A few words on the Facebook IPO:
1: If someone says “they cashed out, you know, raised a tonne of money and can now go acquisition spree and live it large developing their revenue streams” I’d beg to differ. Not only because of the last part, which implicitly states that the bigger the IPO the better for the company fundamentals – cart-before-horse style – but because of one fundamental tech currency. Promises of future awesomeness. Uh? What I mean is that the major problem here is that the overpricing of the IPO meant that the growth potential is fairly low, meaning momentum is gone, meaning that doing the common deal of reduced salary for stock options is dead. If you know that the amount of geniuses who will be working at Facebook will be reduced in the future, why not go to a viable business like Google instead? Ergo, less innovation from FB in the future.
Also, the green shoe option, and the ability to unload the offering shares to the underwriters and major initial investors is now dead.
2: NASDAQ fail. Seriously, why on earth didn’t they just suspend the entire thing? Either before the IPO, or as soon as they started realizing the epic proportions of the chaos unleashed?
3: Rumors that MS and other underwriters were discriminating between which investors gets the information that the projections of revenue growth might be a little bit on the rich side – not surprising, but a goddamn scandal nonetheless. Does anyone ever want to buy anything that this syndicate puts out ever again?
4: Investor stupidity. You were investing in imaginary cash flows far into the future in the tech business, where for all we know a Chinese social network, Google+, or a mobile app might just make the company as valuable as last years newspapers… (not that today’s newspapers are particularly valuable either…) Seriously, 108 P/E, or at the peak, 130? 27 P/S? You say you bought when there essentially were no quoted and order confirmations?
Irrespective of the other issues with this, if you bought in, you deserve to get burned. Enjoy the ride down to below fair value, I’m calling a share price of $8 before I’m even remotely considering buying this.