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EYE-BALL Guru on – The FACEBOOK (FB) Float:

May 24, 2012
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Title:
The FACEBOOK (FB) Float!
Wall Street has not changed – they all believe they’re owed a free ride.  A few weeks ago when they received their Facebook allocations notices they would have all been celebrating their good fortune and counting their wealth on expectation.

The float came – a share price of $US38 – it went to $US44 within minutes and all the investors had their calculators working out their wealth increase – ring their Banker to arrange a new asset purchase based on the Facebook valuations and life would have been good.

After lunch – the price was back under $US40 and the initial euphoria was now a concern – does one sell and take a small profit, or trust the Morgan Stanley prospectus on forecasts.   Well the price action over the ensuring days left everybody a little shell-shocked.  When their investment went south the first thing they did was ring their lawyers wanting to find a way to sue Morgan Stanley, Zuckerberg, and anyone else that spoilt their perfect lifestyle.

The Chart below is a Yahoo chart on the daily price action of the Facebook share price.

Facebook (FB) Graph:

| NASDAQ – 23rd May 2012 |

There were price indicators showing a high of US$44 on the morning of the initial float. This is not reflected in this chart.

The ‘billions’ lost by investors is to now become a matter for the courts to decide – the debate is whether full disclosure on expected Facebook earnings were falsified.

Really – when you give your money to someone else to make you wealthy you are ‘all-in’ … if you can’t do it yourself and place blind trust elsewhere you deserve everything you get.

For Zuckerberg – he doesn’t seen the type to take a cheap deal and leave anything for the next guy.  He sold a great idea to the world and he cashed in for part of it.  The Morgan Stanley’s were in it for their own greedy reasons – just like every investor who threw caution to the wind – yet again given the GFC and the lessons it offered up.

Common – how many moms and dads are in this because their pension fund is in it – are they part of the court case as well?

If this does not ring a bell on regulatory and predatory practices – then there is no hope for the Financial Markets of the World.   In ten years time Facebook might be bigger than Google – but as an initial float of some 20% of the company – for $US16 billion – it was always going to be an overpriced issue … if you bought in as a ‘stag’ – hope you lost your balls …

As for the Court case – more money than sense – no case to answer unless Morgan Stanly did inflate the forecast numbers – it is a witch hunt at this stage …

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The EYE-BALL Guru …

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  1. May 24, 2012 at 2:01 pm

    Greed – it gets you everytime …

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