So... how long before Facebook goes belly-up?

shack

Facebook and other "social media" sites are here to stay. The Facebook IPO was probably overpriced but that is the fault of the investors, not Facebook. Since such a small percentage of the total outstanding shares are owned by institutional investors Zukerberg et:al will still control the direction of the company so it will be interesting to see where he takes it. It is difficult to project the lifecycle of internet based companies as there just hasn't been enough history. It may be shorter than "historically" conventional business...but who knows. Like Google, it is popular, generates significant revenues and has only begun to tap it's potential. It could be a long term powerhouse.

cnh

shack wrote: »

Facebook and other "social media" sites are here to stay. The Facebook IPO was probably overpriced but that is the fault of the investors, not Facebook. Since such a small percentage of the total outstanding shares are owned by institutional investors Zukerberg et:al will still control the direction of the company so it will be interesting to see where he takes it. It is difficult to project the lifecycle of internet based companies as there just hasn't been enough history. It may be shorter than "historically" conventional business...but who knows. Like Google, it is popular, generates significant revenues and has only begun to tap it's potential. It could be a long term powerhouse.

Certainly possible, shack! May I ask where all the "down to earth-seasoned, business sense comes from"?

The fact of the matter is Mr. Zuckerberg and his associates have made a truckload of money even if they lose a few percentage points here or there. Those guys are "set" for life. Other investors? Who knows? Markets are often governed by "irrationality" as much as we would like to believe they are "rational". There have been some spectacular studies showing this in my field. I leave it at that because there are 'different' kinds of economists. Those who apologize for the way things are, and those who wonder what else they could be or become.

Personally, I don't care what happens to F-book one way or another, because it is the insiders who will, mostly, benefit. And there is so much else to invest in.

Until the next big thing? I wish you all a shot at "illegal" insider trading because that's where the real money is! lol

cnh

nooshinjohn

Thought I would bring this one back now that the value has fallen to 18 bucks a share. At the rate it's dropping, it will be a penny stock by year-end...

Things got worse for Facebook Friday, and its stock fell to a new low, as several Wall Street analysts covering the company turned more negative on the social networking leader.

Facebook stock (FB) closed down $1.03, or 5.4%, to $18.06 after research firm BMO slashed its price target on the stock from $25 a share to $15, reflecting lower expectations for revenue growth.

The continued fall of Facebook shares is cementing Facebook as potentially one of the worst debuts for a initial public offering (IPO) in such a short period of time, says Jay Ritter, professor of finance at the University of Florida. Shares of Facebook have fallen 52% from their IPO price of $38 a share May 18.

Having an IPO lose half its value this soon after its debut is rare, Ritter says. Of more than 1,000 IPOs between 2001 and 2010, just 5% were down 50% or more six months after the offering, he says. Facebook has traded for less than four months.

"Most of these (poorly performing IPOs) had optimistic expectations build in," he says.

And it's exactly those lofty expectations that continue to be whittled down by a number of powerful forces including:

?Less bullish forecasts from analysts. BMO cut its stock forecast on Facebook to $15 in part because many advertisers are "reevaluating performance of Facebook ads," analyst Daniel Salmon says in his report.

Meanwhile, Jordan Rohan, analyst at Stifel Nicolaus, cut his 2013 revenue forecast by $50 million and earnings-per-share forecast by a penny to 59 cents a share. While the stock price is more compelling, Facebook's near-term earnings trends warrant caution, Rohan wrote.

?Pressure from insider selling. An avalanche of stock unlocked this month continues to put a lid on Facebook's share price as the supply of shares overwhelms buyers. Heavy selling by insiders, including early investor Peter Thiel and co-founder Dustin Moskovitz, isn't encouraging investors who might think the shares are cheap.

"Selling by key insiders (and venture capitalists) has set a precedent for other sponsors and employees to sell heavily below $20 per share," Rohan said in his report. Meanwhile, three more lockups expire this year, allowing insiders to sell more than 1.5 billion shares if they wish. Another lockup expires next year.

?Still-lofty expectations. Analysts are still calling for 4% revenue growth in the third quarter vs. a year ago, which could be challenging in the seasonally slow quarter, Salmon says. After the stock's fall, shares are still trading for 66 times earnings reported for the past twelve months, says S&P Capital IQ. That's rich even compared with Internet rival Google, which is trading at 20 times earnings measured the same way.

shack

Facebook will be just fine. The losers are the "investors" that bought the stock at the strike price on the day of the IPO. THEY were the ones that drove up the price...not the insiders at Facebook. If the investors had paid any attention they would have known this was going to happen...and in fact Zuckerberg warned them in an open letter as part of the prospectus that Facebook was NOT about "maximizing shareholder returns" but that most profit would be funneled back into the company to develop new "social" technologies. The company is in it for the long term... not quick profits. And Zuckerberg made sure that he will continue to run Facebook because he still owns over 55% of the outstanding shares.

Some of the letter has been cut for length. I've highlighted key parts in red. Investors simply expected something that wasn't going to happen...at least in the short term...and because of that they paid too much. The stock is now probably selling for close to what it should have in the beginning.

LETTER FROM MARK ZUCKERBERG

Facebook was not originally created to be a company. It was built to accomplish a social mission...to make the world more open and connected.

We think it?s important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do. I will try to outline our approach in this letter.

At Facebook, we?re inspired by technologies that have revolutionized how people spread and consume information. We often talk about inventions like the printing press and the television...by simply making communication more efficient, they led to a complete transformation of many important parts of society. They gave more people a voice. They encouraged progress. They changed the way society was organized. They brought us closer together.

Today, our society has reached another tipping point. We live at a moment when the majority of people in the world have access to the internet or mobile phones...the raw tools necessary to start sharing what they're thinking, feeling and doing with whomever they want. Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries.

There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on.

We hope to strengthen how people relate to each other.

Even if our mission sounds big, it starts small...with the relationship between two people.

Personal relationships are the fundamental unit of our society. Relationships are how we discover new ideas, understand our world and ultimately derive long-term happiness.

At Facebook, we build tools to help people connect with the people they want and share what they want, and by doing this we are extending people?s capacity to build and maintain relationships.

People sharing more...even if just with their close friends or families...creates a more open culture and leads to a better understanding of the lives and perspectives of others. We believe that this creates a greater number of stronger relationships between people, and that it helps people get exposed to a greater number of diverse perspectives.

By helping people form these connections, we hope to rewire the way people spread and consume information. We think the world's information infrastructure should resemble the social graph...a network built from the bottom up or peer-to-peer, rather than the monolithic, top-down structure that has existed to date. We also believe that giving people control over what they share is a fundamental principle of this rewiring.

We have already helped more than 800 million people map out more than 100 billion connections so far, and our goal is to help this rewiring accelerate.

We hope to improve how people connect to businesses and the economy.

We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services.

As people share more, they have access to more opinions from the people they trust about the products and services they use. This makes it easier to discover the best products and improve the quality and efficiency of their lives.

One result of making it easier to find better products is that businesses will be rewarded for building better products...ones that are personalized and designed around people. We have found that products that are "social by design" tend to be more engaging than their traditional counterparts, and we look forward to seeing more of the world's products move in this direction.

Our developer platform has already enabled hundreds of thousands of businesses to build higher-quality and more social products. We have seen disruptive new approaches in industries like games, music and news, and we expect to see similar disruption in more industries by new approaches that are social by design.

In addition to building better products, a more open world will also encourage businesses to engage with their customers directly and authentically. More than four million businesses have Pages on Facebook that they use to have a dialogue with their customers. We expect this trend to grow as well.

We hope to change how people relate to their governments and social institutions.

We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time.

By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored. Over time, we expect governments will become more responsive to issues and concerns raised directly by all their people rather than through intermediaries controlled by a select few.

Through this process, we believe that leaders will emerge across all countries who are pro-internet and fight for the rights of their people, including the right to share what they want and the right to access all information that people want to share with them.

Finally, as more of the economy moves towards higher-quality products that are personalized, we also expect to see the emergence of new services that are social by design to address the large worldwide problems we face in job creation, education and health care. We look forward to doing what we can to help this progress.

Our Mission and Our Business

As I said above, Facebook was not originally founded to be a company. We've always cared primarily about our social mission, the services we're building and the people who use them. This is a different approach for a public company to take, so I want to explain why I think it works.

I started off by writing the first version of Facebook myself because it was something I wanted to exist. Since then, most of the ideas and code that have gone into Facebook have come from the great people we?ve attracted to our team.

Most great people care primarily about building and being a part of great things, but they also want to make money. Through the process of building a team ? and also building a developer community, advertising market and investor base ? I've developed a deep appreciation for how building a strong company with a strong economic engine and strong growth can be the best way to align many people to solve important problems.

Simply put: we don't build services to make money; we make money to build better services.

And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits. By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term ...and this in turn will enable us to keep attracting the best people and building more great services. We don't wake up in the morning with the primary goal of making money, but we understand that the best way to achieve our mission is to build a strong and valuable company.

This is how we think about our IPO as well. We're going public for our employees and our investors. We made a commitment to them when we gave them equity that we'd work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment. As we become a public company, we're making a similar commitment to our new investors and we will work just as hard to fulfill it.

Once again, Facebook exists to make the world more open and connected, and not just to build a company. We expect everyone at Facebook to focus every day on how to build real value for the world in everything they do.

Thanks for taking the time to read this letter. We believe that we have an opportunity to have an important impact on the world and build a lasting company in the process. I look forward to building something great together.

Polkie2009

I was listening to MarketWrap with Moe Ansari the other night and he was looking at the FB charts and mentioned it has probably about come down to the level of what the IPO price should have been. This stock will figure out a way to capitalize on it's millions of subscribers, then it will branch out and make money.

Strong Bad

Shack hit it spot on. The unrealistic expectations of the "Make a quick buck" Wallstreet crowd is making it appear that Facebook is tanking. In reality, it's settling in right where it actually should be. Wallstreeters wanted another Apple stock (aka $600+ per share), but it ain't gonna happen.

One aspect of Zuckerberg I really like is the fact that he pisses off Wallstreet in so many ways. They want him to be short ranged stock focused, yet he wants to focus on his product solely for the long term and the money aspect will come. The stuffed shirts show up to meetings with their $1k+ suits, but he shows up with a hoodie and jeans.

tonyb

Both sides played up the hype to secure investments, as usual, the greed and make a quick buck crowd swallowed hook line and sinker. Those who lost money cried foul. See, the thing that sometimes overtakes even the most seasoned investor is greed. They throw out all they have come to learn/know, for the chance of making a killing. Due dillagence must be done regardless of the once in a lifetime opportunity to make a fortune. Wallstreet knows this, brokerage firms know this, yet it's all about the coin, a slight stretch of the truth, and who cares who gets hurt in the process. The investor in the end makes his/her own choices. I don't blame FB, Wallstreet, or anyone else, it's the sole responsibility of the investor to decide where to risk his coin. Sure, all the charts and graphs can point to a certain direction, but nothing is written in stone. Much like a casino, it's a gamble. Be it a more informed gamble anyway.

FB will continue to make money, thats a gimme, but really what is it ? A pool of global customers in one spot for advertisers to take aim at ? For organizations to influence ? The potential is there. How it's used can be good or bad.

I liken FB to the gobbs of people who do nothing but sit infront of the TV for most the day. People can spend hours on end with FB too. Is that something we should be happy about ? Just asking is all. It seems to me we have more choices to sit on our arses these days than ever before, can't be good health wise, brain wise.

steveinaz

Wall street fat cats? Nah, common sense. Who buys stock in a company that has nearly peaked already? I'm always suspicious of "something for nothing" deals like facebook, that's why I don't have an account. Bev does, but it's simply used to be able to look at families' Facebook accounts.

Pretty soon Facebook users will find out how this can all be offered for "free."

Strong Bad

tonyb wrote: »

I liken FB to the gobbs of people who do nothing but sit infront of the TV for most the day. People can spend hours on end with FB too. Is that something we should be happy about ? Just asking is all. It seems to me we have more choices to sit on our arses these days than ever before, can't be good health wise, brain wise.

It's interesting just how hooked on Facebook so many people are and the folks at Facebook know this. I disabled my account 1 month ago and haven't missed it. It used to be a great "tool" to catch up to old friends ( I found so many old friends ), but in recent years it's become another outlet for people to waste time, **** about how terrible their lives are and just generally act like fools.

Had a friend email me about a week ago saying she couldn't find me on Facebook and was trying to message me. I told her..."Well you magically found me via a tried and true tool called EMAIL. You also have my cell # which you could call or even text me. Facebook didn't make those technologies become obsolete!"

It's amazing how people don't even want to talk to people on the phone anymore. They buy a cell phone, but won't answer it, yet will proceed to knock out a Stephen King novel sized text message.

Incredibly, mankind survived without cell phones and email...and the internet...and computers...

tonyb

Amen to that ^^^

The people that use it to hook up with lost family members, cool, but most just like to get into others buisness for the drama. Hence the dumbing down continues.

shack

Strong Bad wrote:

One aspect of Zuckerberg I really like is the fact that he pisses off Wallstreet in so many ways. They want him to be short ranged stock focused, yet he wants to focus on his product solely for the long term and the money aspect will come. The stuffed shirts show up to meetings with their $1k+ suits, but he shows up with a hoodie and jeans.

I wish more business owners would take this attitude. I have said for many years the three most damning words in business are "Maximizing shareholder wealth". It essentially takes the customers and employees out of the equation...and IMO that is not a good thing. Businesses should be in it for the long run...not just to make investors a lot of money.

tonyb wrote:

I liken FB to the gobbs of people who do nothing but sit infront of the TV for most the day. People can spend hours on end with FB too. Is that something we should be happy about ? Just asking is all. It seems to me we have more choices to sit on our arses these days than ever before, can't be good health wise, brain wise.

Actually I use Facebook to keep more active. I follow a lot of hiking, backpacking, photography, biking, etc. sites that provide information and connects me with like minded people. Of course all this could be discovered through other means...but not as quickly, as easily or as broadly. Not only do I get inspriation from the sites, but it allows me to get out more. Facebook is just like any other "tool"...it's value is all in how you use it.

Strong Bad wrote:

Incredibly, mankind survived without cell phones and email...and the internet...and computers...

And cars...and trains...and planes...and modern medicine...etc...etc...etc. Sorry John...that is a foolish point.

steveinaz wrote:

Pretty soon Facebook users will find out how this can all be offered for "free."

For Facebook users it is already "free". Advertisers/businesses of course are paying for the service...as they should.

steveinaz wrote:

Who buys stock in a company that has nearly peaked already? I'm always suspicious of "something for nothing" deals like facebook, that's why I don't have an account.

Don't be so sure about already "peaked". The same thing was said about Amazon about 5 or 6 years ago. That was another net company that focused on long term growth and inovation vs short term returns. We don't yet know what the upside of Facebook is.

"something for nothing"...the telegraph, radio, the telephone, the television, the internet...all "something for nothing" deals that turned out ok. The common thread is communication and interaction...and like it or not...Zuckerberg has created a communication network where people all over the world can interact at the same time in ways even the internet did not facilitate. I use it a lot...I like it...and hope it continues and improves.

avelanchefan

http://www.bloomberg.com/news/2012-09-04/facebook-falls-to-record-low-after-morgan-stanley-report.html

Looks even more dismal today.

crsthunder

Maybe a year tops...

transmaster

What may well happen is the stock price is going to get down to a point that facebook is going to start to look attractive to somebody else. To Apple it's present market cap' would be chump change. I really can't see Apple doing this but would knows. Ping was supposed to work with Facebook but facebook pulled the rug out from under Apple, and it sure isn't working very well without it.

cnh

Are we still talking about facebook and even taking what Zuckerberg pens at face value? I for one "believe" "everything" any CEO says because I "trust" that those guys always speak the truth. Yet, I don't even completely believe some of what "I" say here on occasion. lol

cnh

danger boy

Facebook isn't going anywhere.. Zuckerberg is trillionaire... it won't die... to many people use FB.. and I highly doubt he'll sell it any time soon.

transmaster

cnh wrote: »

Are we still talking about facebook and even taking what Zuckerberg pens at face value? I for one "believe" "everything" any CEO says because I "trust" that those guys always speak the truth. Yet, I don't even completely believe some of what "I" say here on occasion. lol

cnh

Zuckerberg did not set the initial ISO price that was done by the brokerage firm that marketed the stock. Nobody knew how to value a social network Zuckerberg just sat back and let the frenzy take hold, and laughed all of the way to the bank.

cnh

transmaster wrote: »

Zuckerberg did not set the initial ISO price that was done by the brokerage firm that marketed the stock. Nobody knew how to value a social network Zuckerberg just sat back and let the frenzy take hold, and laughed all of the way to the bank.

Completely agree with you. When I say what he "pens" I did "not" mean to imply he set the price. You're right and I was not as clear as I should have been.

As you point out, doesn't really matter because the dude did what he set out to do.

cnh

DMara

I have never joined any social network, so I don't care much :biggrin:

shack

Cuban sums it up pretty well...

Famed American business magnate Mark Cuban has some sharp words for investors who bought Facebook shares on their first day of trading and are now crying about the company’s plummeting stock. In a post on his personal Blog Maverick page, Cuban says that investors should have absolutely known what they were getting into when they plunged their money into yet another risky tech IPO and added that it’s wrong to blame Facebook for charging $38 per share when people were willing to pay for it.

“Facebook was able to raise about 10 BILLION DOLLARS in this IPO,” Cuban writes. “The CFO’s job is not to manage shareholder portfolios. His job is to help Facebook succeed. I don’t know about you, but putting 10 BILLION DOLLARS in the bank in my opinion is one way to help them succeed.”

Cuban also discloses that he bought some Facebook shares early on, figured out they were going to hurt his portfolio, and promptly dumped them back on the market.

“When the stock didn’t bounce as I thought/hoped it would, I realized I was wrong and got out,” he writes. “It wasn’t the fault of the FB CFO that I lost money. It was my fault. I know that no one sells me shares of stock because they expect the price of the stock to go up.”

ViperZ

Well, it's up almost buck fifty from the all-time low on day before yesterday! LOL

tonyb

Lets assume for a minute FB made out 10 billion on it's initial IPO. Then it lost what....50 billion in value ? Who's laughing all the way to the bank ?

SDA1C

Strong Bad wrote: »

It's interesting just how hooked on Facebook so many people are and the folks at Facebook know this. I disabled my account 1 month ago and haven't missed it. It used to be a great "tool" to catch up to old friends ( I found so many old friends ), but in recent years it's become another outlet for people to waste time, **** about how terrible their lives are and just generally act like fools.

Had a friend email me about a week ago saying she couldn't find me on Facebook and was trying to message me. I told her..."Well you magically found me via a tried and true tool called EMAIL. You also have my cell # which you could call or even text me. Facebook didn't make those technologies become obsolete!"

It's amazing how people don't even want to talk to people on the phone anymore. They buy a cell phone, but won't answer it, yet will proceed to knock out a Stephen King novel sized text message.

Incredibly, mankind survived without cell phones and email...and the internet...and computers...

Just the thought of days before cell and the inescapable ability to be contacted gave me a woody.

tonyb

SDA1C wrote: »

Just the thought of days before cell and the inescapable ability to be contacted gave me a woody.

Amen to that. I purposely am not available all the time. Drives people nuts too. I don't care anyway, I refuse to be a slave at everyones becon call. Sorry folks, thats how it goes if you want to keep your sanity.

Strong Bad

SDA1C wrote: »

Just the thought of days before cell and the inescapable ability to be contacted gave me a woody.

Right on the mark! I'll get a text from a friend and if I don't reply back within 15 minutes, there's another text asking if i'm alive. At that point I purposely ignore them for a few hours. Actually, I'm not allowed to take my cell phone in the building with me when at work. Stays in the car all day. Some people ask me how I can go all day without access to it. People can reach me on my desk phone in case of emergency. It's also called WORK and not playtime with texting, Facebook and Twitter!

cnh

Although, I couldn't agree more, we're starting to sound like a bunch of "old" curmudgeons! I would imagine that everyone above is at least 50 or more?

Never been on THE FULL-OF-YOUR-FACE-BOOK. No plans to bother. Cell? I use a Track phone for "emergencies", and so I can pick up my daughter after school or my wife. At work, we have something, some of you may remember: email, etc. lol

I'm actually very difficult to get a hold of, and I like that!

cnh

tonyb

I dunno CNH, your pretty frickin' easy to get a hold of....here !! :cheesygrin:

cnh

Only for the Family, tony, the Family, if you know what I mean. :loneranger:


cnh

rebuy

Interesting that no one, unless I missed it, talked about Mark "The Overlord" Zuckerburg, special agent for the CIA. After all Facebook was a CIA Program and this is what they said about Facebook:

“After years of secretly monitoring the public, we were astounded so many people would willingly publicize where they live, their religious and political views, an alphabetized list of all their friends, personal emails addresses, phone numbers, hundreds of photos of themselves, and even status updates about what they were doing moment to moment. It is truly a dream come true for the CIA.”

We know that the CIA invested in other domestic spying computer programs but none have touched Facebook.

wayne3burk

rebuy wrote: »

Interesting that no one, unless I missed it, talked about Mark "The Overlord" Zuckerburg, special agent for the CIA. After all Facebook was a CIA Program and this is what they said about Facebook:

“After years of secretly monitoring the public, we were astounded so many people would willingly publicize where they live, their religious and political views, an alphabetized list of all their friends, personal emails addresses, phone numbers, hundreds of photos of themselves, and even status updates about what they were doing moment to moment. It is truly a dream come true for the CIA.”

We know that the CIA invested in other domestic spying computer programs but none have touched Facebook.

where's my aluminum foil hat???

I don't think the CIA gives a rats **** what your phone number is, or how many aminals you have in farmzville, or what the weather is like in weatherford, Oklahoma.

If the CIA parsed all the viable information from the minutia that is on facebook, they might be able to fill a thimble.

I think facebook is the current version of the cb radio. It only has nominally more staying power and hopefully will end up in the same ditch as disco and the pet rock.

just my two clackers worth

wayne