Facebook shares hit new low

Okay, the IPO was priced at $38 but actually opened at $42 because insiders were able to buy the stock before it went public, thus creating demand and driving up the price. These insiders who sold when the stock opened at $42 made the most possible profit on day 1.

The price began to fall quickly for a number of reasons. One of them was that a day or two before the IPO, Facebook increased the number of shares being issues by around 100 million. This led to confusion as many investors ended up buying more shares than they originally intended which caused a panic for some so they started selling. Another reason is that NASDAQ had issues and delays with opening the stock to the public and many investors did not receive proper notification of whether they actually bought or sold their shares until hours after they did so.

There was also talk of Facebook and its underwriters revealing important information surrounding the IPO to some investors and not to others. Although I'm not presently sure if those rumors were confirmed.

One of the reasons why the IPO was priced so high and was hyped so much was that a lot of people were expecting the stock to behave like LinkedIn did on its first day and wanted to make a quick buck.

After all those issues and the aftermath of lawsuits and talk of misinformation, investors are thinking "sell sell sell" and thus supply is exceeding demand and driving the price down.

Also, (this week I believe) options on the stock began trading which also drove the price down.

Shrink said:

And that constitute a record of historical accuracy?

I'm not, by any stretch of the imagination, defending Zuckerberg, as I know nothing about him. I saw the film and am aware that it is not exactly a documentary.

He may well be the ******* you think he is, but that movie is not a citation of any value.

Click to expand...

Documentaries frequently include inaccurate depictions, and/or embellishments added to entertain the audience.

But I think The Social Network went a bit beyond embellishment and simply went for good old "making s*** up".

Abstract said:

Documentaries frequently include inaccurate depictions, and/or embellishments added to entertain the audience.

But I think The Social Network went a bit beyond embellishment and simply went for good old "making s*** up".

Click to expand...

Wohhhhhhhhoo. You don't mean hollywood embellished a story to make it more entertaining thus put more butts in the seats at theaters. This would never happen.

Abstract said:

Documentaries frequently include inaccurate depictions, and/or embellishments added to entertain the audience.

But I think The Social Network went a bit beyond embellishment and simply went for good old "making s*** up".

Click to expand...

You are, of course, absolutely right that many documentaries are less than perfectly accurate or objective. But, as you point out, the movie apparently (from what I have read) took some really significant liberties (as in "making s*** up"!)

jav6454 said:

Zuckerberg (confirmed ass) is loosing money on an overhyped valuation, I see complete reason to be happy.

Click to expand...

Actually he made a killing dumping a load of shares the moment it floated didn't he ?

I really don't think Zuckerberg is going to lose sleep over the current share price. After all, didn't he sell at $38 in the IPO? It's doubtful he had any plans to sell more shares so soon anyway.

Honestly, I'm almost positive that the price tumble was expected by Facebook & the banks involved with the IPO. They were pushing it with that price.

I do however, feel sorry for the people who thought that they were buying into the next Google and dumped massive amounts of money on the stock. Can't see them recovering anytime soon.

Tsuchiya said:

I do however, feel sorry for the people who thought that they were buying into the next Google and dumped massive amounts of money on the stock. Can't see them recovering anytime soon.

Click to expand...

There appears to be far more than one born every minute.

Would be funnier, if it wasn't so crippling to some.

Facebook shares are hitting a new low each day. Expect the trend to continue on Monday, and throughout the next week.

xAnthony said:

Facebook shares are hitting a new low each day. Expect the trend to continue on Monday, and throughout the next week.

Click to expand...

Do you think they are worth a buy at these 'new lows?'

Whilst over valued at IPO, the business is profitable and most likely will find ways to grow their ad revenue? I'm terrible at making these kinds of decisions, but I would like to grow my VERY limited stock portfolio.

codo said:

Do you think they are worth a buy at these 'new lows?'

Whilst over valued at IPO, the business is profitable and most likely will find ways to grow their ad revenue? I'm terrible at making these kinds of decisions, but I would like to grow my VERY limited stock portfolio.

Click to expand...

Definitely not. I could see this stock price dropping to around $15. I would stay away from this stock for a while.

While Facebook continues to grow, the quality of the website has suffered over the past year and seemingly will continue to do so. Facebook has seen better days and I believe we're witnessing its slow demise now. Waiting for alternative however...

I believe Alexander Graham Bell has that covered.

codo said:

Do you think they are worth a buy at these 'new lows?'

Whilst over valued at IPO, the business is profitable and most likely will find ways to grow their ad revenue? I'm terrible at making these kinds of decisions, but I would like to grow my VERY limited stock portfolio.

Click to expand...

I think that at pretty much any price north of around $10 per share, Facebook has to be considered a gamble.

A lot of FB's appeal to investors lies with its rapid growth in its user base. Its gotten very quickly to almost a billion users. The problem is that a) its already captured most of its potential users (ie. people with a computer and internet connection) and b) any future users it adds are more likely to be difficult to make a lot of money from. In other words, if Facebook signs up another 500 million users in developing countries like India and Brazil, its going to be difficult for them to sell ads for that audience.

The only way for FB to justify its lofty IPO valuation is if it can find some way of getting more revenue from its existing audience. Most people believe that selling more ads on each page is not really practical (at some point extra ads are going to turn people off.) So it comes down to using all the info it has on its users to sell ads in "innovative" ways. But even this has its downsides, as this user found out after making a joke about a product he saw on Amazon:

On Valentine’s Day, Nick Bergus came across a link to an odd product on Amazon.com: a 55-gallon barrel of ... personal lubricant.

He found it irresistibly funny and, as one does in this age of instant sharing, he posted the link on Facebook, adding a comment: “For Valentine’s Day. And every day. For the rest of your life.”

Within days, friends of Mr. Bergus started seeing his post among the ads on Facebook pages, with his name and smiling mug shot. Facebook — or rather, one of its algorithms — had seen his post as an endorsement and transformed it into an advertisement, paid for by Amazon.

Click to expand...

Stories like that make me very wary indeed about Facebook's prospects for turning into an earnings powerhouse like Google. (Granted, sometimes my browsing history does sometimes cause odd ads to appear on my screen. Some time last year Google's algorithms became convinced I was a wealthy, gay, retired investor - I'm none of the above.) But thats very different from somebody using my picture and info to turn me into an unpaid pitchman for a product and (worse) putting me ads for that product that are going to appear in front of everyone I know.

Tsuchiya said:

I really don't think Zuckerberg is going to lose sleep over the current share price. After all, didn't he sell at $38 in the IPO? It's doubtful he had any plans to sell more shares so soon anyway.

Click to expand...

He sold 30,200,000 shares at a price of $37.58 for a cash out of $1,134,916,000 on May 22, 2012.

----------

xAnthony said:

Definitely not. I could see this stock price dropping to around $15. I would stay away from this stock for a while.

Click to expand...

I was originally thinking ~$24 prior to the IPO but the more research I do into it I am starting to think $12.50ish.

You got it

tekno said:

Ha ha haaaaa! Down to $29 now. I really hope they fall further and further.

http://www.bbc.co.uk/news/business-18257043

Click to expand...

We did NOT buy and was told NOT to but to wait for a year and THEN see what happens. Well, certainly not going to ever!! I hope it falls further as well like to $5.00 Facebook is great but not THAT great. It certainly gets boring and annoying to read silly updates...... who cares!!

----------

NathanCH said:

While Facebook continues to grow, the quality of the website has suffered over the past year and seemingly will continue to do so. Facebook has seen better days and I believe we're witnessing its slow demise now. Waiting for alternative however...

Click to expand...

AGREE! Completely.

Facebook, the company, is not losing ANY sleep over its share price. They made around $16 billion dollars from this IPO.

That being said, I am happy I did some investigative work into the Facebook IPO before the shares were released. I did NOT buy into the IPO because of many concerns with the company. Ironically, this is why I also deleted my Facebook account...

xAnthony said:

Definitely not. I could see this stock price dropping to around $15. I would stay away from this stock for a while.

Click to expand...

Then buy some Jun12 or Jul12 puts. They are fairly cheap, even in the money. Dropping from the current $26 to $15 would be a nice return.

n8mac said:

Then buy some Jun12 or Jul12 puts. They are fairly cheap, even in the money. Dropping from the current $26 to $15 would be a nice return.

Click to expand...

Sell how, buy later.

They'll keep going down for a while, I think anyway. At some point they'll be worth buying. If some genius nutcracker can figure out how to make money out of the ridiculous amount of personal information Facebook's got on people, the company will explode. It's a gamble as to if/when that would happen.

Shrink said:

And that constitute a record of historical accuracy?

I'm not, by any stretch of the imagination, defending Zuckerberg, as I know nothing about him. I saw the film and am aware that it is not exactly a documentary.

He may well be the ******* you think he is, but that movie is not a citation of any value.

Click to expand...

Sweet Jesus. Not only did the sarcasm - apparent in context and evidenced more clearly with a winky smiley face - pass right over your head, but you were upranked for your misunderstanding.

This place baffles me.

Anyway, far from a confirmed ass, Zuckerberg immediately offloaded an awful lot of the shares. Right before they fell. Not too shabby.

allmIne said:

Sweet Jesus. Not only did the sarcasm - apparent in context and evidenced more clearly with a winky smiley face - pass right over your head, but you were upranked for your misunderstanding.

This place baffles me.

Anyway, far from a confirmed ass, Zuckerberg immediately offloaded an awful lot of the shares. Right before they fell. Not too shabby.

Click to expand...

I am well and properly chastised!

Never mock the afflicted...

Shrink said:

I am well and properly chastised!

Never mock the afflicted...

Click to expand...

You are well and properly chaste!

Never mock the afflicted...

iJohnHenry said:

You are well and properly chaste!

Never mock the afflicted...

Click to expand...

Jeez, iJohn, I asked you not to tell!!!

Got on board cheap when I finally accepted Facebook is here to stay for many years just like google. Good for a perve but can't do it anymore now I'm in a relationship.