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back to article Markets to remain glutted with rapidly-depreciating Facebook shares

Facebook's stock continued to slide south late last week, hitting an all-time low of $18.02 a share on Nasdaq. Brokerages in New York dealt the dominant social network yet another blow by saying that the availability of more than one billion shares on the market would have a negative impact on the company. In the first sale of …

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Devil

Making Progress

Only another $18.02 to go...

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Anonymous Coward

All well and good to laugh

But it's not going to be a problem for those that made lots of money from the initial share sale when they bought them and sold them within hours.

It the less well off that thought they would give it a try and put their savings into it.

The con men at the top should be made to reimburse the little people who have lost money on this. It is really doubtful that the shares will ever recover to the original floatation price.

They will probably bottom out at around $5 dollars a share.

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Holmes

Re: All well and good to laugh

Why would the little people have to be reimbursed? For being stupid? Anyone with half a brain could see that the initial price was ridiculously inflated. Compare the price per share / profit per share ratio to that of other companies. They were just being greedy and stupid, whereas the con men at the top were smart and greedy. And that is why those at the the top are at the top: because they are smart.

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"con men at the top"

Investing in stock is a risky business, a GAMBLE. Especially in a fairly new business that doesn't actually produce anything. Any of the 'little people' who threw their hard-earned life savings away so frivolously deserve all they get, and certainly don't deserve reimbursement.

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Re: "con men at the top"

Investing in the stock market is a RISK, not a gamble. A risk can be hedged by proper planning, prior experience at launching new companies, and other things. Yes a new business that doesn't produce anything has a much higher risk than anything else that I can think of in the market. BUT, the people pricing and backing the offering still have a FIDUCIARY RESPONSIBILITY to the investors who will buy the IPO and the company offering the IPO. I don't like roulette wheel lawsuits, but in this instance I would fully support IPO purchasers pursuing an obviously bungled offering. It is time to start holding the charlatans accountable. I might even be willing to grant some leeway for purchasers in the first week or two bringing similar suits, although much after that and I think we get beyond the bounds of common sense.

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Re: "con men at the top"

The people at the top these days are all con men - from the politicians to the CEO's

Most of the rest of us were not stupid enough to pay for shares in a company that frankly is nothing, will never be anything and will disappear without a trace in a few months.

However, you can bet the idiots in charge of our pension funds were stupid enough, they've wasted out money on an insane and obviously flawed purchase, yet they will still take the management fee, they will still take a bonus and they will still laugh because its not their own money they lost.

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Happy

Boo hoo

boo hoo hoo hoo.

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Pint

B'wah hah

ha ha ha ha ha ha ha. Ooops, I wet 'em.

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TRT
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Thumb Up

TRT...

likes this!

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Anonymous Coward

"Shareholders cashing in their chips could hammer Facebook's already halved-in-value stock."

In line with the new Facebook policy on accurate data your statement has been updated to improve accuracy:

"Shareholders cashing in their chips could hammer Facebook's already MORE THAN halved-in-value stock."

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Coat

Re: "Shareholders cashing in their chips could hammer Facebook's already halved-in-value stock."

I suspect that Facebook shares aren't the only thing getting hammered over at NASDAQ right now.

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Unhappy

And they're all inconsiderately taking a day off work today, so I can't watch the continued slide.

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Haha. That is all.

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Analysts are not what they used to be

That viewpoint led Salmon to lower Facebook's stock price target to $15 from $25

Many of us have been agitating for a P/E ratio of 20, still well above the historical average but on a par with other tech stocks, which puts the stock at around $ 8. So, either Mr Salmon is smoking something he shouldn't or knows something we don't or there is still some way to go. On the other hand I am not stock analyst and do not pretend to offer advice.

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JDX
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Re: Analysts are not what they used to be

What about LinkedIn, with a P/E of 917?!

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IT Angle

Re: Analysts are not what they used to be

yeah - 20 is on a par with tech stocks which have an income around a level that would support that calculation. Facebook has never demonstrated anything like that ability beyond some wooly crap about "innovative mumble mumble er...."

$8 would have been a good assessment a year ago when FB still appeared to be moving but all of its activity since then has been either marketing BS to boost the IPO price or twiddling with unimportant crap. Looks to me like the leadership is retreating into its comfort zone.

Facebook needs to get a direction and it needs to develop a mobile business model or that $8 could be generous. The very size of its IPO puts it under intense scrutiny and it is shit or get off the pot time.

Anyone seen matt?

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Re: "Facebook needs to get a direction "

But downwards IS a direction, isn't it ?

Facebook does have a non-electronic precedent ... the South Sea Bubble http://en.wikipedia.org/wiki/South_Sea_Company.

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Re: LinkedIn

I'm not sure what your point is: should LinkedIn's P/E be used to justify a higher valuation for Facebook? Or should I be bashing LinkedIn as well?

In case of the former: the 20:1 comes from the Case-Schiller analysis and is itself a little frothy, long term ratios are generally around 14:1 but in any case, it's an average across all industries and time which, in my view, makes it a better frame of reference than say a single competitor. Besides, I think LinkedIn took a recent charge which skewed the P/E ratio.

In case of the second: I'm not a fan of either Facebook nor LinkedIn but both seem to have positive cash flows and, depending on how well they handle privacy, reasonable prospects. Bashing them, their users or investors is fun but churlish.

I am a little worried about the investment environment that let such wild swings in valuation. Someone has or still is taking a big bath, while those would could cash in have made fat profits, since this IPO and given the calculations it does look like deliberate market manipulation with the blessing of the SEC.

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Re: Analysts are not what they used to be

yeah - 20 is on a par with tech stocks which have an income around a level that would support that calculation. Facebook has never demonstrated anything like that ability beyond some wooly crap about "innovative mumble mumble er...."...

I've reached a point now where the term "innovative" damn' near breaks my bullshit alarm.

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Facepalm

Re: "Facebook needs to get a direction "

There is a difference with the South Sea Company though. In that case the stock shot (or rather was insider traded to) sky high levels before crashing back down again to around the same level it was at, in Facebooks case the opposite has happened. Stock started at sky high levels (rather iffily so in my opinion) and has pretty much been crashing ever since. Whether it recovers or not in anyone's guess, personally I think unless they manage to start bringing in a lot more cash, then I doubt it.

I don't know what it is but anytime I see an article about Facebook shares, I get an image in my head of Don Ameche and Ralph Bellemy shouting Sell, Sell.

http://www.youtube.com/watch?v=S8H2FIf1oH4

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Re: it does look like deliberate market manipulation with the blessing of the SEC.

Yep, which is why I would support a lawsuit from the shareholders.

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Re: "Facebook needs to get a direction "

If you regard the initial valuation as the "insider trading" it could be comparable. One of the reasons we have the current regulatory regime is to inhibit market manipulations from such insider trading. When we get under the rubic of clean and fair assessment from the regulator it is double bad.

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P_0

Instead of competing with Goggle for a slice of advertising revenue, Facebook should concentrate on internet shopping. Compete with Ebay and Amazon. I'm sure the knuckle-dragger users would part with their kebab money if they can make one click purchases, instead of clicking on an advertising link, scrolling through some corporate crap, signing up a new account with a shopping site, typing your address etc ad infinitum. They'll click the back button on their browser faster than a school teacher trying to untag her drunken topless photos, and go back to picking their nose.

Let people set up shops and sell pet rocks to each other. Facebook takes X% of the profit. Paypalify the website and let the writhing mass of 1 billion users make money for them.

That way they may be able to get some real revenue growth. Cus who the hell wants to invest in a company whose greatest revenue-making idea is "sponsored stories"?

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Boffin

@P_0 WTF?

Sorry but FB doesn't have the infrastructure to compete against any retailer because FB isn't a retailer.

Their real product is the information that they capture from their lusers. They play in the advertising space and can partially compete w Google. Where they would be better is if they did search too.

Sorry, nice idea, but not practical.

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Re: can partially compete w Google.

NOBODY can compete, even partially, with Google in the ad space.

Yes, they have potentially valuable information, but I have to concur with the previous poster, FB's best shot at making money is to figure out how to leverage that information for purchasing, which would give them something to leverage against the other shopping sites. Mind you, that doesn't mean their best shot has better than 50/50 odds. In fact, I'd peg them at closer to 20/80 and then only IF they get moving on it soon.

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P_0

Re: @P_0 WTF?

"Their real product is the information that they capture from their lusers. They play in the advertising space and can partially compete w Google. Where they would be better is if they did search too.

Sorry, nice idea, but not practical."

This product - information - is way overrated, to a site like Facebook. Facebook ads are an annoyance. That's not an opinion. That is what they are. Nobody goes to Facebook, thinking "I'm going to buy a book" etc. People want to look at photos of friends and build virtual farms. Facebook can make a decent revenue with advertising, but it won't grow. User base is maxing out, at least in countries where people have money to burn.

Facebook can try to compete with Google in search, but as Yahoo, Bing et al, figured out the hard way, that is not easy.

It would be far easier to let retailers, Nike, Chanel, book retailers, even Apple open mini-shops on the site. Yeah they have their own web shops, but none of them have Facebook's userbase. Even if Facebook took 1~5% of the sale, everyone's laughing. I don't think this would be too difficult. Plus Facebook really utilize it's user info. And users could do one-click shopping straight from a Facebook ad/button.

And then why not let everyday user's open shops. This could be more tricky, but Ebay do it. If your hobby is making ceramics, sell it on Facebook to your friends or strangers or whoever.

I'm not saying this is simple. There are technical challenges, probably legal and logistical challenges, but Facebook could do this. And there is clear room for revenue growth if they do this. And it will stop their user base from fading away.

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Re: Rarely has the phrase lol sprung so readily to my fingers

A bunch of financial analysts thought it was, or said they thought it was good. Motley Fool has been running articles advising people that now is a good time to buy!

But more or less the entire IT community thought Facebook was massively over-valued and would plummet, lots of financial analysts said it would be fine. Should have listened to the people who understood it.

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Re: Rarely has the phrase lol sprung so readily to my fingers

"Motley Fool has been running articles advising people that now is a good time to buy!"

seriously?

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Anonymous Coward

Re: Rarely has the phrase lol sprung so readily to my fingers

Steady on. You might start an outbreak of common sense, where financial people actually listen to technical people! Cant' have that! As you were ...

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Anonymous Coward

Maybe Google are waiting for the price to drop enough then buy them to (finally) have a decent hold on social networking.

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F***

I hope you're trying to be funny!

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Re: F***

I doubt it. Frankly, it's the easiest way to get FB on a firm financial footing. Everything else is possible, but long odds. Long odds are even harder to beat as a publicly traded company than a private one.

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Payment system

If I were them I'd compete with Paypal. They're already the authentication system for a lot of sites, so linking in a paypal clone would seem to be the logical extension.

As for share value, meh, they were obviously overweight. I don't think they're worthless stocks, but FB need to demonstrate post-fad longevity and, you know, a business plan.

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Re: Payment system

"If I were them I'd compete with Paypal. They're already the authentication system for a lot of sites, so linking in a paypal clone would seem to be the logical extension..."

Y'mean, as in "they're both scams"?

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Re: "Payment system" To be absolutely frank with you old chap...........

..............given the various security issues we have seen cropping up with FB I wouldn't touch any such financial service with the thin end of a very long barge pole if it had anything to do with that company.

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Meh

Beer can shares

In some states there is a 5c deposit on beer sold in aluminium cans. In the dotcom bubble there were beer can shares: if you'd "invested" in canned beer with 5c deposit per can instead of shares, the returned deposit would have been worth more than the shares 12 months later.

I predict that over 12-24 months, Facebook will be a beer can investment.

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Pint

Re: Beer can shares

Without the enjoyment of drinking the beer.

50 cents to $1 is maybe a reasonably high value. I can't imagine WHY anyone bought at the IPO price

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FAIL

Re: Beer can shares

Without the enjoyment of drinking the beer.

-------

Not if it's American beer.

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Pint

Re: Beer can shares

Without the enjoyment of drinking the beer.

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Not if it's American beer.

...or, at least your average major American brands.

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Pint

@Mike Flugennock Re: "or, at least your average major American brands"

You got there before me. I will just add that there are a considerable number of very good local and regional breweries in the US producing absolutely everything one could imagine from the lager end of the scale through various ales and bitter beers to stouts, porters etc. Contrary to what some appear to believe American taste in beer is not confined to Budweiser!

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Re: @Mike Flugennock "or, at least your average major American brands"

Thanks for elaborating just then. I could never have discussed that in any detail without dragging this thread entirely off topic.

But, basically, yeah... the perfect short answer for all our Brit pals at the Reg who rag on American beer: "It's not all Budweiser over here!"

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Both Facebook and Groupon demonstrate a valuable maxim

When you grow your high school project to the size and profile that real businesses will spend boatloads of real money buying them you sell.

If you float you subject your business acumen to real scrutiny and (in californian slang speak) end up looking real dumb.

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The market is about to be flooded by

lots of cheap servers.

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Happy

A return to santity?

Investors intentionally buy overvalued stocks hoping to ride the bubble then sell before it bursts. Basically your betting on the market behaving irrationally.

Apparently there has been a shift and people are actually expecting the stock prices to have some reflection on the actual value of a company.

Apparently the market has become less interested in hype and more interested in antiquated notions like numbers and math.

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HAHA!

Bitch!

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Anonymous Coward

zUKERGBURG engineered this collapse

he did it to hurt the children

(pump and dump)

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Flame

It served its purpose...

Which was to make money for Zuckerberg and those who got in early, as well as the brokers and those involved in the IPO. They may not make as much as they would have liked, but they've done OK.

It's us that'll be picking up the cost of this through our pensions, bank charges,r interest payments or one of the many other ways that the shitheads who run our banks and investment houses have of pulling money from our pockets to pay for their incompetence.

Remember, a broker is someone who invests your money until it's all gone...

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Mushroom

Re: It served its purpose...

Too true @Steve Crook

I'd laugh at the idiots who bought at the IPO price, except it was pension funds, insurance companies etc and so I'm paying a small share of the loss one way or another.

Grrrrrrrrr.

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