Facebook IPO Designed To Trick Amateurs?

LIB3RTY

Looks like the Facebook stock may have been hyped for a "pump and dump" by those with insider knowledge.

Link

From the article:

"Now federal regulators, shareholder attorneys and angry investors are looking askance at the hype — and company disclosures — that attended the lead-up to last week’s ballyhooed Facebook stock sale.

They want to know whether the company and the banks that arranged the sale pulled one over on ordinary investors, against whom the odds are often stacked in initial public offerings.

“The true facts at the time of the [sale] were that Facebook was then experiencing a severe and pronounced reduction in revenue growth,” according to a lawsuit filed Wednesday against the company, its directors, Morgan Stanley and other banks affiliated with the sale"

grey_gym_sock

the brokers handling the IPO are being paid to sell the shares. they're not providing financial advice to private investors, nor could they be expected to. if they've actually lied, or omitted to disclose information they should have, then by all means throw the book at them. but it may be a case of suing because ppl have lost money so somebody must be to blame.

atush

No. I am an amateur but I didn't invest as I was not sure it was worth quite as much as portrayed.

I think it is people's greed, and their disappointment that this greed was not satisfied.

doubleJackD

anyone else remember friendsreunited? the founders sold it to ITV for 175 million, then 4 years later ITV sold it for 25 million. i'd imagine facebook will go the same way.

Reaper

Any investor with an ounce of common sense would have stayed well clear. The PE ratio was 88!! No stock is worth that.

talexuser

Exactly, if you didn't realise that, you should not have been buying, so it's all your own fault you've been stung.

The whole prospectus was based on it's a free service now, but we will introduce fees and hope everyone will pay up and carry on growing as if it was still free...

MoneySaverLog

I really was considering shorting facebook too, just stopped short of doing so and now wished I did. They are well overpriced, even a amateur like me could see that and were bound to drop.

As predicted earlier: http://forums.moneysavingexpert.com/showpost.php?p=50760815&postcount=16

Credit-Crunched

- NO 'hard assets' stock, property etc
- Easily replicated
- Very open to 'trend' changes as friends and myspace found out

Any one who purchased this stock at the list price needs their heads read!

TDPIX

IPOs are meant to hype up the stock.

IPOs (and stock buying in general) should always be a case of DYOR.

Unfortunately some people simply buy into hype. This is their own fault though, not the company's fault.

It was obvious that FB was/is overpriced.

Glen_Clark

Probably no more 'pump and dump' than the average IPO. But the average IPO is for a company most people have never heard of.
I guess the reason Facebook got away with it is because they are well known to billions of people, so on a percentage basis they are bound to appeal to more suckers than the average IPO?

Glen_Clark

PS: Do IPOs usually sell shares below market value?
The only ones I can remember that sold shares below market value are the last Tory Governments Privatisations where they sold public owned assets to the public at very low prices to buy votes?
Apart from that I always think well the Underwriters are paid handsomely to buy shares at these prices, why should I do it for nothing?