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Facebook trades under $30, down 7%+
- Osiris 14y agoWhile the IPO was bad for investors, it was certainly good (financially) for Facebook. They definitely maximized their earnings from the IPO and Zuckerberg really made out well getting just under $38/share for his $1.1bn in shares. In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did.
- badusername 14y agoI assume it was financially healthy for a very small group of people within Facebook. Most of the employees would be on lockdown before they can sell their stocks on the public market, no?
- ceejayoz 14y agoFacebook, the company, got a lot of money out of the IPO, not Facebook's individual employee holdings.
- jonknee 14y agoInsiders got even more out of the IPO than the company did.
- ddet 14y agoI am assuming they have to wait 6 months, by then FB will not be worth much compared to their strike price.
- cjrp 14y ago3 months - http://blogs.wsj.com/digits/2012/05/24/facebook-lock-up-expiration-not-seen-as-a-worry/ http://blogs.wsj.com/digits/2012/05/24/facebook-lock-up-expi...
- muyuu 14y agoAt this rate these 3 months will feel very long and they will be pretty much "a worry" for those affected.
- zeroonetwothree 14y agoIt's 6 months for most employees.
- gamble 14y agoThe early investors made out like kings, but I doubt Facebook's employees are in a cheery mood as they watch their options sink underwater and their vested paper wealth dissipate while waiting for the lockup period to end.
- birken 14y agoIsn't that the fault of the private investors for overvaluing Facebook? Presumably all granted options had a strike based based on the current private valuation, which clearly the public market doesn't agree with (without judgement as to whether the public market is right or wrong).
- jcdavis 14y agoFrom what I understand (not an FB employee, but know several) the stock grants in the last ~3 years have been RSUs not options, which at least means they can't be underwater
- gamble 14y agoYep, but it's still a problem for the company. Facebook has been on a hiring spree, backed by an implicit promise that anyone in before the IPO would be practically guaranteed to make a buck. If the IPO is still a bust by the time the lockup expires in 3-6 months, it's going to be an HR problem. Of course, it depends on how Facebook actually structures its compensation packages. RSU are more popular with most companies these days than stock options, so they may just be looking forward to a smaller payday than worthless options.
- bdr 14y agoI'm skeptical that FB would be higher today if it had IPOd lower.
- dredmorbius 14y agoIt would be higher relative to the IPO price. Among other things, this means that employee options would still be above water. Rather more motivating than underwater options after years of death-march hours.
- jonknee 14y ago> In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did. Google priced their shares based on an auction, I'd say it was priced right. It was also much smaller because it wasn't a bunch of insiders trying to dump their shares at an inflated value. Google sold 19.6M shares, 14.1M of them were from corporate. There were 271M shares in total, so only a very small amount of the company was transferred. In contrast for FB, there are 2.14B total shares and the IPO was for 421.2M of them, a much larger percentage of the company. In addition, insiders made up 241M of those shares sold, which is actually the majority of the IPO.
- asdf333 14y agoWhile this is anecdotal, some ibanking friends told me that alot of the traditional wall street banks 'boycotted' google for going w/ a smaller player who did a non-traditional format (auctions) that threatened their business model and that resulted in lower demand (and lower price) for their shares at IPO than would have otherwise been the case.
- baq 14y agoanother win for the efficient market hypothesis. /s
- tomkarlo 14y agoThe game is not as simple as maximizing the value of just the shares being sold on day 1. Post-IPO, a company's shareholders are largely the same as pre-IPO... the value they achieve for their shares in will be determined over a much longer time frame. Reputation / performance matters.
- ddet 14y agoFB IPO is bad for the startup world
- benjaminwootton 14y agoAgreed. I wonder how much of the current froth is based on people trying to be the next Facebook or Instagram? If Facebook takes off and justifies their early valuation, the startup/angel/incubator/VC world would go into the stratopshere. If it continues to languish, people are going to be much more skeptical in making investments and even starting web based businesses. A lot hinges on this stock price for the rest of us....
- il 14y agoI don't think the possibility of a $50B exit vs a $100B exit will make any difference for most angel investors.
- waterlesscloud 14y agoWhat will make a difference is that neither Instagram or Pinterest would get anywhere near as much of a valuation today as they did a month ago.
- awj 14y ago> If it continues to languish, people are going to be much more skeptical in making investments and even starting web based businesses. Is the latter part of that really true? Starting a web based business is worlds easier/cheaper than just about any other kind. I see this more as injecting a dose of reality and doing away with the give-things-away-to-get-big-then-monetize-somehow "business plan".
- pbreit 14y agoNo it's not. Facebook is an anomalous company so there's not much worth in comparing it to the rest of the industry. The fact is, some $10 billion dollars just entered investor hands who will no doubt be ploughing it back into (mostly Bay Area) startups for years to come. And Facebook becoming more acquisitive certainly helps as well.
- sek 14y agoThe employees, they dumped a lot of their shares probably. They are allowed since Monday to sell them.
- TomGullen 14y agoHow many shares did the employees own? Even if they all sold all of them, is it really enough to have a meaningful impact on the price of the stock with that much trading volume and that large of a market cap? Probably not!
- planetguy 14y agoIf you count Zuckerberg as an employee, then I'm pretty sure he owns more shares than were issued in the IPO. Even if you don't, a huge slab of the company is owned by current and former employees.
- flyt 14y agoLockup doesn't expire until six months after the IPO. Employees and ex-employees have a while to wait until they can begin selling.
- denniedarko 14y ago6 month lockup no?
- unreal37 14y agoCan anyone explain why they are down 7%?
- LargeWu 14y agoI think a better question is why are they only down 7%
- astrodust 14y agoAs Facebook stands, they're doing okay. The stock might be over-valued, but that's the environment we're in now. To get that stock going up they'll have to increase their market share and the only way to do that is to start acquiring big social networks, something they don't seen prepared to do, or diversify.
- georgemcbay 14y ago"To get that stock going up they'll have to increase their market share and the only way to do that is to start acquiring big social network" Which social network(s) are they supposed to acquire for growth? While there are certainly other social networks out there, I sincerely doubt there are any that don't have a huge user overlap with Facebook.
- astrodust 14y agoFacebook seems to have less traction in markets like China and Japan when compared with the market share of the local networks. Facebook could do worse than "Go Yahoo!" and start acquiring properties simply for their userbases. I'm sure QQ is expensive, but it's not out of reach for a company that's public. Issue enough shares and anything's possible...if you can get shareholder approval.
- gamble 14y agoFacebook options trading began today.
- TomGullen 14y ago
- taytus 14y agoI think that the big difference is that Google is a company while Facebook is a product.
- taytus 14y agoDown voted? Nice community bro.
- TomGullen 14y agoIt's around a $23,000 reduction of market cap per second from the IPO 8 days ago (https://twitter.com/Scirra/status/207481113902465024 https://twitter.com/Scirra/status/207481113902465024) A pretty spectacular rate of value loss
- borism 14y agoI guess that's it for the "hyperinflation is coming!!!" gold-crazed Ron Paul-supporting crowd.
- rondon1 14y agoMorgan Stanley has been putting in floors to keep this stock from totally crashing. They cannot keep it up forever.
- zgohr 14y agoDo you have proof? I know that on opening Friday we saw it sit at $38.00 and that was obviously MS, but since then I don't see any evidence in the stock price that this has happened since. On the 23rd the stock traded at 31.53 a few times but later in the day traded at 31.52. I'd love to see MS take a beating for that 100m they got for underwriting this poorly orchestrated IPO, I just haven't been able to see it happening unless there is proof I am unaware of.
- tomkarlo 14y agoAt least for the first day, this was documented (and expected) from the underwriters. http://www.businessinsider.com/facebook-banker-morgan-stanley-bought-a-humongous-amount-of-stock-to-try-support-price-2012-5 http://www.businessinsider.com/facebook-banker-morgan-stanle... Underwriters start out with a net short position on an IPO so that they can step in to support if necessary.
- evilbit 14y agohttp://www.google.com/search?q=greenshoe http://www.google.com/search?q=greenshoe
- rondon1 14y agoNO I don't have any proof. If wall street left lots of proof in their wake, people would have gone to jail during the housing crash. Maybe I'm wrong, Maybe the stock randomly hit 34,32,30,29 and plateaued because normal investors put in orders for those prices.
- nlz1 14y agoSo...when is Zuckerberg scheduled to be interviewed on Squawk Box?
- nicholassmith 14y agoDoes anyone have any insider info on when Facebook's employee lockup period ends? The shares won't end up worthless but I can't see them being worth billions.
- tghw 14y agoGenerally, it is 6 months after the IPO.
- mattlong 14y agoEmployees are typically awarded stock options with a non-zero strike price based on the FMV of the company at the time the options grant. Those options very well could end up worthless.
- hughw 14y agoI imagine many of them hedged with options on the open market. [edit] I just learned below that that market just opened, so that strategy must not have been available to them.
- zeroonetwothree 14y agoEmployees are not allowed to trade in FB options.
- jquery 14y agoHedging Zynga options should work almost as well.
- cletus 14y agoThere are only two parties hurt by this: 1. The premiere clients of Goldman Sachs and Morgan Stanley who bought into the lie that FB should trade at >100:1 P/E; and 2. Facebook. (1) I don't care about. (2) is the interesting one. You'll note that I don't include the employees in the list of injured parties. They're largely in a lockout anyway (I assume?). Whether it opens at $38 and drops to $30 or starts at $20 and climbs to $30 is of little consequence. Facebook strategically seems concerned with only two companies: Google (disclaimer: I work for Google) and Apple, both of which have established, proven businesses and strategic assets in Internet and mobile going forward. Facebook is a platform company without a mobile platform in a world becoming increasingly mobile. Facebook has a lot of cheerleaders, optimists and pundits all backing this idea that the potential of all this data is huge, so much so that I believe they started to believe their own positive press. It's an easy trap to fall into. But make no mistake: this is bad for Facebook. Sure some investors, Zuck and (maybe?) some employees made a few more dollars but Facebook doesn't need the money and neither do most of the investors. But that's incredibly shortsighted. Facebook's ability to retain and attract talent and make stock-based acquisitions is in large part determined by the health and outlook of their stock. If they'd IPOed for $20-25 and jumped to $30 then they would have a lot of momentum behind them. Instead the press is "how low will it go?" What kind of position is that to be in if, say, you're trying to negotiate a $1B+ stock-based acquisition? Anyway, I'm glad about this drop. Not out of any kind of schadenfreude but because the market is acting... rationally. These P/Es were never justified and instead of not mattering and the stock skyrocketing anyway (which would happen were we in a bubble, which we are not), the stock is seeking a more appropriate level. This is good for us, the tech industry and the market and the fact that some choice clients of Goldman Sachs and Morgan Stanley got bilked along the way is just gravy as far as I'm concerned. EDIT: to clarify, I don't really have a position on what the appropriate level is other than $38 is and was too high. It could still well go lower than $30.
- ryanmerket 14y agoHow can you say the P/E isn't justified when Facebook isn't monetizing +60% of their impressions (mobile)?
- 14y ago
- woodall 14y agoIn 1 month the price will be back to, or above, the original IPO.
- planetguy 14y agoAnd how much of your own money are you putting where your mouth is on that one? If you're right, you could make a lot of money with that bet.
- woodall 14y agoThis is just my prediction. In a month's time I'll read back over my comments and, hopefully, I'll see this, check, and have an answer.
- MSM 14y agoHow much money did these people that "knew it would fail, of course!" put on shorting it when it was $35? If any of the people that "knew $38 was way too high" had done that, they'd be out counting their money on a beach, not sitting at their desk. It's all just hindsight garbage.
- micaeked 14y agoIn the US, IPOs cannot be sold short for a month after they start trading.
- arturadib 14y agoAlternate title: FB down 20%+ since IPO You'd be gambling enough already if you bought FB stock at 20x earnings (the tech norm for well-established companies), let alone at 100x. At 20x, you'd be speculating on FB's ability to sustain its current earnings power in an increasingly competitive and verticalized space. That's a tough proposition, particularly since social graphs are not as much of a competitive moat as people thought (Orkut for example had at some point virtually the entire online population of Brazil engaged with it, virtually none now), and everybody and their mother is investing in a new social network for a different vertical. Of course, it is entirely possible that FB will not only maintain its market position, but also increase its earnings power five-fold or whatever. In that scenario, they would have squashed most other vertical social networks and found a sustainable business model (they haven't really yet, see [1]). Again, not impossible, but bear in mind what assumptions the current valuation implies. It's not surprising to see the market re-adjust its valuation after the IPO craze. [1] http://cdixon.org/2012/05/15/facebooks-business-model/ http://cdixon.org/2012/05/15/facebooks-business-model/
- r00fus 14y agoThe social graph is not their moat. It's the ubiquity. It's a Microsoft-angle, to dominate "social" and become a de-facto identity provider. That the social graph feeds ubiquity and vice-versa is what makes the proposition appealing. Google+ is about the only real competition, and it's really designed for a separate purpose.
- stonemetal 14y agoI know everyone keeps pointing to the 100:1 P/E but with 900 million active users that is more than 100 bucks per user. Is the average FB user worth 100 dollars to FB?
- jamesbressi 14y agoIf your math is right, then yes I think anyone would agree that the mind share of each active user on FB is worth even more than $100 bucks. But, the problem is they have not proven they can monetize those users efficiently and effectively yet. I remember when everyone questioned how Google was going to monetize on their traffic and they figured it out and hopefully FB will too. The one interesting thing that is a big difference between Google and FB though is that Google had "traffic" and FB has a group of people hanging out so to speak. You would think that FB has the better potential to maximize monetization of customers, but how remains to be seen.
- jdavid 14y agoThe problem with Facebook isn't about what a user's worth to the company, it's what the company is willing to do to make a user worth $100 or $1000.
- qeorge 14y agoConsidering Google's ARPU is ~$30, and Facebook's users aren't nearly as valuable as Google's (IMO), that's a big hell no.
- cube13 14y agoTo be fair, FB doesn't need to get $100/user to be worth the $100 billion valuation. Realistically, they need to be making somewhere on the order of $6.7 billion/year to have a "healthy" P/E of 15. So, assuming that costs scale linearly with profit(they won't), FB needs to really be making around $25/user for the $100 Billion valuation to have a healthy P/E.
- molmalo 14y agoAlso, you should consider that $25 is way different for users from different countries. Its not the same to get that money from someone in the USA than from someone in Brazil (it's second market), India (3rd), Indonesia(4th), Mexico(5th), Turkey(7th), etc... [1] Business in those countries will not pay the same to publish their ads in FB, simply because the expected return will be lower. [1] http://www.socialbakers.com/facebook-statistics/?interval=last-week http://www.socialbakers.com/facebook-statistics/?interval=la...
- coreyo 14y agoThis is exactly how companies get sucked into the quarterly chase of Wallstreet. Facebook shouldn't be concerned and neither should you.
- vibrunazo 14y agoWanna see something cool? Put FB and ZNGA side by side on the graph: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1338321600000&chddm=1955&chls=IntervalBasedLine&cmpto=NASDAQ:ZNGA&cmptdms=0&q=NASDAQ:FB&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
- slug 14y agoI always do that when there's a post about facebook stock and it's quite entertaining to seem those two go side by side on the up-down roller coaster.
- usaar333 14y agoWhy does Google show a market cap of only $62B? If the $38 IPO was a $104B valuation, $29 should be $79B
- akuchlous 14y agoFacebook had been public for last few years. The shares were for sale, without a healthy look a the numbers. Going by the P/E ratio, it should go by Google's PE of 18 instead of 93. Event a healthy pop up on P/E to 48, the shares should be worth $15 or a FB valuation of no more than $30Billion. By most optimistic estimate, it will be $20 by June End.
- betadj 14y agoAn internet legendary destroyed by wallstreet.
- bigdubs 14y agoThis view is actually false. I should probably respond to a more visible comment but this will have to suffice. The winners in the IPO, and this has been said before (not just by me), is facebook and zuckerberg. The losers are the underwriters and their clients who the underwriters placed the stock with (and now, the rest of the retail investment market). Typically an IPO is priced such that 'insiders' are getting a better deal than the retail investors will have when supply starts to open up. This IPO, that methodology was reversed. It was a huge stock->cash dump, and will benefit $FB near term because they have some 20+bn in cash now, but probably ruin them long term because of the reputation hit they took, and the prevailing view that their stock is worthless. TL;DR; facebook screwed wallstreet more than it got screwed by wallstreet.
- greg7mdp 14y agounder $29 now! How low will it go?
- agumonkey 14y agois there a point after which a decrease fulls itself ? I know nothing about stock market, first day drop might signals frailty or wrong pricing but won't stable negative continuity trigger a global resell reflex ?
- offshoreguy1 14y agoNo surprise. It was grossly hyped and over valued. It's marketable price is being determined by the markets.
- electic 14y agoYou would have to be nuts now to even think about taking a job at Facebook and if you are there, I'd think about leaving in all seriousness. I predict that Facebook is going to have a hard time hiring good talent now. This is one of the downsides of filling up your stock with a lot of hot air. It's all short term gain.
- h84ru3a 14y agoLet's look at this in simple terms. Let's look for evidence of a "business model". Website becomes popular. Website gets personal details from users: email, maybe photos, address, etc., plus it gets a list of "friends" for each user. Website shows display ads. (Website gives birth to games company. Games company goes public then loses half its value in two months.) Does website have a "business model"? Wait, we're not done. Website monitors everything users do on the website as well as, to the extent they can, the other websites users visit, using web beacons scattered across the web (Like buttons, aka "Facebook Connect"). Website shows display ads. Do we have a business model yet? But wait, there's more. Website goes public and raises a heap of easy cash. Website acquires a web browser, produces a mobile phone and begins monitoring everything users do on the web and every conversation they have with their friends. Website shows display ads. Do we have a business model yet? Or is this just lots and lots of spying, information collection and dreaming that this is somehow useful for business? Display ads are not a business model that will grow a business, unless the business is itself a display ad company. (And Google already acquired those guys years ago.)
- Tichy 14y agoI thought they are already making money.
- h84ru3a 14y agoThey made money in the past, as more and more users kept signing up and using the site (more new eyeballs on the display ads). We're looking to the future now. What happens when the number of new users starts to slow down? As a public company, there is increased pressure for it to perform and to grow. Increasing the enormous net worth of the CEO and some insiders and then gradually fizzling out is not, one would think, the objective of a corporation that goes public. The usual reason companies raise money through IPO's is to grow the company.
- josscrowcroft 14y agoSo should I buy Facebook stock while it's low? Confused.
- bourdine 14y agoI think, the Facebook stocks down is not so tragic. Zuck well know what is real price of Facebook stocks and can take a bull strategy. And if it, this terrible falling is not so terrible for Zuck. It just my point of view, but it have some chance to be a real picture. I'm agree with many hn's that mobile is a general way for today Facebook. But today main Zuck plan look like a only increasing ads on Facebook - I'm talking about new Promote button - http://www.socialbakers.com/blog/587-get-ready-4-new-facebook-timeline-features/ http://www.socialbakers.com/blog/587-get-ready-4-new-faceboo... Let me be honest - I'm not undersand Zuck. He have long war with Google for search traffic but still not released a Facebook Search. He can build a many new sections with new features (with ad) but still not. Well, he can experience with new brand pages (bild a new guidline and start migrate website inside Facebook and host it) or choose a absolutley new way of monetization (they are obvious) but this all still do not. I think, Zuck must hire a new CEO and calm down, then stocks can grow up to $160-$220 and more.
- denzil_correa 14y agoFacebook is currently trading at 28.8, Down 9.62% [1]. [1] http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1338366029869&chddm=1173&chls=IntervalBasedLine&q=NASDAQ:FB&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...