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(Bloomberg)   Retail investors lining up to lose money on Facebook IPO   (bloomberg.com) divider line 36
    More: Dumbass, IPO, Facebook, Pandora Media Inc., retail investor, Capital One Financial Corp., wealth management, TD Ameritrade, diversification  
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1055 clicks; posted to Business » on 08 May 2012 at 12:41 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-05-08 12:44:36 PM
I am in the other line. The line to not buy any facebook shares.
 
2012-05-08 01:01:41 PM
Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.
 
2012-05-08 01:06:58 PM

secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.


Like google, right?

Because web traffic cannot be monetized in any way, clearly.

You guys are idiots. But you know what, I'm open, show me how facebook is overvalued.
 
2012-05-08 01:09:19 PM
"I've never gotten in on anything at the ground level," said Morrison...

And you're not going to now. You're going to get in at the level where you immediately step over the edge and fall into the waiting maws of institutional investors who know damn well that FB isn't worth anywhere near its baloney valuation but that they can still make money early in the process by taking yours.

Have fun, though. Maybe you could balance it out with some Zynga stock while it's still trading well below it's IPO price and you're playing Russian roulette with your bank accounts...
 
2012-05-08 01:13:28 PM

justtray: secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.

Like google, right?

Because web traffic cannot be monetized in any way, clearly.

You guys are idiots. But you know what, I'm open, show me how facebook is overvalued.


You mean aside from the fact that its earnings are barely over a penny on the dollar per share of stock and they're doing that on purpose because the argument they're putting forward is that although they're way overvalued now you're buying into future growth?

But, yea..... I mean.... aside from immediate overvaluation being the whole strategy here you probably have a point and are completely justified in calling everyone else idiots.
 
2012-05-08 01:20:41 PM

justtray: secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.

Like google, right?

Because web traffic cannot be monetized in any way, clearly.

You guys are idiots. But you know what, I'm open, show me how facebook is overvalued.


This. All the same shiat people are saying about the Facebook IPO were things I said about Google's IPO. I missed the boat with Google precisely because it was "so obviously going to lose money in the long run."

This is not to say that Facebook's IPO will replay Google's IPO success, necessarily - but I'm going to take a much more serious look at it this time around.
 
2012-05-08 01:21:44 PM

justtray: You guys are idiots. But you know what, I'm open, show me how facebook is overvalued


They barely make any money compared to the actually value of the company? There is a chart someone that shows the annual revenue of facebook compared to it's estimated value and it basically tells the story. It's the dotcom stuff all over again.
 
2012-05-08 01:34:21 PM
I think it depends on if you're looking at FB as a long-term hold. It's not, and anyone looking at this as a google-like investment is in for a sore ass. I'll be in on the IPO, and probably dump it within the week; maybe even within 24-48 hours. I see this going very badly for some people...
 
2012-05-08 01:39:34 PM
At the high end of the proposed valuation, Facebook is asking investors to pay 99 times earnings, a higher multiple than about 99 percent of companies in the Standard & Poor's 500 Index.

"A lot of time the retail investor isn't thinking about valuation," Sha said. They often "end up being the ones that buy high," he said.


You gonna get raped.
 
2012-05-08 01:49:21 PM
href="http://www.fark.com/comments/7093680/76732427#c76732427" target="_blank">Rapmaster2000: At the high end of the proposed valuation, Facebook is asking investors to pay 99 times earnings, a higher multiple than about 99 percent of companies in the Standard & Poor's 500 Index.

"A lot of time the retail investor isn't thinking about valuation," Sha said. They often "end up being the ones that buy high," he said.


On the bright side, they'll finally be part of the 1%.
 
2012-05-08 01:53:22 PM
Why facebook is a risky buy...

Fad factor = high
Barriers to competitor entry = low
Protected IP = zero
Customer switching costs = zero
Supplier switching costs (advertisers) = zero

Right now facebook the Myspace of 5 years ago and the AOL of 10 years ago. In 5 years we'll all look back in horror at how much personal information we gave to a company who shamelssly sells it and boggle at why we thought posting every detail of our lives (with pictures) was a good idea.

Zuckerburg will be a billionaire regardless but I personally don't feel any need to reward a fad by giving my money to some 20 something kid who in the grand scheme of things has brought no marginal value to my life.
 
2012-05-08 01:53:25 PM
money-watch.co.uk

I think that FB will actually start around the enthusiasm mark. In a year we'll all be kicking ourselves for not buying in the summer slump.

FB could be a good stock in the long run. But they're going to make for a wild ride on IPO day.
 
2012-05-08 02:09:23 PM

Fuggin Bizzy: I missed the boat with Google precisely because it was "so obviously going to lose money in the long run."


Your best strategy, based on your post, is going to be take all your assets, convert them to cash, and throw them off a cliff because you're doomed.

First of all, there's a difference between an IPO valuation and the expected value of the stock at some point in the future. You can believe that the stock will ultimately be profitable for you while still understanding that the current price is unjustifiably high.

Second of all, unless you both ignored Google's IPO and proceeded to sit on your hands for the next couple of years, you still could have bought in. Their stock price took a big hit with everything else back in 08 and you could have jumped in then. You don't have to buy at the lowest point and sell at the highest to be successful. In fact, trying to force that sort of thing is a good way to go broke.

Finally, the Facebook stock is overvalued. That's just a fact. Using numbers and shiat. The sales pitch is that you're buying Facebook's future growth. They're not worth $90b. They're worth about $5b.

So if you think Facebook has the capacity to meet or exceed $100b in revenue in the coming years, more power to you. Given its user base and the fact that it still hasn't actually attempted to monetize its real assets yet, I'm going to go ahead and say that I don't see enough evidence of that happening to be willing to jump into an IPO full of institutional sharks who could pull the rug out from under me a month after it goes public.

There's too much risk. You have too many people buying on name only, too little evidence from the company in question that they're doing anything that's going to get them to $90b in revenue, and too low a barrier to entry in the market they're in. On top of that, I have serious questions about the real value of huge blobs of indistinct data. Collecting somebody's cheese doodle buying habits at the grocery store has obvious value to clear and distinct people. Collecting somebody's pooping habits and whether or not they like Johnny in 5th grade English.... not so much, I don't think.
 
2012-05-08 02:21:47 PM

wildcardjack: [money-watch.co.uk image 443x341]

I think that FB will actually start around the enthusiasm mark. In a year we'll all be kicking ourselves for not buying in the summer slump.

FB could be a good stock in the long run. But they're going to make for a wild ride on IPO day.


Since Facebook has been hyped by the media for quite some time and is already being called a "new paradigm," I would argue that the IPO is happening right around the bull trap mark on that chart.
 
2012-05-08 02:23:10 PM
Sure, I want to invest in a company that has no real product, produces nothing and no other assets other than a room full of servers.
 
2012-05-08 02:30:42 PM

Splinshints: Fggin Bizzy: I missed the boat with Google precisely because it was "so obviously going to lose money in the long run."

Your best strategy, based on your post, is going to be take all your assets, convert them to cash, and throw them off a cliff because you're doomed.


You were just sitting around all day waiting to use that line, weren't you? Did you get that from Dogbert? Because it sounds kinda familiar.

What I said was "I ignored Google as a sure-fire loss; was wrong; will be taking a closer look at Facebook," but your response seems to indicate that what you heard was "Facebook's going to blow up exactly like Google did so that's where I'm putting my kids' college money. Oh, and the mortgage too."

But whatever. Dogbert's pretty hilarious.
 
2012-05-08 03:09:39 PM

justtray: show me how facebook is overvalued.


Once the kids realize they don't want to share a networking site with their teachers and parents covertly or overtly spying on them, they'll find something else.

And once the grownups realize it has become little more than a vehicle for corporations (and in some cases) law enforcement to spy on them, they (like me) will leave the site.

FB is a fad. Myspace, Bugle Boy, Grunge, etc.
 
2012-05-08 03:28:04 PM
I am far from wise but did Mr Buffet just say he is going to pass on this IPO?
 
2012-05-08 03:29:08 PM
Reddit co-founder Alexis Ohanian won't invest in Facebook due to its CISPA support

CISPA recently passed the House and is awaiting review by the Senate. President of the United States, Barack Obama is said to be willing to veto the bill if necessary.

The reddit thread

Well Mr. Curtis time to step up.
 
2012-05-08 03:32:10 PM

pounddawg: Mr Buffet


Warren Buffett and Charlie Munger Won't Buy Into Facebook's I.P.O.

Warren Buffett and his Bershire Hathaway partner Charlie Munger could care less about Facebook's big Initial Public Offering (I.P.O.) Road Show, which drops the needle tomorrow. While Mr. Buffett was somewhat diplomatic in explaining to CNN that his company never buys into offerings, Mr. Munger was as forthright as you might expect an 88-year-old billionaire to be:
"I don't invest in what I don't understand. And I don't want to understand Facebook," Munger said.

In fact, it's not only that he doesn't understand it - it's that he dislikes the whole idea of it.

"I don't want people putting all this personal stuff into a permanent record when they are 15 years of age. I think it's counterproductive. I just basically don't like it."


yep
 
2012-05-08 03:34:47 PM

Fuggin Bizzy: You were just sitting around all day waiting to use that line, weren't you? Did you get that from Dogbert? Because it sounds kinda familiar.

What I said was "I ignored Google as a sure-fire loss; was wrong; will be taking a closer look at Facebook," but your response seems to indicate that what you heard was "Facebook's going to blow up exactly like Google did so that's where I'm putting my kids' college money. Oh, and the mortgage too."

But whatever. Dogbert's pretty hilarious.


What a dumb post.

If you thought Google was a good investment you had plenty of time to buy into it, so your failure to do so requires that you spent several years making obvious mistakes. Just because you missed the $85 IPO doesn't mean you couldn't have made money on it.

And if you didn't want me to use Google as a comparison, you probably shouldn't have brought up Google as a comparison.

But, whatever, you take a closer look at Facebook. Let me know if you find that missing 99 cents on the dollar while you're doing that.
 
2012-05-08 03:50:43 PM

justtray: secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.

Like google, right?

Because web traffic cannot be monetized in any way, clearly.

You guys are idiots. But you know what, I'm open, show me how facebook is overvalued.



1) The company is run buy a kid who paid $1 billion for instagram on a whim. He didn't even pay what the company was worth...he paid double....

2) Groupon...how are they doing a year later?

3) Most importantly.... No one saw google coming at $600 a share (the people that took that leap on google 10 years ago were rewarded)....BUT people have been eyeing this IPO for years. There are people paid obscene amounts of money by people with ungoldly amounts of money and their only job is to figure our how to screw everyone and make money on this. This stock may to go $50, or $150..but from there is anyone's guess. There are going to be hedge funds around the globe going to absolute war...some to drive the price up so they can dump shares....some to drive it down becuase they're short...literally, tens of millions of shares and hundreds of millions of dollars are going to be on line? Even if you've got $100,000 to play with; it it a drop in the bucket.....it's like bringing a paper airplane to WWII. You're outgunned on a whole different level.

I have no idea what's going to happen...but I do know I don't want to blindly jump onboard with all the people who think they're going to get facebook at $40/share ride that sucker to $500+/share in a few short years (in some sort of google 2.0)....
 
2012-05-08 04:15:33 PM

WhoIsNotInMyKitchen: Why facebook is a risky buy...

Fad factor = high
Barriers to competitor entry = low
Protected IP = zero
Customer switching costs = zero
Supplier switching costs (advertisers) = zero


I disagree about a couple of those. The barrier to competitor entry and to customer switching for a social site is critical mass. I'd love to be using Google+ just because I think it has better features for a social network, but the people I want to keep up with aren't there. Of course, they're not posting as much on Facebook either these days, and it might be that at least in my demographic the fad factor is starting to be more pronounced.
 
2012-05-08 04:35:22 PM

justtray: secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.

Like google, right?

Because web traffic cannot be monetized in any way, clearly.

You guys are idiots. But you know what, I'm open, show me how facebook is overvalued.


Look at it this way. Enrollment has likely peaked and net revenue is around $4 billion. If that doubles two years running, they'll get to around $16 billion in revenue. On that they want a $96 billion cap.

That is fairy tale land right there.
 
2012-05-08 05:05:48 PM

Fuggin Bizzy: I'm going to take a much more serious look at it this time around.


If, as an ordinary retail investor (assuming that's what you are), you have an opportunity to get in on an IPO you should probably pass. That means everyone with a preferential shot at it (institutional investors and their preferred clients) hasn't sucked up all available shares, and it probably sucks.
 
2012-05-08 05:27:37 PM

redpanda2: WhoIsNotInMyKitchen: Why facebook is a risky buy...

Fad factor = high
Barriers to competitor entry = low
Protected IP = zero
Customer switching costs = zero
Supplier switching costs (advertisers) = zero

I disagree about a couple of those. The barrier to competitor entry and to customer switching for a social site is critical mass. I'd love to be using Google+ just because I think it has better features for a social network, but the people I want to keep up with aren't there. Of course, they're not posting as much on Facebook either these days, and it might be that at least in my demographic the fad factor is starting to be more pronounced.


Yup. Google+ proved the barrier to large scale switching is higher than people realize. On just about everything where they compete people find Google+ superior, and in some cases (hangouts for example) dramatically so. But people didn't switch and don't use it because their friends aren't there.

Plus, a shocking number of people who "switch" end up linking that new profile to Facebook and using both as well.
 
2012-05-08 05:45:37 PM
www.geek.com

chihiro89.files.wordpress.com
 
2012-05-08 07:15:54 PM

secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.


Funny, that's what people said about Google, which is now trading at what, $550/share?

I don't doubt that Facebook's bubble will pop down the road, but right now, there's a shiatload of money to be made if you can get in on the IPO.
 
2012-05-08 08:13:46 PM

Dwight_Yeast: secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

Funny, that's what people said about Google, which is now trading at what, $550/share?

I don't doubt that Facebook's bubble will pop down the road, but right now, there's a shiatload of money to be made if you can get in on the IPO.


I don't doubt some early investors in Facebook will make money, especially if they time a short sell well. The problem is the market Facebook is trying to compete in is much more crowded now than it was when Google took off in the late 1990's.

Facebook is valued at about $100 billion, and had a revenue of $4 billion last year.... Google is valued at about $200 billion, and had a revenue of about $40 billion last year. Something doesn't jive properly there. Both Facebook and Google have incredibly high profit margins, which makes sense for companies with such limited overhead. That definitely increases their valuation. Facebook is higher in proportion to it's revenue in theory because of its huge growth these past couple years.

But I have a very hard time with expectations that Facebook will continue to sustain their growth levels that would warrant anything close to $100 billion. They already have a huge user base, but the rate that it's growing is slowing rapidly. They haven't had huge amounts of luck venturing into new growth areas. Frankly I expect revenue growth to decline rapidly in the next 5 years... Facebook may have social networking cornered, but they've almost tapped out that market and are having a tough time pushing into new areas.

Facebook should be valued probably closer to $30 or $40 billion. As a short-term investment it's fine, but anyone who plans to retire on it should be careful.
 
2012-05-08 09:25:10 PM

Fuggin Bizzy: justtray: secularsage: Why are these guys so eager to buy shares in something that is so obviously going to lose money in the long run? It's going to bubble up and burst, because Facebook is way overvalued.

This is exactly the sort of behavior that brings recessions on us every 10 years.

Like google, right?

Because web traffic cannot be monetized in any way, clearly.

You guys are idiots. But you know what, I'm open, show me how facebook is overvalued.

This. All the same shiat people are saying about the Facebook IPO were things I said about Google's IPO. I missed the boat with Google precisely because it was "so obviously going to lose money in the long run."

This is not to say that Facebook's IPO will replay Google's IPO success, necessarily - but I'm going to take a much more serious look at it this time around.


Seriously, all you folks who believe you will make money on this--Go to the casino.
The odds are known and you get free drinks.
 
2012-05-08 09:26:12 PM

Dwight_Yeast: shiatload


There is a shiatload of money to be made but you won't be getting it.
 
2012-05-08 11:00:04 PM
williamhogeland.files.wordpress.com
 
2012-05-09 04:10:15 AM
I do think the IPO price is too high, but that doesn't mean it won't stay up there as long as Facebook keeps posting record numbers. I think we'll have to wait until they report a "bad" quarter to see a serious swing towards normality.

I'd never short a stock based on valuation alone; that's like buying a stock simply because it currently has a low P/E (price to earnings) and nothing else. You have to have some sort of event to the the ball moving. A lower revenue quarter or two should do it.
 
2012-05-09 06:43:07 AM
My guess is that the shiat will start once investors don't see money coming in - they'll then start demanding things like Facebook putting more crap on the site to bring in more income and pretty soon, the death spiral will start.
 
2012-05-09 10:51:22 AM
I think facebook has already peaked in popularity. Most of my friends have deactivated their accounts or simply don't use it like they were 2 years ago. Most people I know have either moved on to Twitter or just seem to instagram/pintrest/etc. With the introduction of Timeline and all that other garbage the site looks like the bloated piece that Myspace was towards the end. The whole appeal that made everyone migrate from Myspace to Facebook was Facebook's simplicity and design...
 
2012-05-09 02:20:23 PM
Mid-afternoon of Day 1: short Facebook stock
Day 2: HOORAY LEMMINGS
 
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