May 19 2012

pure bubble

El Reg reports that facebook share dealing opened at $42 per share (up $4 on the opening IPO price of $38). As they wryly point out, the Telegraph reports that that price makes the company “worth” more than Boeing.

That is nonsensical beyond belief. Boeing actually make things. Big things, that other companies pay a lot of money to buy. Facebook’s sole revenue source is advertising.

A small prediction. This time next year, facebook’s shares will be trading at less than $5 each – tops.

Update – added 19 June 2012 – this Nasdaq daily quote page for Facebook may be useful.

Permanent link to this article: http://baldric.net/2012/05/19/pure-bubble/

5 comments

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    • Peter on 2012/05/22 at 3:23 pm

    You may want to revise that statement, It may happen earlier. The shares have bricked already ($31.5 as I type this, with the drop immediately starting when trading commenced on Monday) and there is mucho finger pointing as those who held shares in volume have been quietly bleeding them into the market.

    It simply confirms what anyone with half a brain cell knew already: anyone who buys shares in a company to a value that exceeds 100x its income needs his or her head examined. To compare, Apple trades at about 13x income, Google at 19x.

    In short – yet another lot of fools have been parted from their money, with the banks and handlers walking away into the sunset with a fist (and pockets) full of dollars.

    I fully expect them to receive bonuses again, even though nothing is well in the finance markets..

    • Mick on 2012/05/22 at 4:30 pm
      Author

    Peter

    I’ll stick with my prediction for now. But I’ll be watching the share price closely over the next few weeks.

    Mick

    • Peter on 2012/05/24 at 11:37 am

    You may enjoy this article – the guy clearly doesn’t believe in being politically correct.

    “Facebook, a wildly overvalued momentary internet phenomena led by an arrogant 28 year old man-child, decided to treat the process of going public with the same respect they do their users’ privacy, which is to say, with none at all.”

    Ouch..

    Regards, P

    • Mick on 2012/05/24 at 3:28 pm
      Author

    Thanks for that Peter. I don’t think he likes either financiers or facebook. But I did like his rider to the comments section on his blog post:

    “Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.”

    I was tempted, momentarily, to reply. But only momentarily.

    Mick

    • Mick on 2012/08/01 at 9:12 pm
      Author

    A quick note that today, 1 August 2012, Nasdaq reports that Facebook is trading at $20.92. That is a fall of over 50% on the opening trade price or nearly 45% on the IPO price. Not bad for just two and a half months. At this rate, my $5.00 prediction should come in ahead of time.

    Way ahead of time.

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