LA TImes: Facebook's epic fail

[marmar]

from the LA Times:


Maybe the dumb money wasn’t so dumb this time.

The stock market did turn out to be a voting machine on Facebook on Friday (to quote Warren Buffett and Benjamin Graham), and the vote was thumbs-down on flapdoodle.

Market pros will be debating the lessons to be drawn from the disastrous first-day trading in Facebook’s initial public offering. But one lesson is that when given enough information, investors can find their way through fogbanks of hype.

.....(snip).....

The expected pattern is that public investors — “dumb money” in Wall Street regard — react more to hype than to fundamentals. That’s why savvy Wall Street traders take it as a bearish signal when small investors pile into a stock or the stock market.

.....(snip).....

Additionally, in about a week the shares become eligible for short-selling, which could place more pressure on the price. A few months from now, insiders prohibited from selling their own share will have the green light, and millions more shares will enter the marketplace. The question in coming weeks may no longer be how high Facebook can soar, but how low can it go? ...........(more)

The complete piece is at: http://www.latimes.com/business/money/la-facebook-fail-20120518,0,5818946.story?track=rss

[Prometheus Bound]

1. I would hate to see Morgan Stanley and the other underwriters lose money on this.

Not to mention insiders having to watch the stock drop while waiting for the green light to sell.

But I guess I can handle it. In fact I can see considerable humor in it.

[bluestate10]

2. I could care less whether Morgan Stanley and other underwriters lose money.

Let them take a bath. Maybe then, next time their money and time will be invested on companies that have a real impact of the economies of the USA and the world. I, for one, would like to see development of a web search engine that is more efficient that Google and Yahoo, finds exactly what I am searching for and don't pop up gobs of unrelated bullshit sites that I have to wade through to find what I was looking for. As far as Facebook is concerned, I don't understand the site, and don't see a need for it other than for those wanting to fantasize in a web of social bullshit.

[aquart]

12. You know what Facebook does? It connects separated families.

It keeps grandparents in the loop. New baby pictures are instantly available for viewing and comment.

It located a long lost cousin so that my mom could visit with him before he died.

It found another cousin looking for a particular family grave and my mom was able to tell her where it is.

Is that the social bullshit you're talking about?

[randome]

14. ____

[bhikkhu]

15. It does all that well, and then it sells your life to the highest bidder

...or at least it does its best to. I use facebook myself to keep in touch with dispersed family, but the marketing side of it has gotten to be a big pain. If something else came along that wasn't so advertising heavy and commercial, and wasn't so dedicated to selling your personal information to line the pockets of a few billionaires, I'd dump the service in a heartbeat.

They screwed up a perfectly good product, and I don't think it will be long before they go the way of AOL.

[XanaDUer]

16. My long lost half-sister found me on FB

So, for that, I am grateful to it. I now have a niece.

[grasswire]

25. my family members have a closed FB group.

There are about fifty of us on it, located all over the globe including one cousin on a U.S. Navy ship in the Middle East. We are able to keep up in a way that would never, ever happen without FB. Many family photos from the late 1800s forward have been posted to share, and genealogical information.

Too cool. My 92-year-old legally blind aunt signed up for FB last week cuz she's missing the fun.

[Prometheus Bound]

17. Actually I was being sarcastic. MS was trying to manipulate the market.

Maybe buying as much as $2 billion in shares, to keep their reputation as the top underwriter for tech, or from another perspective, to avoid the reputation of the worst underwriter ever.

Market manipulators deserve to lose.

[Yavin4]

3. Trust Me, The Banks Won't Lose Money

And even if they do, the Fed and the govt will bail them out.

[wilt the stilt]

4. I said a couple of days ago on DU

that Facebook was a big nothing. I just didn't see anything special about it as a business. a pet rock.

[DinahMoeHum]

6. Interesting. I was talking to a business consultant the other day. . .

and I asked him about social networking, whether I should really get involved and have a Facebook account (I'm looking to change jobs).

He told me, don't bother with Facebook, that LinkedIn was a much better site if I wanted to do this kind of networking on a strictly professional basis: Professionals networking with professionals.

Then he told me: "Remember, Facebook was founded by a college geek looking for a date. Not a Steve Jobs or Bill Gates sort of person" I chuckled.

So far, it seems people like you and me and the consultant are having the last laugh.

[tanyev]

5. Public investors did not Like.

[Liberal_in_LA]

13. I understand that the banks propped up the price on Friday. don't we have to

wait until monday to see how the market really values the stock?

[Johonny]

18. I think you have to wait until the latest Euro panic leaves

Everyone seems to be talking up how "smart" the market was on this IPO but frankly the whole market has been selling for 2 straight weeks. The general word is the market could likely be down again next week. It's probably going to take some good Euro news to break it. You have high dividend stocks that are sitting near 52 week lows. And then you got this facebook stock. When people do start to buy after this recent drop, it isn't certain people won't first pour money into solid companies that are high interest paying and have a much longer history than facebook. All of which makes you think Facebook will go down in price. The best estimates are about 30 %, the worst by 90%. If you are buying FB right now it's because you plan on owning it and the company being around 20 years from now. The problem is it is priced probably too high for that kind of thinking too. Given the market at the moment unless something magical happens over the weekend, Monday isn't likely going to be a good day for almost any stock of wallstreet.

[Liberal_in_LA]

19. thanks for the info. I seriously doubt facebook will be around in 20 years

not in the current format.

[Roy Rolling]

7. let's talk finance

Facebook is a seller of advertising, like newspapers and television and radio and Google ads. Advertising has oversaturated people's lives and commercials are less and less effective.

The advertising on the side of Facebook sites is a distraction and few people are driven to buy from them. Once they crunch the numbers (if ever) advertisers will find out Facebook offers a poor return on advertising budgets.

Once that happens, Facebook stock will be long dead....

[MADem]

8. I couldn't see the substantial improvement over that other time-waster, MYSPACE.

Except that there was less capability to put flashing lights and bullshit all over one's page "creations."

They're both more efficient than e-mail, but they're also way more public unless the user is quite paranoid. Great way to be nosy--like peeping over the virtual garden fence, I suppose.

[Liberal_in_LA]

20. hey! I found Myspace! It's still around. wow.

http://www.myspace.com/

[daaron]

9. Is it too soon?

To start gloating?

Tack on the fact that FB is dodging its tax bill, along with it's founders, and I am forced to ask:

How can any democratic activist (note the small 'd') continue to support this Corporate Spy Machine with it's evil minions and trunkline into the nearest HSD fusion center?

If you support OWS, and you still have a Facebook account, I'm shaking my head (cyber-metaphorically-speaking) at your ill-informed hypocrisy.

Try Diaspora* (a secure, open-source social network with international userbase of geeks and artists) at diasp.org, poddery.com, joindiaspora.org or one of the many other publicly-accessible pods worldwide. Ditch your corporate spymaster, and join the liberation tech movement, Facefools!

[MADem]

21. Nothing is "secure"--not Diaspora, not anything. You're "out there" on the net, people can see you,

track you, find you. The only way to be truly secure is to go off the grid entirely, avoid places where there are video cameras (which is everywhere, these days), and live a sucky, crappy, hermit's life with no techy stuff, no fun, no world-wide interaction.

You don't wanna be obvious? Make your account name Deniece Danephew, or Ophelia Thigh, or Heywood U. Pishoff, or something like that. That makes it harder for the corporate tools to sell your info.

[daaron]

22. Well, there's degrees of security...

Certainly when I feel like being completely anonymous and untraceable, it is not only technically possible, but it's pretty easy once you know what to do. I don't require that level of privacy, but I like knowing how to acquire it (cuz I like learnin' stuff).

However, there is no comparison between Diaspora's security and Facebook's. It's like comparing the relative security of putting your money in a high-quality safe or leaving laying on a table at McDonald's. In the 1st case, it's going to be DAMN hard to get the money. In the second case, it's being given away.

Apples and oranges.

[MADem]

23. Just don't give Facebook your full name, and use a tosser email for their stupid notifications!

Problem solved without having to be all covert. Also, I doubt you'd be able to get Aunt Millie and Uncle Ebert to become "Diaspora" fans, so the utility is kind of limited.

If the feds want to know what you've been up to on the net, they can find out. Pretty easily, too...

[daaron]

24. I stopped using Facebook more than a year ago.

For a while during the peak of OWS, I did what you suggested, but using Tor to snag some IP somewhere. When I'm done with my FB toy, I just stop playing with it - nothing tracks back to me, as long as I don't troll my friends' pages.

I don't have much use for ultra-security, but it's nice to know how to acquire it. Just cuz. Sure if the Feds wanna know, browsing encryption like SSL/TCL is relatively small bit-size for the keys (thanks to national security, cyphers are classified like missile guidance, and it's illegal to export algorithms that work too well for the NSA to hack).

There's other ways around this, of course. Not all encryption relies on a cypher like RSA, etc. Tor (the Onion network) works by nesting chains of IP's from around the world, so even if you're browsing http not https, it would be a monumental task to figure out who is on the other end of any exit node, even for the NSA (the Feds uses Tor too, for this very reason). Your browsing is in plain sight, but YOU are not - you could be anybody. There's other similar projects to Tor - JonDo springs to mind - but Tor is robust and under heavy development. It's also a snap to use and almost as fast as regular browsing.

Supporting Tor is one of the most important things a progressive Netizen can do to help oppressed folks in China, Iran, Pakistan, etc. get around their respective national firewalls. The more people who use Tor, the faster and more secure the network is. I keep a Tor exit node running on my entertainment machine just in case a Chinese dissident wants to read DU. With Tor, they can.

If everyone using Facebook would use Tor instead, we the people would PWN the Internet.

[MADem]

26. I made a page named after one of my dogs that has no info on it.

I use it when someone says "Go look at this facebook page."

The reason is that you go to a link and you get the log in page and they won't let you see the page until you log in...so woof woof, facebook!

I keep in touch with my friends and family the old fashioned way--I'm not much of a letter writer anymore, but I use the old telephone and email!

How nice of you to help the chinese dissidents--that's a real mitzvah, right there!

[unblock]

10. "facebook's" "epic" "fail"? sorry, zero for three....

"facebook's" epic fail? if anyone failed here, it's the banks who priced it a tad too high to match the marketing they did, and, more so, the financial punditry that hyped the crap out of it. facebook itself can hardly be blamed for setting the price so as to maximize the money it raised for the company and for the owners.

facebook's "epic" fail? if they overpriced it, it wasn't by much. certainly $10/share, the basic standard ipo launch price, was way too low. maybe they should have priced it at, what, $34 instead of $38? that's hardly epic proportions.

facebook's epic "fail"? they successfully raised probably as much money as the possibly could have. had they priced it 10% or 30% lower, they would have raised -- uh -- 10% or 30% less for the company and for the owners. so the it's rather difficult to call raising as much as they could have -- which is, after all, the entire point of an ipo -- a "fail".


bottom line is that this article is exactly the sort of self-important, narcissistic indulgence on the part of the financial media that the article itself is bemoaning.

oh, and i just love that "underwriters of the IPO undoubtedly spent millions of dollars, maybe hundreds of millions, propping up the stock Friday so it wouldn’t fall below the $38 offering price, as that would have been a huge embarrassment".

"undoubtedly"? wow, amazing financial reporting. next time, try "i'm guessing, based mostly on what other financial reporters are guessing".



for the record, i think facebook has long been way over-hyped, and i think the long-term potential for the business will sour once the next shiny internet thing comes along and facebook starts losing eyeballs the way myspace did. but the ipo itsef was undoubtedly a staggering success.

indeed, the problem is that its success exceeds what was warranted.

that's the opposite of fail.

[gratuitous]

11. Yeah, let me fail epically for a few billion dollars

I'll fail every day at that price.

You're right; the failure here isn't Facebook's, it's the financial hype machine and the nitwits who swallowed their own bullshit.