Facebook another overhyped float

[Slax]

I always had my doubts about the valuation of facebook and the ability of it to generate any sort of decent return on investment. Facebook does not bring to the table sound financials, with advertising revenue currently estimated at $4B this year. Whilst they have forecast this to double over the next 3 years, you have to ask at what cost. There seems to be a definite shift away from facebook in Western countries of late and increased ads will do nothing to improve this.

Facebook was a social jugernaut, but it has little room to grow in Western countries where advertising revenue will be highest without acquisitions. It once again makes you look at the whole internet market and realise that there just isn't value anywhere in it for sustainable growth on investment. Most of them are overvalued according to experts.

For those who might argue this by referring to Apple, remember Apple is a manufacturer which is where the vast majority of its income comes from. Amazon would possibly be the only exception, but that too had a rocky road for a period early on.

 

[bballscout]

I will buy into facebook if it drops below $25.

 

[George Washington]

I will buy into facebook if it drops below $25.

Enjoy losing your money.

 

[tazzietiger]

Everyone seems to be pointing the finger at Morgan Stanley.

After one of the most anticipated initial public offerings in history, Facebook's 19 per cent drop this week prompted investors to fault everything from Morgan Stanley's role as lead underwriter, to the company's greed and the Nasdaq Stock Market.
“It was like the gang that couldn't shoot straight,” said Michael Mullaney, chief investment officer at Fiduciary Trust. He said he placed Facebook orders for clients. “The underwriters mis-estimated what actual demand was, and there was pure execution failure coming out of the Nasdaq.”

Taking the most heat is Morgan Stanley, said Mullaney. The bank was lead underwriter among the 33 firms Facebook hired to manage the $US16 billion sale of stock. The bank decided with Facebook executives to boost the size and price days before the May 17 IPO, ignoring advice from some co-managers, said people with knowledge of the matter, who declined to be identified because the process was private. Morgan Stanley talked with few of its fellow underwriters aside from JPMorgan Chase and Goldman Sachs throughout the IPO, one person said.
“They overplayed the enthusiasm and probably just misread the atmosphere of the marketplace,” said Keith Wirtz, chief investment officer at Fifth Third Asset Management and bought some stock in the IPO.

Just days before Facebook raised the size and price of its IPO, the company began telling analysts to lower their sales forecasts, people familiar with the matter said. Morgan Stanley analysts were among those who cut their projections during the roadshow, said one person. The move also followed a May 9 filing in which Facebook said advertising growth hasn't kept pace with the increase in users.
Some investors say they felt misled by the underwriters. According to one London-based fund manager who asked not to be named, bankers indicated demand was so strong that he placed a bigger order than he thought he would get, leaving him with 40 per cent more Facebook shares than anticipated. He sold most of that stock on the first day of trading


http://www.smh.com.au/business/worl...stanley-for-facebook-flop-20120523-1z3yi.html

 

[ThePezDispenser]

I don't really understand the hype behind fb shares, with no div payouts do investors really believe the price can increase on a company that has already expanded to every major country that hasn't already banned it?

 

[Visions]

When they come out with a share price that has a price to earnings share ratio of 80 odd, do they actually expect it to improve? Considering that you have strong companies like Apple and Google around the 14-18 mark.

 

[Slax]

When Zuckerberg sold 30M shares on day 1 ($1.17Bn) it obviously indicated that he thought they were overvalued.