As a follow-up to our article on the IPO of Facebook, written
yesterday morning (linkage), I want to add
this information:
First, the 421 million shares sold in this
IPO represents only a fraction of the potential wealth of this company.
Understand that Facebook has 900 million users. If each user
purchased a modest 5 shares at the IPO of $38 per share ($190.00 total expense),
the original transaction could have been 4.5 billion shares or 171
billion dollars. Contrasting 171 billion against the actual sales total of 16
billion dollars, helps to demonstrate just how over-stated was the
popular impression of Facebook. Jay Pristricelli, a Wall Street
analyst, confirmed to Fox Business that current users (the 900
million referenced above) did not support the Facebook offering.
Gerri Willis, one of FoxBusiness's
financial gurus, saw a problem on the day of the sale (Friday).
She was concerned that so many of those holding stock in Facebook,
before the IPO, were selling
their stock rather than
waiting for the much talked about value "explosion." While some
analysts (Stewart Varney at Varney and Company [Fox], for example)
were talking about an end of day value of $60 per shares, these initial
stock holders were selling. Somewhere between 40% and 60% of the
original collective of share holders sold their stock on Friday.
While apparently
not violating any laws, Sacks, Chase and Morgan Stanley all went on
record (Friday) with positive analysis of this stock, keeping the selling
rate as high as it was. . . . . . . not a good thing.
Who were the
winners on Friday? Facebook, itself. Understand that all
of the IPO's offering, all 421 million shares, sold for $38 or
higher, on Friday. Zuckerberg and company won. Additionally,
all of the original stock holders, those who purchased stock for 5
bucks a share (for example), cashed in and made the proverbial
"killing" rather than wait for the eventual stock value increase. In
this fact, As mention above, Gerri Willis saw this as a vote of "no confidence."
Another stock
analyst thought the IPO was 40% over valued, putting the true evaluation
at $22 per share.
An addition to the
problems being discussed is the fact that Facebook is having an issue
with its advertisement campaign. As it turns out, folks
are not "clicking" on Facebook advertisers, as they should, or
so is the claim of the naysayers. From
what I can see, this message is mixed on this criticism. GM recently announced that it is
pulling is advertisements from Facebook because of low sales results.
But, Ford officials have stated, for the record, that
their ad campaign on the social networking giant is going as they had hoped.
Conclusion: decide for yourself as to the evaluation of the
Facebook stock. Keep in mind to track the advertising issue. Mark
the buying trend of the stock, currently on a very slow (almost flat line
on Monday) but downward trend.
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