Thursday, May 24, 2012

Sizzle, fizzle IPO.

Mark Zuckerberg. The Genius who made "suckers" out of Investors.

Facebook IPO--Sizzle, fizzle. The "sizzle" side goes something like this: "Are you kidding me? This is huge and everyone got what they wanted. The company got its valuation of $104 billion; Zuckerberg got his $19-plus billion; about 400 millionaires were created; the bankers got what they wanted -- sizzle enough for you? Oh, and Mark and Prsicilla got married the next day. So, say what you like, but this is SIZZLE, baby." Once again, the small investor was taken to the cleaners and they have only themselves to blame. Did anyone think it through before buying into this hyped stock?  This was a classical plumb and dump, only the pump and dumpers didn't even know it themselves.  Even with 900 million subscribers who pay nothing for the right to use it's site, these new tech generation people will jump ship once a new product  comes along or they get to see advertisements every time they check their messages.  Advertisements are going to kill off the goose because Madison Avenue Ad agencies will never be able to justify paying for ads that no one looks at on a 2 inch screen. Facebook and its lead investor, Morgan Stanley did contribute, however.  If they had stayed with the original asking price of $28 and offered a few million shares less, Facebook’s IPO is likely to have result in a modest but healthy success–but a little greed set in. Morgan Stanley s also rumored to to have bought back millions of shares in an attempt to shore up the IPO stock price. What happens to the price when the underwriter starts selling them off again? Facebook’s disappointing public company debut has drawn a great deal of media scrutiny and criticism. But the finger pointing has not been contained just to the front pages of the newspapers. Disappointed investors have also now resorted to the courts, and further lawsuits seem likely to follow.First, on May 22, 2012, an investor who claims to have purchased shares in the Facebook IPO filed a purported securities class action lawsuit in California (San Mateo County) Superior Court against Facebook, CEO Mark Zuckerberg, CFO David Ebersman,   seven outside directors, and 32 offering underwriters.In support of these allegations, the federal court complaint cites a May 19, 2012 Reuters article entitled "Morgan Stanley Was a Control Freak on the Facebook IPO -- And It May Have Royally Screwed Itself" (here) and a May 22, 2012 Reuters article entitled "INSIGHT: Morgan Stanley Cut Facebook Estimates Just Before Facebook IPO" (here). Facebook's IPO appears to have been riddled with insider-trading. 


Well it looks like the companies who thought they were getting in on the ground floor of something big will have to wait instead of the quick turn around and profit taking they envisioned.  I see nothing wrong with the fact the Facebook has been hovering around it initial cost.  It may go way down and then those that bought it at $38 will whine like babies who thought they were guaranteed quick money.  Or, it could go up in time but not quickly.  Anyway I look at it I laugh at all the greedy idiots who have to wait for their money if they get it at all.

No comments:

Post a Comment