The Facebook IPO

[Russ Smith]

Supposed to be Friday 5-18, currently set to price between 34 and 38 bucks per share. Lots of feedback that it's overpriced, but it was selling for 45 bucks a share on the open market on those sites that allow you to sell pre-IPO stocks.

Kind of interesting. Etrade has a way to buy at the IPO price so I applied but was of course rejected, they won't tell you what the requirements are but apparently you need much higher amounts in your trading account and much more activity than I have which I expected. I just figured can't hurt to see.

I'm considering buying some in my IRA account I have much more capital there so I might actually be able to get it first day open market.

I'm expecting the first trades to be in the 50's, IPO stocks often fluctuate 25-30% the first day so I'm thinking if the first trade is in the low 50's I may put in a buy order in the low 40's and see if it ever executes?

 

[jf-08]

I am eager to see how this one plays out.

 

[TJ]

Talked to my financial advisor about this yesterday. He sees a scenario where if you qualify, your ROI will double in one week. Of course, he said there'd be a sell-off if that happened, but it's still a stock worth holding on to for the long haul


Sent from my iPhone using Tapatalk

 

[Russ Smith]

Talked to my financial advisor about this yesterday. He sees a scenario where if you qualify, your ROI will double in one week. Of course, he said there'd be a sell-off if that happened, but it's still a stock worth holding on to for the long haul


Sent from my iPhone using Tapatalk

Yeah if you get it at the IPO price you're going to make money. Very hard to do that though.

I tried to buy VMWare on the open market after IPO and failed for a few days and have been kicking myself ever since that I didn't buy it anyways, could have tripled my money in a reasonable time frame.

 

[Duckjake]

Talked to my financial advisor about this yesterday. He sees a scenario where if you qualify, your ROI will double in one week. Of course, he said there'd be a sell-off if that happened, but it's still a stock worth holding on to for the long haul


Sent from my iPhone using Tapatalk

I recall the furor over the UPS IPO. Everyone was crazy over how much money UPS was going to make delivering all the items ordered online. I never did hear exactly how that worked out but if I'm not mistaken it wasn't the bonanza many were expecting. Anyone know for sure?

 

[Russ Smith]

Massive letdown so far. Opened late just over 42(IPO price 38). 140million shares traded in first 20 minutes. I had an order in for 44 lowered to 43. Took 15 minutes for Etrade to confirm cancelling. It's now just over 38 up less than half a percent!

I'm trying to buy it in my IRA at 38 with the intent of holding it for awhile but even 500 shares is apparently too small it's not going anywhere.

187 million shares traded now in about 30 minutes. If you have pre IPO shares at under a buck you're rich but the people who thought they'd go up 50% today, pretty disappointing.

 

[Russ Smith]

Weird trading. Nearly 300 million shares traded. My IRA order at 40 never executed, I lowered it(tried to at least cancel is not confirmed) and increased the share amount it still shows it sitting there.

I put in a very small order 80 shares at 39.85 when the stock was just about 40 and 5 minutes later it executed at 39.77. We'll see, it's about 41 now and was nearly 42 a bit ago but it certainly could fall again.

Huge volume but the price isn't really popping and I am amazed an 80 share order executed but a 500 and now 750 share order hasn't.

 

[82CardsGrad]

A year from now I would be surprised if the stock is at $40. It's gonna be very tough for Facebook to prove it's worth as a publicly traded company. Zuckerberg has said time and again that they are not a public company, but a social endeavor. Making money the way Wall St desires is not in the plans for Facebook...
Who knows, 10 years from it could prove to be a worthwhile investment. But I would really be surprised if even 3 years from now the stock is trading much above $40.

Too many shares to be released and not enough revenues & profits... bad combo...

 

[LVG]

Russ: Nasdaq has stated they're having problems with executing FB stock trades.

 

[jefftheshark]

I read something interesting that said that Zuckerberg insisted that there be a larger public participation in the initial release, but that this was considered a mistake by many on Wall Street. The article stated that normally the public is shut out of the offering, and this "demand" is what creates the big pop out the gate. In this case a lot of the entities that wanted in on the deal were allowed in at the initial open and hence there is no frenzy to get in at any price.

Personally I'm staying away from this one. Too many questions on how they'll monetize what they've got to justify a $100 billion market cap. Plus I have that little voice in the back of my head saying that this is the blow-off top for the current bear market rally.

JTS

 

[Russ Smith]

A year from now I would be surprised if the stock is at $40. It's gonna be very tough for Facebook to prove it's worth as a publicly traded company. Zuckerberg has said time and again that they are not a public company, but a social endeavor. Making money the way Wall St desires is not in the plans for Facebook...
Who knows, 10 years from it could prove to be a worthwhile investment. But I would really be surprised if even 3 years from now the stock is trading much above $40.

Too many shares to be released and not enough revenues & profits... bad combo...

I 100% agree with you my thing is I said the exact same thing several years ago when Google went public and look how that stock went.

I guess the question is will Zuckerberg let the "grown ups" have enough power to realize it is a business, or will he continue to run it like a 20 something in a hoody who doesn't think it's a business?

I guess the other thing that struck me is the 900 million subscribers, he's just under 1/7th of the population of the world. Obviously they can't continue to grow at the same rate(subscribers) but there is incredible potential with all those potential customers.

 

[Russ Smith]

Russ: Nasdaq has stated they're having problems with executing FB stock trades.

Yeah they clearly are.

The volume now is about 450 million I think they're just swamped.

Etrade clearly was it took forever to get a cancellation from them on such a small order.

 

[Russ Smith]

I read something interesting that said that Zuckerberg insisted that there be a larger public participation in the initial release, but that this was considered a mistake by many on Wall Street. The article stated that normally the public is shut out of the offering, and this "demand" is what creates the big pop out the gate. In this case a lot of the entities that wanted in on the deal were allowed in at the initial open and hence there is no frenzy to get in at any price.

Personally I'm staying away from this one. Too many questions on how they'll monetize what they've got to justify a $100 billion market cap. Plus I have that little voice in the back of my head saying that this is the blow-off top for the current bear market rally.

JTS

I'm actually still all cash in my IRA's and damn glad I am but I would like to buy some FB in there if I can get it at what I think is a reasonable price.

I don't think it's going to do what Google has done but I do think someone is going to figure out how to tap into all those subscribers and make more money.

From what I've read the big challenge is a mobile app that allows for advertising money right now none of them do.

 

[82CardsGrad]

I 100% agree with you my thing is I said the exact same thing several years ago when Google went public and look how that stock went.

I guess the question is will Zuckerberg let the "grown ups" have enough power to realize it is a business, or will he continue to run it like a 20 something in a hoody who doesn't think it's a business?

I guess the other thing that struck me is the 900 million subscribers, he's just under 1/7th of the population of the world. Obviously they can't continue to grow at the same rate(subscribers) but there is incredible potential with all those potential customers.

Don't get tricked into the Google-Facebook comparison Russ. Two totally different scenarios... Google's ownership/leadership was vastly different and much more contemporary than is Zuckerberg. Google is a revenue/profit making machine with their revenues being generated by a much more reliable mechanism = Search.
Whereas Facebook is/will be largely reliant upon ad revenues, which are much less dependable. Ad revenues over the internet (from computers/laptops) has been declining. Facebook talks about the mobile ad opportunities and while the mobile market is enormously larger than the computer/laptop market, making money off of ads via mobile devices is totally unproven.

 

[Russ Smith]

Don't get tricked into the Google-Facebook comparison Russ. Two totally different scenarios... Google's ownership/leadership was vastly different and much more contemporary than is Zuckerberg. Google is a revenue/profit making machine with their revenues being generated by a much more reliable mechanism = Search.
Whereas Facebook is/will be largely reliant upon ad revenues, which are much less dependable. Ad revenues over the internet (from computers/laptops) has been declining. Facebook talks about the mobile ad opportunities and while the mobile market is enormously larger than the computer/laptop market, making money off of ads via mobile devices is totally unproven.

Well the other obvious difference is Google was competing with Yahoo, and Facebook is now competing with Google(Google +) and frankly FB has it tougher.

I am not saying FB is goign to 600 I'm saying I don't think the people saying it's just a website are being honest either.

But they are absolutely different companies.

The Google guys got they weren't grown up enough to run a company that big and brought in outside people who were, we'll see if Zuckerberg gets that and does it or not.

Fidelity says there are still significant problems getting trades and confirmations through so I've now asked to cancel my IRA trade. No guarantee it will cancel or not it may have already executed and they can't confirm it yet, but I figure until they get the glitches ironed out I don't want to be buying any more shares.

There is an interesting debate on if they overpriced the IPO or not though. It's like tax returns, everyone wants a big one at the end of the year but you're actually better off getting no return because it means you had all that money available during the year when you needed it. If an IPO stays around the opening price the argument is they picked the right valuation. The ones that really pop are either way underpriced or way oversold often.

But in this case I think they overpriced. There's some talk when it was near 38 earlier in the day underwriters stepped in and bought to drive the stock back up.

And as Jeff said it's very clear experts told Zuckerberg he was pricing it too high and releasing too many shares.

 

[82CardsGrad]

Well the other obvious difference is Google was competing with Yahoo, and Facebook is now competing with Google(Google +) and frankly FB has it tougher.

I am not saying FB is goign to 600 I'm saying I don't think the people saying it's just a website are being honest either.

But they are absolutely different companies.

The Google guys got they weren't grown up enough to run a company that big and brought in outside people who were, we'll see if Zuckerberg gets that and does it or not.

Fidelity says there are still significant problems getting trades and confirmations through so I've now asked to cancel my IRA trade. No guarantee it will cancel or not it may have already executed and they can't confirm it yet, but I figure until they get the glitches ironed out I don't want to be buying any more shares.

There is an interesting debate on if they overpriced the IPO or not though. It's like tax returns, everyone wants a big one at the end of the year but you're actually better off getting no return because it means you had all that money available during the year when you needed it. If an IPO stays around the opening price the argument is they picked the right valuation. The ones that really pop are either way underpriced or way oversold often.

But in this case I think they overpriced. There's some talk when it was near 38 earlier in the day underwriters stepped in and bought to drive the stock back up.

And as Jeff said it's very clear experts told Zuckerberg he was pricing it too high and releasing too many shares.

Regardless of all that's beeing said (much of it spot on), today, there is no way to make the #'s work in a way that support Facebook being worth $100 Billion. All conventional methods of valuation don't get you there. But, 7-10 years from now - who knows...

 

[Russ Smith]

Regardless of all that's beeing said (much of it spot on), today, there is no way to make the #'s work in a way that support Facebook being worth $100 Billion. All conventional methods of valuation don't get you there. But, 7-10 years from now - who knows...

Exactly, it's not worth what it is without looking forward. it's a one and done kid in the NBA draft who looked great in college but is getting way too much money as a rookie.

I do think the biggest fear for any share holder should be does Zuckerberg really care if the business runs well? AS you said that's not what he seems to think is important.

You can tell that everytime they do something like force timeline on millions of people most of whom pretty clearly didn't want it. My local paper said they bought a company awhile back specifically for that technology to make timeline. makes you wonder if he's capable of not using the my way or the highway approach.

My intent is hold the shares until they hit 400 and then sell.

 

[jf-08]

In at 38 - out at 42 - made some nice cash.

 

[jw7]

In at 38 - out at 42 - made some nice cash.

Good timing.

I wouldn't touch this stock with a 10-foot pole.

 

[82CardsGrad]

Good timing.

I wouldn't touch this stock with a 10-foot pole.

Me too... wouldn't be surprised if it doesn't hit 42 again for another 6 months or a year!

 

[TJ]

Me too... wouldn't be surprised if it doesn't hit 42 again for another 6 months or a year!

Agree. I became skeptical when FB decided to add more shares to accommodate the high demand for the IPO.

We were qualified for the IPO. We put in a buy request, and at the 11th hour were denied. Might be a blessing in disguise.

 

[Russ Smith]

In at 38 - out at 42 - made some nice cash.

I have a friend who bought 50 shares at 38 and sold at 41 a few minutes later. Very luck, most people were stuck in the delays getting confirms.

My IRA trade went through, I found out 6 hours later!

 

[jw7]

I was looking today to buy some put options on this, but no option chain for this stock as of yet.

There is just no revenue model at all. It's hype.

I would short sell it but I have never done that before and I am a-skeered.

 

[Russ Smith]

I was looking today to buy some put options on this, but no option chain for this stock as of yet.

There is just no revenue model at all. It's hype.

I would short sell it but I have never done that before and I am a-skeered.

I'm actually wondering if there's going to be a lawsuit over this IPO before it's all said and done. Word out now that it's confirmed that the lead underwriters including Morgan Stanley, cut their estimates for FB during the IPO roadshow, but didn't publicly announce it. They told certain key investors(read large ones) but not the overall public even though it's very clear it's material information.

Several stories out on this how institutions decided not to buy or to buy less because of the forecast cuts but how the average investor(Me) had no idea such cuts had occurred.

As the articles say the underwriters had all the information necessary so to selectively disseminate that information is not only grossly unfair, it's probably illegal.

It's going to take awhile for them to recover from this. They made 4 billion last year in revenue so they're a profitable company but the first couple of quarters as public better be huge to overcome all the negative pub they're getting now.

 

[Gaddabout]

Guys, if Facebook opened up an on-site storefront, they would CRUSH Amazon and Google. They have so many users, they could do it cheaper than ANYONE. They are already the biggest, stickiest Internet property ever created. The average user spends 8 HOURS A MONTH on the site. No other Internet property in the world has ever approached that kind of eyeball attention. Frankly, there are TV networks that would kill to have those numbers. It would be iTunes on steroids. Sell movies, music, clothing -- anything pop culture related. In a heartbeat. All they got to do is put a small portion of that new capital they have into something like it.

And ... they could maintain their free status and public sentiment.

Oh, and that would make it the killer mobile app of our generation in one shot.