

Facebook Stock Hits A New Low, Down More Than 50% Since IPO - maayank
http://techcrunch.com/2012/08/31/facebook-stock-hits-a-new-low-now-down-more-than-50-since-ipo/

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rdl
The employee lockup is what scares me. Most Facebook employees were hired
early in their careers, didn't have other money, and a lot have bought or want
to buy houses, cars, etc using their still substantial paper wealth.

I believe in the Facebook product, quality of team, and future revenue
potential, but sale at lockup(as well as concentration of control in Zuck)
scare me, unless it gets to $10-20b capitalization.

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yuvadam
This is not surprising, we have passed peak Facebook [1]. It was a very
successful fad, but it is no longer the _right_ place to be.

[1] - <https://www.google.com/trends/?q=facebook>

~~~
citricsquid
google has also flatlined recently: <https://www.google.com/trends/?q=google>

is it not possible that the internet has reached capacity, that companies like
Facebook and Google are never going to be in a position to add 100/200 million
users a year any more?

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dave_sullivan
FWIW, looks like FB still has a P/E of 62. That's high, but could be much
higher. For reference, however, Google is at 20.

P/E is certainly not the only number that matters, but I think the two
companies have a lot in common re: their major profit sources, and it suggests
FB has quite a bit of room to go down more if they don't turn things around
with eg an especially good quarter.

~~~
ramblerman
Am I correct in understanding that as, for 62 dollars worth of shares I buy 1
dollar of the earnings?

~~~
dave_sullivan
Yes, that's the general idea.

Your $62 today theoretically gives you some right to $1 per year of earnings +
every other year after that, taking into account earnings growth (So, the case
for high P/E ratios is that earnings growth will be fast enough that that $1
quickly turns into $2 each year) Apple's P/E, for more comparison, is at 16.

But more specifically, since facebook doesn't pay a dividend, you won't see
that $1 each year because Facebook will re-invest their earnings into their
business. You're essentially saying that facebook will invest that $1 into
growing their earnings faster than you could generate a similar return by
investing in something else. When a company reaches a point where the market
is mature and further investment will likely not result in a earnings growth
rate that beats similar alternative investments, it pays a dividend and the
stock actually becomes a cash stream, which you can then re-invest or spend
freely.

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SeanDav
If every time FB hits a new low it makes HN front page then we are going to
have a very boring front page.

I fully expect FB to drop below 10.

~~~
eru
Do you hold a short position?

~~~
benologist
Would it make what he said less true? Daily updates on FB's stock _are_
boring.

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marvin
I think the comment was more about his stock prediction. It's very easy to
make confident claims about the performance of a stock when you're not
invested in it yourself. Financial opinions would be a lot more interesting if
they were only given by people who followed their own advice to the letter.

~~~
georgemcbay
Just because you believe a stock will eventually be at a lower price than it
currently is doesn't mean it makes sense to short it unless you also think you
can time the drop perfectly, and if you think that you're a fool.

The virtually unlimited downside of shorting is a _lot_ of risk that has to be
factored into any decision and thus shorting isn't to be taken lightly even if
you're pretty damn sure of your opinion.

~~~
eru
> doesn't mean it makes sense to short it unless you also think you can time
> the drop perfectly,

With the right options, you don't have to time it perfectly. Just good enough.

You can limit the risk of shorting relatively cheaply by buying way out-of-
the-money call options.

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grandalf
The banks who helped boost the price around the IPO are reclaiming their
capital gradually, letting stories like this happen, and letting Facebook plan
out the next phase of its capital generation strategy. Giving early investors
a strong exit was part of the plan.

The biggest irony is that spectators view the downward trend in share price as
evidence that the early price was hype driven. In reality, both upward and
downward trends are equally impacted by hype.

I plan to invest when the price gets to $15. The only alarming sign so far is
the massive number of ads for Target that appear daily on the mobile version.
Clearly a few large companies made big ad purchases, and Facebook now
regurgitates the news that a friend liked Target again and again at every
opportunity. It's supremely annoying and might actually make me stop using
Facebook.

~~~
clobber
Yet you still plan on investing?

~~~
grandalf
So far I've seen Facebook recover from a lot of bad decisions. I think the
leadership at the company is very strong and that the core business concept
ads lots of value to a lot of people's lives.

~~~
clobber
Disagree. It's been one privacy blunder after the next- each further
tarnishing the reputation of the company and service.

If you find oversharing, memes and cat pics valuable, then yes it's
"valuable."

~~~
grandalf
I look at it as a tension between things that humans find viscerally
entertaining vs privacy that we would all value if we were rational. Sort of a
classic challenge analogous to the difference between _homo economicus_ and
regular people.

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veyron
Yesterday's discussion: <http://news.ycombinator.com/item?id=4459958>

~~~
raganwald
If you could post a link to _tomorrow's_ discussion, you'd have something.
"You sunnavabitch! Lemme see that browser... Howdja do that?"

~~~
veyron
In this case, there's a nonzero chance the author saw the HN discussion and
made a quick post. After all, it is TechCrunch ...

~~~
raganwald
Oh I know, I was just riffing off a Mitch Hedberg line:

 _One time, this guy handed me a picture of him, he said,"Here's a picture of
me when I was younger." Every picture is of you when you were younger. "Here's
a picture of me when I'm older." "You son-of-a-bitch! How'd you pull that off?
Lemme see that camera... what's it look like? "_

I like it because it reminds me of an old Twilight Zone episode.

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binarysolo
Just a further reminder for people looking at FB (disclosure - mild short
position):

Stock unlock schedule: August 16th, 2012: 268 million shares, 10% of shares
outstanding. October 14th, 2012: 249 million shares, 9% of shares outstanding.
_November 13th, 2012: 1.332 billion shares, 49% of shares outstanding._
December 13th, 2012: 124 million shares, 5% of shares outstanding. May 17th,
2013: 47 million shares, 2% of shares outstanding.

~~~
calvinlough
November 13th is going to be an interesting day...

~~~
spaghetti
Indeed. Glad it's not a Friday!

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kalininalex
The first link on the Yahoo Finance page for FB:

"It’s Becoming Clear That No One Actually Read Facebook’s IPO Prospectus or
Mark Zuckerberg’s Letter to Shareholders":
[http://finance.yahoo.com/blogs/daily-ticker/becoming-
clear-n...](http://finance.yahoo.com/blogs/daily-ticker/becoming-clear-no-one-
actually-read-facebook-ipo-160120121.html)

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dj2stein9
Facebook stock simply had no business being valued that high to begin with.
This was a classic pump and dump operation by the investment firms who took
this company public. I thought Facebook was at best fully valued back when
Microsoft bought in at 15B valuation, so they absolutely have room to fall
further.

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majani
The thing that shocks me the most about this whole situation is how hackers
also bought into the hype about potential revenues. Any forum administrator
could tell you that running an ad-supported social network is a not such a
great business plan. I don't think Facebook is doomed to die, but I believe
it(along with other free social networks) will soon be found out as very poor
businesses.

