14 ms·

Facebook shares hit again as valuation doubts rise

92 points by liuwei6 14y ago

recoiledsnake 14y ago
Most of the IPO purchasers would've shed their shares on Friday and yesterday(volume was crazy on both days) and now the regular joes are left holding the bag. In fact, some of the big sharks have sold off their shares on Friday and went short on the stock, so they're making bank on this.
- mikemarotti 14y ago
  The burden will continue to rest on the middle class until there is no more middle class.
  - tedunangst 14y ago
    I guess it was my lucky day. I somehow managed to escape being forced to buy FB stock. Maybe I'm upper class now? That'd be pretty sweet.
    - mikemarotti 14y ago
      I tried to come up with an appropriate rebuttal, but you're right - it wasn't the middle class that was taken advantage of here, it was truly the "dumb money" who decided to buy a stock with a 100:1 PE ratio. Point taken.
- dacilselig 14y ago
  Can you tell me which big sharks you are referring to? I know Morgan Stanley is in big, however I don't know much of the other large players.
  - recoiledsnake 14y ago
    I would classify Morgan Stanley as a whale, not a shark. Can't find the article right now, but I read yesterday about big client of one of the underwriters saying he went through with the purchase of the IPO but dumped shares early and went short. These are the smart guys.
papaver 14y ago
This is one of the most genius moves ever. Bloat the value of the stock to a point where all the current investors can get out and make their money back on the IPO. Once they have their money back it no longer matters weather the truth comes out that actually hitting numbers like 25% growth for 10 years is almost an impossible feat, especially for a company that isn't diverse.
- nikcub 14y ago
  hate to say it but i'm sorta cheering facebook on this time. get one over the street.
deleted 14y ago
[deleted]
matthodan 14y ago
I'm long and strong $FB via the IPO, but I think we're going to have a year of pain before we're in the clear. Facebook needs to prove that they can continue grow-- not an easy feat for a company with huge market share. I want to see Facebook redefine the market by developing better ways to monetize the social graph (duh!). I think mobile has potential, particularly outside of the US, but success will require great execution. It will be interesting to see if Facebook can retain talent with options priced off the public valuation and a stock that is stagnating (or worse, declining).
- gfosco 14y ago
  Sadly, you're going to lose a lot of money. Facebook cannot possibly bring in the required revenue for growth. Their base will erode far faster than new business will come on board. The IPO was the bubble bursting, making the insiders rich, and laying the ruin for everyone who jumped in.
  - stonemetal 14y ago
    But they "only" sold 18 billion, that leaves insiders still holding 92 billion of FB. If this were really a bubble bursting wouldn't the rich insiders be holding a much smaller chunk of the fool's gold.
    - stonemetal 14y ago
      Never mind I appear to be mistaken, the company only sold 18 billion dollars in stock, the insiders sold off 57%. http://news.ycombinator.com/item?id=4023751 http://news.ycombinator.com/item?id=4023751
  - nickfromseattle 14y ago
    Zuckerberg is extremely intelligent, he must have had concerns about this pre-IPO. Why would he allow this to happen?
    - gfosco 14y ago
lionheart 14y ago
I'm not really sure why everybody here is so bearish on FB. Sure, its an unproven company with a high P/E ratio, but so are most tech startups when they go IPO. I think Zuckerberg has shown that he knows how to innovate, grow the company, and even make painful changes that eventually lead to more growth and profit. There is at least a decent chance that FB will refine their business model and turn into a large, stable technology company with good returns. Is this some kind of HN Schadenfreude?
- gfosco 14y ago
  How is there a decent chance of that? Have they refined anything in the past and grown beyond a simple "get users, show ads" model?
  - WillyF 14y ago
    Isn't that Google's model? It's worked out pretty well for them.
    - simonsarris 14y ago
      Well, when I look at companies that I might legitimately invest in, arguably the most important question is "what kind of room for growth is there?" Without getting too deep, its not hard to see Google become more than an ads company in the near future. Google Research. Google (self-driving) cars. Google ISP. Google Space Mining. Google the hardware manufacturer (hello moto). It's very difficult from my little point of view to see the same thing happening with Facebook. Their room for growth seems an awful lot smaller than most other companies worth investing in, and with their stats (higher market cap than Ford, huge P/E, etc), one would have to expect massive room for growth, but they haven't floated much in terms of monetization ideas other than ads and things that people may not like very much (privacy intrusive things, etc)
      - nollidge 14y ago
        There's nothing stopping Facebook from diversifying, too...
snorkel 14y ago
Stock prices rise and fall based on the popularity of the brand. Sure earnings and other announcements nudge a stock up or down for a week or two, but it's really the reputation of the brand that keeps the price up. In this regard FB's biggest risk is people will get bored of FB. This is a risk Google hasn't had to face yet, as everyone still relies on Google for search, but FB is mostly for entertainment, and people will eventually get bored of it. Remember yahoo?
- tomkarlo 14y ago
  Ultimately, it's profits that drive the value of a stock, not the brand. Yes, Apple is a popular brand. But you can't really say the same for Chevron, Exxon or Merck, all of which are top 20 stocks.
SagelyGuru 14y ago
I think the FB price will settle before too long at a more realistic <$10. People who paid $38+ are fools who were taken for a ride. However, they ought to be thanked because it is them that keep the markets functioning. Every time someone makes a profit by buying cheap and selling dear, there is someone else who pays for that profit by buying dear and selling cheap.
Kilimanjaro 14y ago
40B blown up the nose in just a couple of days, that's how wall street rolls.
vikas5678 14y ago
I think the negative comments which came out recently regarding possible threats to earnings from the mobile platform, GM pulling their ads from Facebook and the increase in the offering size all contributed towards this downfall. I think when Facebook comes out with their earnings next quarter, people will have a better idea where the company is headed and the shares might get a higher bid.

92 points by liuwei6 14y ago

Most of the IPO purchasers would've shed their shares on Friday and yesterday(volume was crazy on both days) and now the regular joes are left holding the bag. In fact, some of the big sharks have sold off their shares on Friday and went short on the stock, so they're making bank on this.

mikemarotti 14y ago
The burden will continue to rest on the middle class until there is no more middle class.
- tedunangst 14y ago
  I guess it was my lucky day. I somehow managed to escape being forced to buy FB stock. Maybe I'm upper class now? That'd be pretty sweet.
  - mikemarotti 14y ago
    I tried to come up with an appropriate rebuttal, but you're right - it wasn't the middle class that was taken advantage of here, it was truly the "dumb money" who decided to buy a stock with a 100:1 PE ratio. Point taken.
dacilselig 14y ago
Can you tell me which big sharks you are referring to? I know Morgan Stanley is in big, however I don't know much of the other large players.
- recoiledsnake 14y ago
  I would classify Morgan Stanley as a whale, not a shark. Can't find the article right now, but I read yesterday about big client of one of the underwriters saying he went through with the purchase of the IPO but dumped shares early and went short. These are the smart guys.

papaver 14y ago

This is one of the most genius moves ever. Bloat the value of the stock to a point where all the current investors can get out and make their money back on the IPO. Once they have their money back it no longer matters weather the truth comes out that actually hitting numbers like 25% growth for 10 years is almost an impossible feat, especially for a company that isn't diverse.

nikcub 14y ago
hate to say it but i'm sorta cheering facebook on this time. get one over the street.

deleted 14y ago

[deleted]

matthodan 14y ago

I'm long and strong $FB via the IPO, but I think we're going to have a year of pain before we're in the clear. Facebook needs to prove that they can continue grow-- not an easy feat for a company with huge market share. I want to see Facebook redefine the market by developing better ways to monetize the social graph (duh!). I think mobile has potential, particularly outside of the US, but success will require great execution. It will be interesting to see if Facebook can retain talent with options priced off the public valuation and a stock that is stagnating (or worse, declining).

gfosco 14y ago
Sadly, you're going to lose a lot of money. Facebook cannot possibly bring in the required revenue for growth. Their base will erode far faster than new business will come on board. The IPO was the bubble bursting, making the insiders rich, and laying the ruin for everyone who jumped in.
- stonemetal 14y ago
  But they "only" sold 18 billion, that leaves insiders still holding 92 billion of FB. If this were really a bubble bursting wouldn't the rich insiders be holding a much smaller chunk of the fool's gold.
  - stonemetal 14y ago
    Never mind I appear to be mistaken, the company only sold 18 billion dollars in stock, the insiders sold off 57%. http://news.ycombinator.com/item?id=4023751 http://news.ycombinator.com/item?id=4023751
- nickfromseattle 14y ago
  Zuckerberg is extremely intelligent, he must have had concerns about this pre-IPO. Why would he allow this to happen?
  - gfosco 14y ago

lionheart 14y ago

I'm not really sure why everybody here is so bearish on FB. Sure, its an unproven company with a high P/E ratio, but so are most tech startups when they go IPO. I think Zuckerberg has shown that he knows how to innovate, grow the company, and even make painful changes that eventually lead to more growth and profit. There is at least a decent chance that FB will refine their business model and turn into a large, stable technology company with good returns. Is this some kind of HN Schadenfreude?

gfosco 14y ago
How is there a decent chance of that? Have they refined anything in the past and grown beyond a simple "get users, show ads" model?
- WillyF 14y ago
  Isn't that Google's model? It's worked out pretty well for them.
  - simonsarris 14y ago
    Well, when I look at companies that I might legitimately invest in, arguably the most important question is "what kind of room for growth is there?" Without getting too deep, its not hard to see Google become more than an ads company in the near future. Google Research. Google (self-driving) cars. Google ISP. Google Space Mining. Google the hardware manufacturer (hello moto). It's very difficult from my little point of view to see the same thing happening with Facebook. Their room for growth seems an awful lot smaller than most other companies worth investing in, and with their stats (higher market cap than Ford, huge P/E, etc), one would have to expect massive room for growth, but they haven't floated much in terms of monetization ideas other than ads and things that people may not like very much (privacy intrusive things, etc)
    - nollidge 14y ago
      There's nothing stopping Facebook from diversifying, too...

snorkel 14y ago

Stock prices rise and fall based on the popularity of the brand. Sure earnings and other announcements nudge a stock up or down for a week or two, but it's really the reputation of the brand that keeps the price up. In this regard FB's biggest risk is people will get bored of FB. This is a risk Google hasn't had to face yet, as everyone still relies on Google for search, but FB is mostly for entertainment, and people will eventually get bored of it. Remember yahoo?

tomkarlo 14y ago
Ultimately, it's profits that drive the value of a stock, not the brand. Yes, Apple is a popular brand. But you can't really say the same for Chevron, Exxon or Merck, all of which are top 20 stocks.

SagelyGuru 14y ago

I think the FB price will settle before too long at a more realistic <$10. People who paid $38+ are fools who were taken for a ride. However, they ought to be thanked because it is them that keep the markets functioning. Every time someone makes a profit by buying cheap and selling dear, there is someone else who pays for that profit by buying dear and selling cheap.

Kilimanjaro 14y ago

40B blown up the nose in just a couple of days, that's how wall street rolls.

vikas5678 14y ago

I think the negative comments which came out recently regarding possible threats to earnings from the mobile platform, GM pulling their ads from Facebook and the increase in the offering size all contributed towards this downfall. I think when Facebook comes out with their earnings next quarter, people will have a better idea where the company is headed and the shares might get a higher bid.