Nature does periodically purge the shallow end of the gene pool. 🙂
Which is seemingly uncountable, even by the Facebook brainiacs
I think google is doing better than Facebook. Look at how android is penetrated in mobile phones, Facebook is so passive and the ads are not like Adsense which gives ads to the users who are interested to see based on google data bases.
Facebook has ads? Either my Adblock extension is working, or my mental block is because I don’t even notice them. I’ll try a see if they’re there next time I’m on. If they do have ads, they must be REALLY PASSIVE.
Facebook does have ads on its desktop version.
Google may be a one trick pony but Google has some serious revenue and income. FB does not.
Google a ONE trick pony?
I doubt that… they do a lot more then search.
Revenue developing Ads and tracking what people search for and syncing Ads relative to what you seek is masterful. I don’t like it but absolutely amazing if you think about it. Google I believe controls Admob. And they do a lot of research in software not that they are very good… plus had at least the insight to steal code and hack a Droid to press out of the cookie cutter syndrome and start a mobile phone industry like Apple. No. Google is not a one trick pony.
Facebook, what the hell for… I understand the benefits to networking but on Facebook – oh god, Linkedin or others are geared better for that… though Facebook is popular and many potentials to see ads. I think it is moronic…
When 95% of your revenue comes from online classified ads, yah, you are a one trick pony.
Nice pony.
The digital equivalent of the Yellow Pages. A blue chip company, sure. But until they develop a second product, that’s all they are.
Yes, Google will get far since their capacity to steal is equal in strength to their search ability.
Google is a one trick pony. How do they make all their money? Advertising.
Personal opinions of FB and their financials aside, didn’t they give accurate information if the stock is selling at what they priced it as? The idea of a stock needing to bounce at IPO would signal that the company undervalued itself or gave intentionally low prices for the sake of an opening bounce. It’s as if percieved “good” news is better than accurate forecasting. Its a similar situation with Apples forecast earnings. Everyone knows they’re low balling. It as long as they beat their own lowball estimate, they have an easy win in their pocket.
You, sir, are smarter than most analysts. If a stock has a huge pop at the IPO, that means the company got much less money from investors (that is the point of the IPO, after all) than they could have. Having it settle at the IPO price means that they priced it as high as possible, given the demand.
Try explaining that to the friends and family who were allowed to buy at the IPO price.
Stocks usually priced intentionally to climb after the IPO so that those who were able to buy pre-IPO can turn a profit.
You have missed the point of pricing an IPO. You WANT the price to go up quickly after opening because it “proves” that the company’s stock was highly sought after.
First, there always are large, private and institutional investors who are offered large numbers of shares at a price significantly discounted from the public IPO offering price. These usually plan to sell soon after the IPO, so they are highly concerned with the stock going up. Up = Profit.
Second, the stock price taking a big jump on the first day is really good PR and drives more buyers, which further ups the price. A tepid price jump, or heaven forbid, a drop, cools investors’ heels very quickly because they stop and ask themselves, “What does everyone else know that I don’t? What’s wrong with this company?”
Third, the whole point of the IPO is to make money for the corporation and its existing shareholders. If a feeding frenzy develops because the stock is viewed as a good deal, then everyone’s stock goes up, the company earns more money and is worth more money.
The trick for the firm conducting the IPO is to properly price the stock so that it WILL go up after it opens. The fact that Facebook did not go up tells you that the IPO firm did not price the stock properly. My guess is that they were concerned about the same thing happening, and thus decided to cash in on the massive hype and get as much money as they could from the opening bell rather than hope for a subsequent jump, because they knew it was unlikely to occur unless the IPO price was obviously low.
agreed… well taken and stated remark – good post
The “target”price was chosen before hand, and their underwriter jumped in to prevent the price from dropping below the target price. This was a “for display purposes only” IPO; the stock will be in the junk bin shortly, and everyone who bought at the IPO price will lose their shirt.
FB does not “do” anything; why should the stock be worth anything?
Facebook is a non-productive company. They make nothing. They exist because of the perception that we all need to be ‘connected’ at all times. Its an advertising play, at best.
This is the beginning of people going back to MAKING things – this company epitomizes delusion and emptiness.
Emptiness, indeed.
+1
+1
Agreed. Facebook is – a web site.
That’s it.
Yep.
Last I read there are 2.2 Billion people on the internet and Facebook has 900-million accounts wherein many of its members are networking in myriad ways to share and exchange information.
I am one of the millions on Facebook who create video, animation, stories, photographs, poetry, and I share it with the people who are in my circle of FB friends and family.
I have lots of family across the Atlantic whom I’ve never met and sharing our lives brings us together in ways you cannot imagine.
We don’t want Facebook to “make” things, that would deviate from their business model dramatically. We just want them to provide a means to connect with family.
What’s wrong with that?
If it works for you, great. For the most part, Facebook buys and sells the privacy of its members to the highest bidders, while hiding behind the guise of being “a great place to connect” party line. I won’t shed a tear if their stock doesn’t do well.
I have nothing to hide. As far as FB standing or falling on its own merit, I don’t care, I have no skin in the game.
There is nothing wrong with what you describe. It’s pretending like your personal communication needs and wants is a money making proposition that is the problem.
Who’s pretending, or projecting as it were?
Say whatever you want about the financials, it’s way over my paygrade, I’m just a lowly creative who has found yet another outlet for my craft. So sue me.
You already have a means to connect wiht family, it’s called the internet. Facebook is just a website that wants to insert itself into your communications and use the internet, which you already pay for, to add adverts.
Wake up zek, your drooling again.
Doh! MDN ads in your face as you communicate! I’m shocked.
Facebook will be under pressure from investor’s to increase revenues and so the ads which are fairly discreet now, will get way in your face, big bold colors, animations, fireworks, and audio and video you can’t shut off. And then users will flee.
I’ve been strongly warning people about the Facebook IPO since it was first announced. However, I think your sentiment is total BS.
There are plenty of very successful companies providing utility through services without “making” anything.
Facebook is totally over-hyped and over-valued, but that doesn’t mean it’s “empty”, nor a completely invalid business. It just means that the stock should be priced at a fraction of what it is (and ultimately will be).
As far as going back to “making” things… a long time ago the US moved to a service dominated economy, if anything it’s increasingly moving in that direction. Even companies like Apple don’t just make things without providing a whole ecosystem of services to go with the things they make, wherein what they make are really just tools for accessing those services.
Name one….
There are plenty of very successful companies providing utility through services without “making” anything.
YEAH — name one — ok!!!!!
How about these two, Fedex and UPS… servicing industries delivering packages to other places for people and companies.
Extremely successful, they make what? Boxes no. Make paper work and tracking devices no… they deliver.
UPS have fleets of lorries, offices, warehouses, and they actually move things around for people. Facebook is just a website.
@Zek,
The question was about “making” something as opposed to providing a service. UPS makes nothing, but provides a valuable service and is successful at doing it. Facebook is “just a website” ya, and UPS is just a shipper. AT&T is just a carrier. Netflix, the iTunes stores, etc…, they’re all just websites too.
Again, it’s a totally valid argument that Facebook is worth no where near the market valuation it has, and I’d even lead the argument in that regard, but it is a valid business like many others that provide services instead of making anything.
+1000 billy fishburner… agreed
Facebook is a stupid yearbook of who is who doing what.
I hated yearbooks and still do. Nice memory to have fine… but to daily update it and see who is where and saying what today… unimportant, meaningless and playing a video game DOES a person better. Oh yeah – thats why they have added gaming too. FB is a WAISTE LAND.
+1000 billy fishburner… agreed
Facebook is a stupid yearbook of who is who doing what.
I hated yearbooks and still do. Nice memory to have fine… but to daily update it and see who is where and saying what today… unimportant, meaningless and playing a video game DOES a person better. Oh yeah – thats why they have added gaming too. FB is a WASTE LAND.
More meaningless rubbish from ill-informed nitwits. Facebook’s stock will prove to be a reasonable investment in the near term for investors rich enough to stay in the market. The company has value beyond its IPO. Once the dust settles, it will pay a good return in the short run. BTW- I am anti social network
How much did you buy?….. as a businessman, not as an anti social network guy?
Good return in the short run? Same as “hasn’t got any legs”?
No Zuchebubble today. Maybe people actually recognize a colossal waste of time when they see it.
It’s bouncing hard off of $38. Why hasn’t it hit $37.99 at least once today? Looks to me like someone is propping it up. Standing orders to buy as much as necessary at $38 to keep it up.
Underwriters came in to support it so that it would not go below $38.
Yep.. that’s exactly what happened:
http://www.latimes.com/business/technology/la-fi-tn-facebook-trading-20120518,0,6622700.story
People should read that link.
I went all Nelson Munce after reading it.
Great there go our banks wasting our money to save face for this crap IPO and crap company..
I was able to get 50 shares and not worried about that little bit. Facebook will be a winner. However I have a lot of AAPL and I am very worried about that. I keep thinking it has hit bottom but my gut tells me 400 is more likely than 600 now.
I would sell those quick.. The stock will go down – no way they are worth 100B
Facebook or Apple? Both?
Dump Facebook – there is no upside to Facebook – Keep AAPL as there is huge upside – AAPL is a long term stock..
Joe,
I think that you can make $ on both. FB’s biggest problem will come in August during the lockup release when the dilution of shares will become dramatic. 2.5 billion shares was always a signal that this wouldn’t do a double or anything crazy.
If you bought a small amount for a long term investment, I think that you can hold it. This could be like getting into Apple at 6 or Microsoft at 24 when it first came out. In about 2 weeks you will be able to write covered calls on the stock to protect your initial investment if you’re in it for that long.
As for Apple, unless you got into it recently you really have nothing to worry about. Most of the people on here bought it below 200 so are sitting pretty and not worrying. Apple is also a stock that usually does nothing but retracements until about September. It’s one of those stocks that can go to 480 and end up at 700 in a short period of time. My thoughts on this one and on FB: Put small amounts to work for you, accumulate on the way up and know when to fold if you’ve hit the top or go low. Do not invest the house in one stock. Hope that helps.
PS. By the way, there is a rumor that FB will be added to the Nasdaq 100. If the voices hold true, then I wouldn’t be surprised if you see it in August – you guessed it, around the same time that the lockup period ends (If you’re still holding the stock then consider covered call writing).
No covered calls for Joe. He’s only got 50 shares.
In the book 1984 Big Brother kept an eye on people but it was anything but voluntary. In 2012, people willingly surrender all kinds of private data that is bing collected and sold for profit. Facebook’s entire business model is built upon selling your privacy. Kinda strange, if you ask me.
A nice Safari extension called Collusion is available, ported from it’s FireFox project. Shows who’s tracking you by website and allows you to block it.
https://blog.disconnect.me/collusion-for-safari
Facebook desktop version does have ads
As much as I was swept up in the tech bubble of 1999-2000 (and paid the price for it), I didn’t fall for such IPOs as Palm (said by some to be “worth as much as GM”) or Enron. And I had/have no interest in Facebook. It’s a sucker’s bet, with only the big players (Zuckerberg and those managing the IPO) likely to be the winners.
Ha!
I wanted to make a quick trade but my Market order got delayed a few hours ‘a few HOURS!’ for a market order. What a nightmare! I sold when I had the chance and took a small loss. I won’t be buying that stock again. I’ll be sticking with my Tangible shares in Apple.
hahahhahahaahahahahahahahahahahahahahahahah
Not since the Dutch Tulip Mania have so many people foolishly thrown their life savings away on something that has no real value. Mark Zuckerberg is the greatest confidence man in the history of the world…
This is like investing in the pet rock. IT DOES NOTHING!
Really !!!
I don’t know.
Me and my pet rock got stoned a bunch.
Then he hitched a ride on a train…..
So you’re saying I shouldn’t buy those bulbs? The man with the wooden clogs told me it was a great deal and could put my kids through college.
Mark Zuckerberg is the biggest con artist in history.
Another copycat.
I may overlook the fact that I do not like the product. But I see no future in facebook. I personally don’t get it or why its any better than myspace.
Lastly, Zukerberg. He made money off of something that wasn’t even his idea, he cheated those who came up with and hired him to create it. Not even a one trick pony.
Maybe Zuck is the genius everyone is so sure he is, but I don’t see it.
Facebook’s stock IPO price was why beyond Facebooks actual value.
As Facebook’s value was best defined by my kid who said, “Facebook is for old people and creepy people that think they are part of the in crowd because they have a Facebook account and live by lurking in Facebook.”.
I asked my kid what they thought about Facebook Credits, The Reply was, “Why do companies like Facebook and Microsoft go other of their way to try had hide the actual price of stuff. They also think we’re stupid in the fact that they want us to give them cash for something that has no value and is not redeemable for real cash. Do they think that we’re stupid and don’t understand money or is their goal to try and trick us into spending more money on stuff. A dollar is a dollar but a Facebook credit or Microsoft point is worthless and has no value.”.
So, the cool kids don’t like or even use Facebook. So, Facebook’s stock price is worth about as much as a Facebook credit or Microsoft point to my kid, Zero.
Your “kid” sounds more like your own alter ego than a typical teen. The demographic hot spot for FB is young adult, educated, and female.
Facebook? Facepalm!
=:~)
The only way Facebook becomes profitable is if it sells its soul.
Not saying anything is necessarily wrong with that (at some point most of us who want to make a decent living do it some degree). But it won’t be the Facebook that hooked millions of people into it. Instead of being a place where you “meet” your friends, it’ll become a place where you meet your friends with 50 vendors hollering in your ear about minivans, satellite television and the best damn clothes washing detergent on the planet.
At that point, it’ll shed most of its hippest members to some other startup and the cycle will begin again. I just don’t see social networks making money without lots and lots of ads. And I don’t see people using it as much if that becomes intrusive.
And if they really start selling all of your memories, people will leave in droves.
The Southpark episode about Facebook was on last night. Absolutely classic!
AAPL stock has gone from 71% to 69% institutional holdings. Where did the 2% go? A lot of it probably went to prop up the Facebook IPO price so it didn’t go below 38.
To double one’s money on Facebook stock over the next 5 years, it would have to double its market cap to that of Googles and bring in 10x the current revenue of $4billion.
Therefore I would say that the proper valuation of today’s faecebook stock should be about $3.80 a share with a market cap of $10 billion.
The whole reason for the capital raise is to pay back the $50bn foreign private equity raised by Golman Sachs. No doubt these are the people who are selling the majority of shares, which they must have purchased or converted at a discount, because who else could make any money from selling right now?
I can hardly wait until it hits $6.66 a share next week.
Google took a huge drop as Goldman, and Morgan, sold shares to prop up Facebook at end of the day.
Myspace.
That is all.
Exactly.
How many server farms are worth billions?
They are one PR disaster away from tanking because the whole edifice is based upon consumer sentiment.
This is the South Sea bubble / Dot.com bust revisited.
What good is Facebook for?
1) Exposing dumb people without a life on a global basis.
2) Confirming suspicions that certain people are pretty shallow and vacuous – and they just won’t shut up. What is that proverb about staying silent and keeping people guessing instead of opening your mouth and confirming all suspicions?
3) Cheapening the value of real poets, thinkers and intellectuals by allowing anyone to post crap masquerading as intelligent discourse, usually accompanied by a predictable clicking of “like” by a coterie of even more idiotic, robotic and self-serving “followers”.
Facebook is an unproductive fad, a souped-up online message service. It’s become so embedded in popular culture and such a crutch for the kinds of people outlined above that it will survive until something better comes along. But I think its status as a global mover and shaker will gradually fade.
The same could be said of people who post on MDN threads. Just sayin’
Maybe so. But I have never seen an MDN post which says simply: “Eating lunch! Yoo-hoo!!” Or another one: “Sleepy. Going to bed.”
The classic I’ve come across a few times is: “Yawn”