Facebook IPO Designed To Trick Amateurs?

atush

I agree, IPOs are always pumped up.

I think the way they can target advertising to individual users depending on their profile and key terms is a huge moneyspinner for the future and can help companies target their ad budgets more effectively at lower cost.

But the price and PE was too high. Like buying a new hyped car at a mark up only to find it is worth half the price 10 mins after you have driven off.

sabretoothtigger

IPO Designed To Trick Amateurs

The free market is designed to serve no one exclusively. Amatuers shouldnt buy singular stocks, end of story really.
So either you are talking about gamblers or knowledgable speculators
The IPO was not available to small retail holders as far as I know, so there was no trick. Caveat emptor

The PE ratio was 88!! No stock is worth that.

Thats not true because context is everything. It could be a large amount of profits were taken in one off costs

I thought they were overvalued just because growth is lacking. High PE often implies massive growth and its worth taking because of future earnings not present.
Especially in high margin business, like Intel has margins of 50% but also sometimes high research costs.
If they could keep the profits in future with lower costs it would be great, we are basically asking is their product so great it will last a decade in its legacy and its similar in any tech idea.
If zuckerburg can just sit back and profit, not have to spend money that'd be great

FB could be a bargain if they started by signing up one tenth of China every five years. I dont think they will

- NO 'hard assets' stock, property etc

They own computers to serve the website. They definitely have assets like the source code and patents, to me thats fairly solid and common for tech

Glen_Clark

sabretoothtigger wrote: »

Amatuers shouldnt buy singular stocks, end of story really.

If Amateurs shouldn't buy singular stocks what should they do? Where can they go where they won't get ripped off

I'm sure Facebook will have no problem signing up millions more people. Whether they will make money out of them is another matter. I don't think you can make much money out of an internet forum because there are so many free ones to which your customers can move at the click of a mouse.

rockitup

MoneySaverLog wrote: »

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

I made post 24 on that same thread and said if FB had a little surge on opening day of trading, then I would short it.

I managed to get in at $41.86 and shorted for £1 per cent drop in price. Sold out at $31.56 for £1,030 profit...

Every little helps... still trying to get my Tesco losses back but nearly there now

rockitup

sabretoothtigger wrote: »

The free market is designed to serve no one exclusively. Amatuers shouldnt buy singular stocks, end of story really.
So either you are talking about gamblers or knowledgable speculators
The IPO was not available to small retail holders as far as I know, so there was no trick. Caveat emptor

Sabre
I reckon the small investors who got burnt the worst were those who had "buy at open" orders in and were at the mercy of the trading floor or unscrupulous brokers. But it was well overpriced anyway, didn't their raise the expected IPO price beforehand and then they priced it at the top of the IPO offer range?

Shorting that was the easiest money I have made for a while, wish I had the balls of steel to go more than a quid a cent to the downside

Radiantsoul

Credit-Crunched wrote: »

- 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!

Facebook has lots of intellectual property, a huge database and very high barriers to entry. I am not sure another "facebook" will come along and replace it anytime soon.

I am not sure it is worth its valuation, but conceivable it could be another Apple.

mr_fishbulb

doubleJackD wrote: »

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.

Exactly. Myspace went the same way. There is little barrier to entry for these sorts of things, and brand loyalty gives way to what's new, cool, and the tipping point of more of you friends use that then the old site.

Granted Facebook has stood up well to Google+, but then Google+ didn't really add anything new.

mr_fishbulb

Radiantsoul wrote: »

Facebook has lots of intellectual property, a huge database and very high barriers to entry. I am not sure another "facebook" will come along and replace it anytime soon.

Websites have low barriers to entry. It's cheap to get a site on a virtual host, and then scale up as you grow.

Yes the database is large, but it's mostly full of who "Likes" pictures of cats doing funny things.

Radiantsoul

mr_fishbulb wrote: »

Websites have low barriers to entry. It's cheap to get a site on a virtual host, and then scale up as you grow.

The barriers are as much social as technological. There are lots of people who dislike Facebook for various reasons, but they tend to be stuck as that is where their friends are. Google Plus is struggling with this fact.

It is getting and managing the growth phase that is the hard part. Clearly Facebook was far more successful at that than Friendsreunited which offered few reasons to keep coming back.

I am not suggesting Facebook is great value, but equally it is not a 1990s tech stock with no revenue, assets or business model. The end game for Facebook is never going to bankruptcy.

dealer_wins

Facebook will come falling down sooner than later IMO.

Once the yoof start using something different and more trendy, the whole house of cards will fall in.