Wednesday, May 23, 2012

Facebook Face Plant?

Unless you’ve been living under a rock for the past week, Facebook had its IPO on Friday to much fanfare. It isn’t Wall Street’s darling so much this week. Facebook stock has taken a dive since Friday and now investors are screaming foul. Word on the street says that the bank knew that Facebook may do poorly and this particular bank even told a select group of investors about the potential disaster or at least warned them away from the stock. The banks, of course, are saying they did nothing wrong. Analysts believe the trouble may lie in telling some investors but not all investors. The man on the street maybe thinking if what the analysts say is true, this is typical behavior for greedy investment banks and Wall Street denizens. I’m not sure what to think.

When I say I really didn’t know what to think, it’s true. I still can’t figure out why investors are so crazy over gold. I love gold because it makes beautiful and durable jewelry. Since the dollar is no longer based on the gold standard, are people still believing in that “end of the world” scenario where gold will be the only valuable they can trade? If it really is the end of the world food and water will be the most valuable commodities around since gold or precious gems are inedible. But back to Facebook and its meteoric rise and fall. To describe Facebook as a complete disaster maybe a little harsh so early in the game, it should take at least 90 days before all the rats jumps ship.

Many people purchased stock on Friday with the intention of a quick sale after the price doubled, maybe on the first day. When the stock stayed the same from start of day to end of day many investors appear to be dumping their stock this week. This “dumping” can be the factor that is affecting the drop in stock pricing. Others are saying that the stock was “overvalued” and shouldn’t have been offered at $38.00 per share initially. Some have even chimed in that $20.00 a share is fair and they are just waiting for the stock to fall to this level. Like any IPO there is a lot of speculation and when people speculate there can be problems, remember the housing bust and all those speculators?

Personally, I think that Facebook could be an okay stock once all the wrinkles are ironed out. Mark Zuckerburg has been poised to do better and go farther than any other social media site on the internet. This influx of cash maybe all Zuckerberg needs to further his plan for world domination. Okay, I’m just kidding about that last part, but you can’t deny he’s done really well with a concept and some slick programming. Just about everyone is on Facebook which is like having the world’s largest customer list, and companies like Dun & Bradstreet have been selling customer lists for years with good results. While Facebook isn’t going to sell your name yet, they are advertising on their side bars and using user profiles to track demographics, this information is quite valuable regardless of what anyone thinks. I’ll reserve my final opinion till some substantial time has passed, I wouldn’t want to jump the gun and besides, if I say anything stupid today, someone might just remember it, it is written down after all.

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