

Facebook trades under $30, down 7%+ - benjaminwootton
http://www.google.com/finance?q=fb&safe=active

======
coreyo
This is exactly how companies get sucked into the quarterly chase of
Wallstreet. Facebook shouldn't be concerned and neither should you.

------
nlz1
So...when is Zuckerberg scheduled to be interviewed on Squawk Box?

------
bourdine
I 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-faceboo...](http://www.socialbakers.com/blog/587-get-ready-4-new-
facebook-timeline-features/) 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.

------
arturadib
Alternate 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/>

~~~
r00fus
The 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.

------
TomGullen
It's around a $23,000 reduction of market cap per second from the IPO 8 days
ago (<https://twitter.com/Scirra/status/207481113902465024>)

A pretty spectacular rate of value loss

~~~
borism
I guess that's it for the "hyperinflation is coming!!!" gold-crazed Ron Paul-
supporting crowd.

------
offshoreguy1
No surprise. It was grossly hyped and over valued. It's marketable price is
being determined by the markets.

------
denzil_correa
Facebook is currently trading at 28.8, Down 9.62% [1].

[1]
[http://www.google.com/finance?chdnp=1&chdd=1&chds=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)

------
usaar333
Why does Google show a market cap of only $62B? If the $38 IPO was a $104B
valuation, $29 should be $79B

~~~
raldi
[http://www.quora.com/What-is-the-difference-between-
market-c...](http://www.quora.com/What-is-the-difference-between-market-cap-
and-valuation)

------
electic
You 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.

------
josscrowcroft
So should I buy Facebook stock while it's low? Confused.

------
vibrunazo
Wanna see something cool? Put FB and ZNGA side by side on the graph:

[http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...](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)

~~~
slug
I 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.

------
greg7mdp
under $29 now! How low will it go?

~~~
agumonkey
is 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 ?

------
rondon1
Morgan Stanley has been putting in floors to keep this stock from totally
crashing. They cannot keep it up forever.

~~~
zgohr
Do 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
At least for the first day, this was documented (and expected) from the
underwriters. [http://www.businessinsider.com/facebook-banker-morgan-
stanle...](http://www.businessinsider.com/facebook-banker-morgan-stanley-
bought-a-humongous-amount-of-stock-to-try-support-price-2012-5)

Underwriters start out with a net short position on an IPO so that they can
step in to support if necessary.

------
betadj
An internet legendary destroyed by wallstreet.

~~~
bigdubs
This 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.

------
taytus
I think that the big difference is that Google is a company while Facebook is
a product.

~~~
taytus
Down voted? Nice community bro.

------
h84ru3a
Let'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
I thought they are already making money.

~~~
h84ru3a
They 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.

------
nicholassmith
Does 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.

~~~
mattlong
Employees 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
I 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
Employees are not allowed to trade in FB options.

~~~
jquery
Hedging Zynga options should work almost as well.

------
stonemetal
I 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?

~~~
cube13
To 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
Also, 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=la...](http://www.socialbakers.com/facebook-
statistics/?interval=last-week)

~~~
cube13
But the end result is that they need to get, in pure revenue, $25/user across
the entire world. It's an average across the entire user space.

------
unreal37
Can anyone explain why they are down 7%?

~~~
TomGullen
Supply and demand is the answer, although probably not the one you are looking
for!

The WSJ reported the options market has just opened for FB stocks. A lot of
people seem to be very bearish about FB so a lot of short action could
significantly impact the demand of FB stock.

I'm an amateur at this though, and would love someone to correct me if I'm
completely off here :)

------
woodall
In 1 month the price will be back to, or above, the original IPO.

~~~
planetguy
And 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.

~~~
MSM
How 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.

------
sek
The employees, they dumped a lot of their shares probably. They are allowed
since Monday to sell them.

~~~
TomGullen
How 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
If 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.

------
ddet
FB IPO is bad for the startup world

~~~
benjaminwootton
Agreed.

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
I don't think the possibility of a $50B exit vs a $100B exit will make any
difference for most angel investors.

~~~
waterlesscloud
What 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.

------
Osiris
While 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.

~~~
gamble
The 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.

~~~
tedunangst
I'd like for someone to explain precisely what Facebook should have done to
ensure a big pop. Value the shares at $5? What if their internal projections
indicated the company was worth more than that? Picking an artificially low
strike price for the options probably would have resulted in people going to
jail, not to mention all the employees owing taxes on the difference.

~~~
betterth
From what I've seen, it was hugely overvalued. Maybe $25-$50 billion, with a
share price of $28-$32.

Last minute change to $38+ was suicide.

~~~
binarysolo
If you wanted to value it at $25-$50B, the share price would accordingly be
$12-$24.

Remember market cap = total shares * price. :)

~~~
betterth
You assume that the number of shares being offered was static, hence the price
drop by half.

More realistically, Facebook should have sold less shares, which would have
kept the price at that target. But I guess it couldn't sell less: they had a
bucketload of people who wanted to sell, and all the biggest potential buyers
had already bought... Lesson learned: don't get talked into secondary market
abuse...

~~~
binarysolo
Maybe I've had too much coffee so I'm not understanding your comment, but
market cap is based on total outstanding shares, whether they were being sold
on the market or not. 10 stocks issued total, company's value doesn't
inherently change based on whether 5 stocks are sold in public vs 10 vs 1.

Sure I get the supply and demand thing you're trying to articulate, but the
reality is that I as an investor am concerned that FB is overvalued at 100B
marketcap, whether the shares are sold at $1 or $10000.

------
cletus
There 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
How can you say the P/E isn't justified when Facebook isn't monetizing +60% of
their impressions (mobile)?

~~~
potatolicious
Because the app has been out since 2008, gone through multiple iterations,
currently holds a 2-star rating on the App Store, and still hasn't managed to
monetize 60% of their impressions.

~~~
ryanmerket
It's not that is hasn't "managed to monetize," they haven't even TRIED. Very
big difference.

~~~
omonra
But who is monetizing mobile banner ads?

~~~
ryanmerket
Google, InMobi, iAds? It's a $2.6B dollar market that is growing 2x yoy. Don't
overlook this market.

~~~
omonra
It's a 2.6B market for ALL MOBILE ads (of which banner ads are only .86 -
<http://www.emarketer.com/PressRelease.aspx?R=1008798>)

So in 2014 it will be a 2B market - across ALL mobile. How big of a share can
FB have - 20-30%? Still looks like a very small number.

