Looks like Facebook stock is taking a nosedive. Some analysts feel it may go as low as $10.00 a share. What are your thoughts?
I wrote a hub about why I would not buy FB stock the day before it started trading. I think that FB will trade around $25 in about six months.
I posted a reply before the IPO to the question of Facebook as an investment. I said then and still agree that the growth estimates are far too rosy, especially in light of the 11 hour announcement that mobile was hurting the revenue models. I believe this is a high risk play not just in terms of growth estimates, but in terms of long term viability. The service FB provides could easily be nothing more than the flavor of the day. It may do very well over the course of time, but given the fickle nature of the internet, I think it is a very high beta play.
They just announced (they being the media) that the large investment banks (Morgan Stanley et al) lowered their earnings estimates on FB during the IPO time frame but ONLY TO SELECTED CLIENTS.
Supposedly the insiders at FB cannot sell their stock until mid-November. Unless you get off on risk that gives you enough time to see the dust settle and also weather maybe one more downward push on the stock as they dump.
From my point of view, Google and Facebook are the same. I get good value from each of them and they don't get a dime from me. Now... I don't see why FB couldn't achieve the same ad revenue as Google. What's the difference? They both get incredible amounts of traffic. But who clicks on ads? I don't? Do you?
Ah, must admit I am sort of glad the stock didn't take off. I think in the near future it will continue to drop off a bit until things settle down and its not such a trendy topic or stock. In the end I am betting it will go up quite a bit in the same way Apple and Google have done. Its always fun to watch the stock market tho!
Not at all surprised.
The 4 major banks involved with this underwriting are exactly the same fantastic four that caused the mortgage crisis in the States.
The IPO was grossly over valuated @ 100 billion. This means, it would have to sustain an annual growth rate of 2.1 billion. Given the business model of strictly Ad Revenue Generation or a launching into the mobile market, with an FB app store, the competition is already 4 years ahead. The only option is for Microsoft to build hardware specifically for FB software (ie a Facebook Smartphone, FacePad, etc.) in the hopes it could sell it to the masses. Which then changes FB core "beliefs" of altruistic social media into a typical media sales model.
During the IPO road show, Zuck decided not to show up to some major events -dope! In addition, two days before blast off, one of the key underwriter spokespersons deflated the IPO value -unheard of in the history of stocks.
The Volume of shares is just ridiculous ~560 million, plus the green shoe. Since Friday, there have been nearly 100 million shares traded. This may not sound like a lot, but given most F500 companies have a weekly of 50 million shares traded with a Bullish trend and their price cannot get above opening in 4 days of trading? Yeats & Keating!
Lastly, it caused some major companies like LinkedIn -and even some of their partner sites- to lose huge volume and value. That is not a good sign. Instead of buying Instagram photo App, for 81 billion, they should have bought Zynga, who supplies 90% of their games platform. This could be huge revenue for them vs a PPC on a "shared story".
Best outlook is to short them, like everyone has been or after the lockup period, go long put. My recommendation is to buy into LinkedIn. This is one hella great company, with four consecutive growth quarters this year and nearly zero adverts.
Newest Nicknames for FB:
Flubbook, Fakedbook!, Zuckered, again. Fizzlebook, OccupyFacebook, MySpace (oh, wait, that already happened -lol) etc.
$29.11 @ 1:15PM EST.
Literally 4 million shares dumped in 5 seconds; 12 noon on the dot.
Yeats & Keating!
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