5 ms·

FB nearly cut in half since IPO (22.28 current low)

37 points by veyron 14y ago

Smrchy 14y ago
Buy on bad news it says. Every time i see such a huge drop for the FB stock i think to myself: Should i buy now - i never did. And every time i see the next rock bottom i am glad i didn't. I do believe though that FB has the potential for a lot more revenue just because they own the channel to their gazillion users. They just haven't figured out a good way, yet.
- tomgallard 14y ago
  They may say buy on bad news, but following that philosophy might have lead you to buy Enron and any number of companies where the bad news wasn't just temporary but a sign of real underlying problems. You're also falling prey to anchoring bias. Because Facebook stock has previously been twice as much as it is now, it seems 'cheap', and a good deal. What you really need to consider is the net value of Facebook as a company (by assessing its long term money making potential), and deciding whether its currently under or over valued. I personally would never consider buying shares in FB because of the weird voting structure/rights. When I buy a piece of the company I want the corresponding votes to have my say in making sure that company is run in my best long term interests.
  - asto 14y ago
    I believe google's equity is also structured similarly. The founders hold most of the voting rights even though they've liquidated a lot of stock.
  - Jare 14y ago
    If you're not buying a significant share and are 'just investing' in a company's potential, you should actually feel more confident knowing that the company is firmly steered by the hands that created it and made it successful.
    - tomgallard 14y ago
      But I want to be able to make that decision. There's nothing stopping me from re-electing Zuck as CEO every year and letting him do his thing. However, if he starts doing crazy things, or I think there's a better candidate for the job, I want to be able to vote to chuck him out. 1 share 1 vote!
- RobAtticus 14y ago
  Really? Because the first time it went to the high 25s (its first rock bottom), if you had bought it you could've sold it in the 30s for a gain of 20-30% depending on where you sold it. This is really only the second "rock bottom" its hit. The first one was a good place to make a trade, and when this one settles, it might be a good place too.
- forgottenpaswrd 14y ago
  "Buy on bad news it says." Is it said that? You should had bought Nokia, RIM or companies in the past like Silicon Graphics(once it started going down like crazy) or SCO. FB is a scam to make their founders rich, a pyramid scheme in witch the money that enters is always from new people that believe are going to be rich with the "new thing"(social media), not from the real world. FB is a billionaire business that does not know how to make money. Good luck with those investments.
  - natrius 14y ago
    The first part of your comment was insightful. The rest was ridiculous. Facebook will be used by a large portion of the online world for at least the next ten years. It will make money. (It does make money, just not more than they're currently spending to grow the company.) The question is how much money they will make.
    - to3m 14y ago
      Call me old-fashioned if you like, or maybe simply insufficiently in tune with the times - but I'd argue that bringing in less money than you spend is the very definition of not making money.
  - aprendo 14y ago
    Is it really so hard to see the real value a service like Facebook provides? I’m personally not a fan of Facebook (but found it to be tremendously useful for quite a few things in the past) but I know several people who find it very useful. At its worst it’s a silly diversion (ála Reddit or Hacker News, though certainly not worse than those), at its best it’s a rich communication infrastructure tailor-made for certain kinds of relationships. Social networks are here to stay. They fix many of the shortcomings of older ways of communicating. Facebook has shown that it’s possible to make money with that. Their current numbers are most certainly not an invalidation of the business model or service, it’s more that they might have wanted too much. Social networks are a sound idea. Facebook has a competent implementation of a social network. Maybe it’s not enough to rule the world – but I think it’s enough to make some money and be a healthy business (though Facebook seems to want more).
rjtavares 14y ago
I can't help but think this is an overreaction to the Zynga implosion. Feeling the urge to buy...
- joering2 14y ago
  Why? Goog PE is 18. Aapl 13. Facebook... 122. 10-times fold!! Don't get me wrong: Facebook is making profits, but the majority of stockholders will keep on looking at PE. Until it remains in such absurd range, you will keep on seeing it in red. This stock belongs in less than 10 dollars space. Then when its get there at $6, buy it for a +$2 pop.
  - jonknee 14y ago
    That P/E is especially worrying because of the scale FB already works in. They just don't have all that many people left to grow with, especially people that are in any way attractive to advertisers. The growth is going to have to be with better monitizing their existing users while trying to keep down expenses, not typical for a very high P/E company.
tonetheman 14y ago
I think it is just making its way towards a more realistic number. FB makes money and they are not a bad company, the stock was just way too high.
- Retric 14y ago
  With a P/E of 123.25 I think it's still got a long way to fall. Still I expect that will take a while. I think FB is reasonable prospects and I would be happy to buy FB with a P/E of 20, but the people don't want to sell anywhere near that price so it's looking like a long slow decline.
  - JonnieCache 14y ago
    Amazon's P/E is currently 191.93 I personally wouldn't touch FB with someone else's barge-pole, but that single number isn't proof of anything.
    - adamc 14y ago
      That P/E explains why I wouldn't buy Amazon stock either. It's a strong company, but that is a ridiculous P/E.
      - pja 14y ago
        P/E only carries meaning for stable companies that aren't growing. If a company is investing for the long term, then their P/E might look terrible but they may be laying a base for huge profits in the future. Of course they might also be throwing money into a hole in the ground, but looking at the P/E ratio isn't going to tell you which of those are going on. NB. Amazon's razor thin profit margins are what would worry me if I had a pile of AMZN stock, not their P/E ratio.
      - rorrr 14y ago
        "Why Amazon May Be Worth 179 Times Earnings" http://contrarianedge.com/2012/07/26/valuex-vail-2012-thoughts-part-1-why-amazon-may-be-worth-179-times-earnings/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ContrarianEdge+%28Vitaliy%27s+ContrarianEdge%29 http://contrarianedge.com/2012/07/26/valuex-vail-2012-though...
nekojima 14y ago
This posting is a great advertisement for Google Finance. I hadn't realized it had been improved so much. I may well move over from other sites and begin using it more often now.
- alexpenny 14y ago
  I haven't noticed any big changes the last five years I've been using it. Other than the whole google facelift its been the best finance tool I've used. Maybe I haven't noticed any new features but what would you be talking about?
  - nekojima 14y ago
    Its been a few years since I last checked, but having 'real-time' quotes is better than 15-minute delayed, which I seem to remember it was before. As well as the graphical overlay of the news bulletins on the share ticker graph is good too. Just seems to provide more timely information now, including overseas listings, than it did before. Won't replace my primary broker site, but good if I don't want to login to check a price or two.
    - pyre 14y ago
      Not all of it is real-time: http://www.google.com/intl/en/googlefinance/disclaimer/ http://www.google.com/intl/en/googlefinance/disclaimer/ Even then, they have a disclaimer: Real-time price data represents trades which execute on the NASDAQ and NYSE exchanges. Volume information, as well as price data for trades that don’t execute on those exchanges, are consolidated and delayed by 15 minutes (NASDAQ), 20 minutes (NYSE).
raldi 14y ago
What day are the employees allowed to sell? (Their shares are frozen for a certain amount of time.)
- ashbrahma 14y ago
  Sometime in August.
  - raldi 14y ago
    Citation?
    - antr 14y ago
      Page 28 on Facebook's S-1 registration statement
    - yanowitz 14y ago
      http://blogs.marketwatch.com/thetell/2012/05/17/facebook-shortens-lock-up-period-for-some-holders/ http://blogs.marketwatch.com/thetell/2012/05/17/facebook-sho... Unusually short lockup period.
    - bjornsteffanson 14y ago
      According to Wall Street Journal, it's August 19th: 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...
  - zeroonetwothree 14y ago
    It's actually October for most employees.
sulife 14y ago
$7 stock. Their growth was less than google's %-wise, and google does what... 25X the revenue? Fundamentals say $7ish.
- cluda01 14y ago
  Pardon my ignorance, but how did you come up with this $7 figure? Was there some technical calculation you made or more of a gut instinct?
eduardordm 14y ago
Don't be fooled by P/E. P=>future E=>past Current price reflects the market believes that, somehow, FB will find more revenue streams (not only ads). I see FB stable at 24$ for at least a quarter. If you need VC money, you just missed the last train.
- veyron 14y ago
  "If you need VC money, you just missed the last train." That's not true if you have a business that can sustain itself for a few years. There's a ton of VC money still there (the stock market, real estate, bonds etc aren't as appealing as one would imagine) but it's most likely going to be very picky.
  - eduardordm 14y ago
    If you already have a business that can sustain itself for a few years, it's unlikely you need any VC money at all.
    - veyron 14y ago
      github, for example. Owners wanted a large equity event, and they wanted money for a larger expansion.
macspoofing 14y ago
I have very little sympathy for those people that lost money on this stock. For months, there were articles about the overvaluation of FB ($100 billion number was thrown around quite often). Here in the office, we had discussions around that, and though everyone agreed FB is a valuable company, 100$ billion was an insane number, considering their revenues were more or less public for a while. And then the IPO happened, at 100$ billion and ... they dropped. So, where's the surprise?!
- verelo 14y ago
  Completely agree, the revenue figures just do not backup the valuation. Having said that, its getting close to a realistic number right now. Good company, great idea, amazing traction...just show better revenue and the valuation will follow. Good on them for having a successful IPO though, a lot of fuss has been made about it but i'm sure deep down inside they know they got the better end of the deal.
- ryguytilidie 14y ago
  And the crazy thing is that you certainly don't buy stock if you dont expect the value to rise. Did these people really think that we would decide fb is REALLY worth 200b they were going to 2x their investment? The opinions were either: way too high or ehhh, I guess it could be right. That doesn't make me feel like a stock is undervalued and I will make money from it. No idea what these people were doing beyond buying a ticket on the hype rollercoaster.
stillBroke 14y ago
I too feel victim to the Facebook IPO. My attempt to recoup the loses was through an iPhone app called "Facebroke". Apple rejected it in less than 1 hour stating "We found that your app contains content that is defamatory or offensive that would be considered objectionable by many audiences". I had to settle with a much tamer version of the app. http://bit.ly/MPNrlo http://bit.ly/MPNrlo
steveplace 14y ago
If anyone actually is interested in a trade here... The option market was pricing in about a 12% move. Today we got a 15% down-move. This means that anyone who was short puts either has to cover or they have to sell stock to reduce risk. Normally what happens after earnings events is that the implied volatility gets crushed as the event risk goes away. However because the options market is feeling a bit of a squeeze, the IV remains elevated... this was the case this morning, but less so right now. So the trade? If you want to buy the dip, I would look at cash-secured put sales. Specifically the Sep 21 put sale for about $1 or higher. If fb heads under 21 bucks then you will be assigned with a basis in the 20s. From there you can roll to covered calls or just hold onto the stock at these levels. Put sales make sense if you are bullish stock and bearish volatility, and as IV continues to fall as the event risk goes away, your position will be in an advantage.
- tatsuke95 14y ago
  No offense, but most of us here probably have no idea what you're talking about. I appreciate you taking the time to offer advice, I only wish I could follow it.
  - deleted 14y ago
    [deleted]
  - steveplace 14y ago
    Hey no worries. This is my kind of "hacking" so I thought I'd put it out there.
    - achal 14y ago
      I'm actually rather interested in what many of those fancy words mean. I'll end up searching around, but beyond that, are there any decent resources you would recommend for someone with only a basic understanding of the market?
      - veyron 14y ago

37 points by veyron 14y ago

Buy on bad news it says. Every time i see such a huge drop for the FB stock i think to myself: Should i buy now - i never did. And every time i see the next rock bottom i am glad i didn't. I do believe though that FB has the potential for a lot more revenue just because they own the channel to their gazillion users. They just haven't figured out a good way, yet.

tomgallard 14y ago
They may say buy on bad news, but following that philosophy might have lead you to buy Enron and any number of companies where the bad news wasn't just temporary but a sign of real underlying problems. You're also falling prey to anchoring bias. Because Facebook stock has previously been twice as much as it is now, it seems 'cheap', and a good deal. What you really need to consider is the net value of Facebook as a company (by assessing its long term money making potential), and deciding whether its currently under or over valued. I personally would never consider buying shares in FB because of the weird voting structure/rights. When I buy a piece of the company I want the corresponding votes to have my say in making sure that company is run in my best long term interests.
- asto 14y ago
  I believe google's equity is also structured similarly. The founders hold most of the voting rights even though they've liquidated a lot of stock.
- Jare 14y ago
  If you're not buying a significant share and are 'just investing' in a company's potential, you should actually feel more confident knowing that the company is firmly steered by the hands that created it and made it successful.
  - tomgallard 14y ago
    But I want to be able to make that decision. There's nothing stopping me from re-electing Zuck as CEO every year and letting him do his thing. However, if he starts doing crazy things, or I think there's a better candidate for the job, I want to be able to vote to chuck him out. 1 share 1 vote!
RobAtticus 14y ago
Really? Because the first time it went to the high 25s (its first rock bottom), if you had bought it you could've sold it in the 30s for a gain of 20-30% depending on where you sold it. This is really only the second "rock bottom" its hit. The first one was a good place to make a trade, and when this one settles, it might be a good place too.
forgottenpaswrd 14y ago
"Buy on bad news it says." Is it said that? You should had bought Nokia, RIM or companies in the past like Silicon Graphics(once it started going down like crazy) or SCO. FB is a scam to make their founders rich, a pyramid scheme in witch the money that enters is always from new people that believe are going to be rich with the "new thing"(social media), not from the real world. FB is a billionaire business that does not know how to make money. Good luck with those investments.
- natrius 14y ago
  The first part of your comment was insightful. The rest was ridiculous. Facebook will be used by a large portion of the online world for at least the next ten years. It will make money. (It does make money, just not more than they're currently spending to grow the company.) The question is how much money they will make.
  - to3m 14y ago
    Call me old-fashioned if you like, or maybe simply insufficiently in tune with the times - but I'd argue that bringing in less money than you spend is the very definition of not making money.
- aprendo 14y ago
  Is it really so hard to see the real value a service like Facebook provides? I’m personally not a fan of Facebook (but found it to be tremendously useful for quite a few things in the past) but I know several people who find it very useful. At its worst it’s a silly diversion (ála Reddit or Hacker News, though certainly not worse than those), at its best it’s a rich communication infrastructure tailor-made for certain kinds of relationships. Social networks are here to stay. They fix many of the shortcomings of older ways of communicating. Facebook has shown that it’s possible to make money with that. Their current numbers are most certainly not an invalidation of the business model or service, it’s more that they might have wanted too much. Social networks are a sound idea. Facebook has a competent implementation of a social network. Maybe it’s not enough to rule the world – but I think it’s enough to make some money and be a healthy business (though Facebook seems to want more).

rjtavares 14y ago

I can't help but think this is an overreaction to the Zynga implosion. Feeling the urge to buy...

joering2 14y ago
Why? Goog PE is 18. Aapl 13. Facebook... 122. 10-times fold!! Don't get me wrong: Facebook is making profits, but the majority of stockholders will keep on looking at PE. Until it remains in such absurd range, you will keep on seeing it in red. This stock belongs in less than 10 dollars space. Then when its get there at $6, buy it for a +$2 pop.
- jonknee 14y ago
  That P/E is especially worrying because of the scale FB already works in. They just don't have all that many people left to grow with, especially people that are in any way attractive to advertisers. The growth is going to have to be with better monitizing their existing users while trying to keep down expenses, not typical for a very high P/E company.

tonetheman 14y ago

I think it is just making its way towards a more realistic number. FB makes money and they are not a bad company, the stock was just way too high.

Retric 14y ago
With a P/E of 123.25 I think it's still got a long way to fall. Still I expect that will take a while. I think FB is reasonable prospects and I would be happy to buy FB with a P/E of 20, but the people don't want to sell anywhere near that price so it's looking like a long slow decline.
- JonnieCache 14y ago
  Amazon's P/E is currently 191.93 I personally wouldn't touch FB with someone else's barge-pole, but that single number isn't proof of anything.
  - adamc 14y ago
    That P/E explains why I wouldn't buy Amazon stock either. It's a strong company, but that is a ridiculous P/E.
    - pja 14y ago
      P/E only carries meaning for stable companies that aren't growing. If a company is investing for the long term, then their P/E might look terrible but they may be laying a base for huge profits in the future. Of course they might also be throwing money into a hole in the ground, but looking at the P/E ratio isn't going to tell you which of those are going on. NB. Amazon's razor thin profit margins are what would worry me if I had a pile of AMZN stock, not their P/E ratio.
    - rorrr 14y ago
      "Why Amazon May Be Worth 179 Times Earnings" http://contrarianedge.com/2012/07/26/valuex-vail-2012-thoughts-part-1-why-amazon-may-be-worth-179-times-earnings/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ContrarianEdge+%28Vitaliy%27s+ContrarianEdge%29 http://contrarianedge.com/2012/07/26/valuex-vail-2012-though...

nekojima 14y ago

This posting is a great advertisement for Google Finance. I hadn't realized it had been improved so much. I may well move over from other sites and begin using it more often now.

alexpenny 14y ago
I haven't noticed any big changes the last five years I've been using it. Other than the whole google facelift its been the best finance tool I've used. Maybe I haven't noticed any new features but what would you be talking about?
- nekojima 14y ago
  Its been a few years since I last checked, but having 'real-time' quotes is better than 15-minute delayed, which I seem to remember it was before. As well as the graphical overlay of the news bulletins on the share ticker graph is good too. Just seems to provide more timely information now, including overseas listings, than it did before. Won't replace my primary broker site, but good if I don't want to login to check a price or two.
  - pyre 14y ago
    Not all of it is real-time: http://www.google.com/intl/en/googlefinance/disclaimer/ http://www.google.com/intl/en/googlefinance/disclaimer/ Even then, they have a disclaimer: Real-time price data represents trades which execute on the NASDAQ and NYSE exchanges. Volume information, as well as price data for trades that don’t execute on those exchanges, are consolidated and delayed by 15 minutes (NASDAQ), 20 minutes (NYSE).

raldi 14y ago

What day are the employees allowed to sell? (Their shares are frozen for a certain amount of time.)

ashbrahma 14y ago
Sometime in August.
- raldi 14y ago
  Citation?
  - antr 14y ago
    Page 28 on Facebook's S-1 registration statement
  - yanowitz 14y ago
    http://blogs.marketwatch.com/thetell/2012/05/17/facebook-shortens-lock-up-period-for-some-holders/ http://blogs.marketwatch.com/thetell/2012/05/17/facebook-sho... Unusually short lockup period.
  - bjornsteffanson 14y ago
    According to Wall Street Journal, it's August 19th: 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...
- zeroonetwothree 14y ago
  It's actually October for most employees.

sulife 14y ago

$7 stock. Their growth was less than google's %-wise, and google does what... 25X the revenue? Fundamentals say $7ish.

cluda01 14y ago
Pardon my ignorance, but how did you come up with this $7 figure? Was there some technical calculation you made or more of a gut instinct?

eduardordm 14y ago

Don't be fooled by P/E. P=>future E=>past Current price reflects the market believes that, somehow, FB will find more revenue streams (not only ads). I see FB stable at 24$ for at least a quarter. If you need VC money, you just missed the last train.

veyron 14y ago
"If you need VC money, you just missed the last train." That's not true if you have a business that can sustain itself for a few years. There's a ton of VC money still there (the stock market, real estate, bonds etc aren't as appealing as one would imagine) but it's most likely going to be very picky.
- eduardordm 14y ago
  If you already have a business that can sustain itself for a few years, it's unlikely you need any VC money at all.
  - veyron 14y ago
    github, for example. Owners wanted a large equity event, and they wanted money for a larger expansion.

macspoofing 14y ago

I have very little sympathy for those people that lost money on this stock. For months, there were articles about the overvaluation of FB ($100 billion number was thrown around quite often). Here in the office, we had discussions around that, and though everyone agreed FB is a valuable company, 100$ billion was an insane number, considering their revenues were more or less public for a while. And then the IPO happened, at 100$ billion and ... they dropped. So, where's the surprise?!

verelo 14y ago
Completely agree, the revenue figures just do not backup the valuation. Having said that, its getting close to a realistic number right now. Good company, great idea, amazing traction...just show better revenue and the valuation will follow. Good on them for having a successful IPO though, a lot of fuss has been made about it but i'm sure deep down inside they know they got the better end of the deal.
ryguytilidie 14y ago
And the crazy thing is that you certainly don't buy stock if you dont expect the value to rise. Did these people really think that we would decide fb is REALLY worth 200b they were going to 2x their investment? The opinions were either: way too high or ehhh, I guess it could be right. That doesn't make me feel like a stock is undervalued and I will make money from it. No idea what these people were doing beyond buying a ticket on the hype rollercoaster.

stillBroke 14y ago

I too feel victim to the Facebook IPO. My attempt to recoup the loses was through an iPhone app called "Facebroke". Apple rejected it in less than 1 hour stating "We found that your app contains content that is defamatory or offensive that would be considered objectionable by many audiences". I had to settle with a much tamer version of the app. http://bit.ly/MPNrlo http://bit.ly/MPNrlo

steveplace 14y ago

If anyone actually is interested in a trade here... The option market was pricing in about a 12% move. Today we got a 15% down-move. This means that anyone who was short puts either has to cover or they have to sell stock to reduce risk. Normally what happens after earnings events is that the implied volatility gets crushed as the event risk goes away. However because the options market is feeling a bit of a squeeze, the IV remains elevated... this was the case this morning, but less so right now. So the trade? If you want to buy the dip, I would look at cash-secured put sales. Specifically the Sep 21 put sale for about $1 or higher. If fb heads under 21 bucks then you will be assigned with a basis in the 20s. From there you can roll to covered calls or just hold onto the stock at these levels. Put sales make sense if you are bullish stock and bearish volatility, and as IV continues to fall as the event risk goes away, your position will be in an advantage.

tatsuke95 14y ago
No offense, but most of us here probably have no idea what you're talking about. I appreciate you taking the time to offer advice, I only wish I could follow it.
- deleted 14y ago
  [deleted]
- steveplace 14y ago
  Hey no worries. This is my kind of "hacking" so I thought I'd put it out there.
  - achal 14y ago
    I'm actually rather interested in what many of those fancy words mean. I'll end up searching around, but beyond that, are there any decent resources you would recommend for someone with only a basic understanding of the market?
    - veyron 14y ago