Facebook's ONLY failure: Expectations management As I type this, Facebook stock is trending toward a $26.84 per share price, valuing the company at $57bn, or roughly half the value Facebook held on its first day of trading two weeks ago. While the market plays a round of "You're to Blame!", Facebook is suffering from inflated expectations. Facebook's net profit margin and …
We're just seeing an echo of the late 90's "dot.com" bubble, same old cycle, same investor / market behaviours, but this time round there is a lot more cash in the system to blow up the bubble.
Facebook was just a vehicle for making lots of dosh for it's founders and early investors, and you can't say that hasn't already happened. And you can't really can't blame Zuckerberg and co. for taking advantage either, this is just the way markets operate. The mass of "johnny-come-lately" investors want to believe they can make a profit at no/little risk, because it's such a big, well known company with massive capitalization, surely it has to be safe?. Who cares about the slowing revenue growth? It'll come good in the end. .etc
As the old lags on el Reg know, we've seen it all before. You can never underestimate "greed is good" sentiment in the markets when the big number dollars are raining all around. People just can't resist it.
Facebook weren't forced to the markets and the management weren't forced into the valuation.
The valuation was obviously too high and anyone sensible was shorting the stock like crazy, knowing that it was all coming crashing down.
Does anyone know anybody that has clicked on a Facebook ad, let alone bought anything off the back of it? Every single piece of evidence or investigation into the long term effectiveness of FB advertising must have made harrowing reading for management.
Apple trading at c. 13, Google at c. 19. It doesn't take a genius to work out that even with expected growth (and Facebook is likely to deliver growth, especially as it branches out into the Indian market) it was way over the top.
And it has been damaging for Facebook so management should have done more.
Facebook Value?
I use Firefox with Adblocker Version x.
I don't see any adverts at all on Facebook.
So how can Facebook get any revenue from me clicking an Advert when it doesn't exist?
Sure they know my name and Date of Birth, but they won't get me to click on their Adverts because I can't.
"NEW YORK (CNNMoney) -- Nasdaq said Wednesday that it plans to spend $40 million to compensate trading firms for losses caused by glitches that delayed Facebook's debut.
Firms would be eligible to receive $13.7 million of that in cash, with the remainder coming from reduced trading fees over the next six months, according to a Nasdaq statement."
It doesn't say anything about the little guy.
Now I'm not your average investor or market trader but the over hyped value of Facebook is farcical in the extreme. After dropping around 20%+ in value over the last few weeks, it is still valued at between 50-60 billion pounds. Nuts!!
If the share price fell to $10 dollars, that would still value facebook at around 20 billion!! Barking mad for a company whose main user base lies in the 14-20 year old bracket... the exact people who do not have the disposable income that the IPO has been hyped about... Once Facebook attempts to apply a more rigorous advertising model, users will leave in droves and its share price will collapse to a more meaningful value.. et al Yahoo...
The main investors are trying to pump the stock, which might work in the short term.. longer term though its there is only one way its going and thats down.
Either way for the punters on the sidelines watching this farce, its too much of an opportunity to miss in making some money shorting the stock.... Roll on $10 dollars a share! (may take a few months though)
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