The Facebook IPO is kind of like a graduation party – everybody comes together for one huge blowout to celebrate the end of an era before going their separate ways. Unfortunately, most people on Wall Street do not understand how bittersweet this moment really is. A tremendous amount of pain is ahead for Wall Street in the next few years, and we will probably never see anything like the Facebook IPO ever again. But the Facebook IPO sure has been fun to watch. Facebook is one of the largest companies to ever go public in the United States. According to CNN, 247 million shares of Facebook exchanged hands in the first 45 minutes of trading. The Facebook IPO was nearly ten times larger than any other Internet IPO in history, and the amount of money being made by some people on this deal is absolutely amazing. For example, it is being reported that Bono will make more money on the Facebook IPO than he has from being part of the band U2 for the past 30 years. Sadly, this euphoria is not going to last for long. The next wave of the global financial collapse is rapidly approaching, and once it strikes there will not be much for anyone on Wall Street to be smiling about at all.
During the IPO process, Facebook sold more than 420 million shares and raised about 16 billion dollars.
Those are incredible numbers.
At 38 dollars per share, Facebook would have a market cap of about 81 billion dollars.
So is Facebook worth 81 billion dollars?
Of course not.
But most stocks are tremendously overvalued at this point.
Yes, Facebook has 900 million users and it made about a profit ofabout a billion dollars last year.
But that does not add up to an 81 billion dollar company.
Not even close.
A recent article by Jay Yarow explained this in more detail….
As good a business as that is, it’s not Google good. It’s not Apple good. And at the current IPO pricing, Facebook has to be a much better business in the near future.
In fact, Yarow says that Facebook is going to have to dramatically improve in order to justify the current valuation….
So, what’s the bull’s case for Facebook? Unfortunately, it comes down to faith. You have to have faith that Mark Zuckerberg, Sheryl Sandberg, and the rest of the executives at Facebook will discover a magical money making product that will justify its valuation.
Unfortunately, there are already signs that the growth of Facebook is slowing down.
Advertising revenue during the first quarter of 2012 was only $872 million. That was a decline of 7.5 percent from the previous quarter.
And eventually someone will come along and topple Facebook just like Facebook toppled MySpace.
Facebook did not even exist a decade ago. Right now there are young kids tinkering around in their college dorm rooms trying to figure out how to create something that will be even better than Facebook.
The truth is that Facebook is operating on borrowed time. It is not going to remain “hot” and “trendy” forever.
But for the moment, there are a whole lot of people out there that want a piece of Facebook.
Hey, I am not in the stock market at all, but even I am half-tempted to buy a few shares so that I can introduce myself as a “part-owner of Facebook”.
After all, who doesn’t like Facebook?
But there is an incredible upside to social networking websites such as Facebook and Twitter as well.
They have given average people the ability to communicate directly with each other on a massive scale.
In the past, the big corporations pretty much had a monopoly on mass communication.
If you wanted to get your message out independently of the big corporations, you could hand out fliers, you could send out mass mailings (very expensive) or you could try to get a book printed.
But today something that you post on Facebook or Twitter could be seen by thousands (or even millions) of people within a few days.
The Internet is filled with a whole lot of garbage, but it can also be used as an incredible tool for good.
Sitting at home behind your desk, you have the potential to touch the lives of people on the other side of the globe through the Internet that you would probably never have a chance of influencing any other way.
So I am very thankful for Facebook.
We should use tools like Facebook to wake people up while there is still time. Our world is becoming increasingly unstable and we might not always have the opportunity to freely share our thoughts with the entire globe like this.
Just try to imagine a world without Facebook, Twitter, YouTube, blogs and Internet forums.
All of those things have only existed for a relatively short period of time, and there is no guarantee that we will always have them.
Instead of wasting our lives away in front of our televisions, we should be taking advantage of these tools to help change the world.
Every single day, hundreds of people are directed to my websitefrom Facebook. I am hoping to eventually increase that to thousands of people per day.
A great economic collapse is coming to this world. People need to keep their eyes on the financial crisis in Europe and on thederivatives market. The coming financial tsunami will likely be even worse than the crash of 2008.
People are going to be looking for answers.
Now is the time to be a light shining in the darkness.
Not everyone has the time or the knowledge to be able to set up a website or make YouTube videos, but nearly everyone is capable of setting up a Facebook account or a Twitter account.
If you make even a small effort, you could end up touching the lives of thousands upon thousands of people.
Yes, there are a lot of negative things that can be said about Facebook, but at least for today let us celebrate it for what it has given us.
It has given us the opportunity to make a difference on a massive scale, and that is a wonderful thing.
Note: Facebook shares closed today at $34.04. That’s a full 10.99% lower than the IPO.