Archive for the ‘Facebook’ Category
Morgan Stanley (MS) defended its role in Facebook Inc. (FB)’s initial public offering after a Massachusetts regulator subpoenaed the bank over talks between an analyst and investors about the social media company’s revenue outlook.
“Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs,” Pen Pendleton, a spokesman for the New York-based investment bank, said today in an e-mailed statement. “These procedures are in compliance with all applicable regulations.”
The question is twofold — whether there was a breach of the “Chinese wall” that is supposed to exist between the research department and syndicate folks and secondly whether there was material research information provided to certain people but not others.
Whether the latter is actionable is somewhat tricky. An IPO has a “quiet period” where the firm and those involved in the offering are not supposed to be making public statements except through the registration documents. But Facebook filed an amendment to the S1 in which some changes were made.
I suspect there will be a load of fun around this event, given the poor performance of the IPO and the technical matters surrounding its trade, especially late confirms and similar problems. This, incidentally, also appears to have led to people being short when that’s supposed to be impossible until the first trades settle (you can’t short without a borrow, and you can’t borrow shares that aren’t yet in the hands of anyone.)
At least that’s the theory; there are myriad reports that institutional clients and hedge funds are short and able to be short. Hmmmm… how do you short something you can’t get a locate on as of yet because the first trades in the public market haven’t settled? That’s a question we ought to get answered as well.
This whole process stinks. I’d love to just simply stick up the “I told you so” banner and call it a day, but this entire mess outlines a few important facts, with the most-important being that Wall Street never gives a damn about you, the individual investor. The entire purpose of selling something is of course to make a profit, and in this case they sure did — they maximized the amount the selling shareholders got, and the common man — indeed, anyone who bought the IPO — got the bag.
Have you figured it out yet America? What are you doing in this market, eh? Exactly how many times do you need to hear the touts tell you how “cheap” stocks are or how “investing” is something you should do — and lose money — before you wake the hell up?
If this isn’t an object lesson up and down the line, from the apparent shorting of stock that doesn’t exist in the public’s hands yet to screwed up executions so nobody knew what they had to “late” updates to material information on the company’s prospects to more, I don’t know how much more clear it needs to be.
Don’t worry, you only lost 26% in two and a half days if you bought at the open, or about 19% if you were lucky (dumb) enough to get an allocation.
That ought to make your whole year look good, right?
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.
Some look at today’s FaceBook IPO flop, the ongoing market rout, and the situation in Europe with disenchantment and disappointment. We, on the other hand, view it with hope: because more than anything, the events of the past few days show that the truth is getting out – the truth that capital markets simply can not exist under the authoritarian rule of central planners, the truth that the stock market is a casino in which the best one can hope for a quick flip, and finally the truth that our entire socio-economic regime, whose existence has been predicated by borrowing from theuncreated wealth of the future, and where accumulated debt could be wiped out at the flip of a switch if things go wrong in the process obliterating the welfare of billions (of less than 1%ers), is one big lie.
We believe that hope is what SocGen’s Dylan Grice is what he has in mind when he penned the following conclusion to his most recent piece: La Grande Illusion.
Since the crisis broke in 2008, the Fed and BoE have printed enough money to buy over 60% of the issuance of their respective government securities since. It makes you wonder. What would bond yields in the US and the UK look like without these purchases? Probably like those in the eurozone periphery. Indeed, maybe the euro debacle could have been completely avoided if the ECB had been headed up by a Ben von Bernanke, or a Mervyn Le Roi. Maybe that’s why so many of my friends agree with Atlantic magazine, which praised Ben Bernanke for ‘masterfully navigating’ the financial crisis and avoiding another depression.
Maybe all the Anglo-Saxon central banks have done is create the illusion that our sovereigns are more solvent than they are, and that our budget constraints are really a safe distance away.
But I don’t think they are. And I think the truth gets out eventually. The Enrons, the Allied Capitals, the Bernie Madoffs … they all get their comeuppance. Indeed, it’s what’s happening today in the eurozone. The accounting shenanigans eurozone governments resorted to in order to meet the entry criteria have been found out. Or at least, current CDS prices correlate well with countries’ cumulative deficit manipulations in the run-up to monetary union, as estimated by Paul van den Noord and Vincent Koen at the OECD. You can’t escape your budget constraint with financial gimmickry. You can just make it look like you have for a while.
Because if there is at least one thing the central planners of the status quo do not have control over, it is just that: hope.
The world is becoming a very unstable place, and the pace at which things are changing all around us has become absolutely mind-numbing. In fact, change has become one of the only constants in today’s world. Once upon a time, people in the United States could actually make 20 or 30 year plans and feel confident about achieving them. But now, nothing is stable anymore. The financial crisis showed us that some of the biggest corporations on the globe can collapse in a single day. The events of the past few weeks have shown us that entire governments can be brought down in a single week. We live in a world where there are now very few “guarantees” that you can count on. One of the only things that is guaranteed is that technology and information will continue to grow at exponential speeds. This year, the total amount of information produced on electronic devices around the globe is projected to be more than a zettabyte. A zettabyte is equivalent to one sextillion bytes. In other words, imagine a one with more than 21 zeroes following it.
Many of the things that we take for granted today didn’t even exist a few short years ago. Facebook has only been with us since 2004. YouTube has only been with us since 2005. Can you imagine a world where those two websites did not exist?
We live in a world of information overload. Once upon a time it would have been possible to go to sleep for a decade and wake up and everything would still be pretty much the same. But today if you were to do that you would be in for a case of severe culture shock.
Do you remember when you could buy a set of encyclopedias and the information in them would still be good a decade or two later?
Well, things do not work that way anymore.
In fact, most of the articles on this website will be obsolete a month from now.
In today’s world, you really have to think twice before you say that something is “not possible”.
A few months ago, it was absolutely inconceivable that Egyptian President Hosni Mubarak would declare to the world that he has “spent enough time serving Egypt“.
Yet here we are.
One week the government of Tunisia seemed perfectly stable and the next week it was toppled.
Do any of you out there still think that you can make realistic “plans for the future” in today’s world?
Once upon a time in America, many of us were taught that if we worked really hard in school we could get a great job with a great company. We were promised that if we were faithful to that company for 30 or 40 years that we would be treated fairly and given a good pension.
Well, in today’s world you might as well crumple up that plan and throw it into the wastebasket.
There is no such thing as a stable job anymore. Businesses are coming into existence and going out of existence faster than ever before. Today, one out of every four Americans workers has been with their empl0yer for less than a year.
Most Americans still don’t really understand that they are now part of a global economy. They keep thinking that things were the way they used to be. They keep thinking that the U.S. economy is invincible.
Well, those days are long gone. The United States is being deindustrialized at lightning speed. Tens of thousands of manufacturing facilities and millions of jobs have been sent overseas. China, once a complete economic backwater, is now kicking the crap out of us on the global economic stage.
Our financial system is certainly on incredibly shaky ground. Will any of us ever forget what happened in 2008?
Do any of us actually believe that it can’t happen again?
Our health care system is also incredibly unstable. Today, 46 million Americans have absolutely no health insurance. That means that 46 million Americans are just one major injury or illness away from financial ruin with no protection whatsoever.
Not that those that actually have health insurance are protected. According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that did have health insurance.
So just because you have health insurance does not mean anything. One bad accident or one really bad disease and you could be totally wiped out.
Isn’t that comforting?
But the truth is that our entire economy is on the verge of total collapse.
World famous investor Harry Schultz recently published the last issue of his legendary financial newsletter. After 45 years, the following is how Schultz summed up the economic collapse that we are now facing….
“Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched & where the rot is by far the deepest.”
David Stockman, the former director of the Office of Management and Budget under Ronald Reagan was quoted by Schultz as saying the following about how desperate things are about to become….
“Get some gold, beans, water, anything that Bernanke can’t destroy. Ron Paul is right. We’re entering a global monetary conflagration. If a sell-off of U.S. bonds starts, it will be an Armageddon.”
Millions of Americans have become “preppers” in recent years as they have come to realize that our economy is headed down a very dark road.
But sadly, the reality is that the vast majority of Americans are not prepared for any kind of economic or natural disaster. As this week has shown us, just the threat of a major snow storm can wipe out store shelves in a single day.
So what would this country look like if a major disaster fundamentally changed life in America and suddenly people were desperate for food and supplies?
It is a frightening thing to think about.
As the pace of change has accelerated dramatically, the U.S. government and other governments around the world have responded by trying to get a tighter grip on everyone and everything.
To get on an airplane in the United States today, you either have to allow a security goon to use a scanner to look over your completely exposed body, or you have to allow a security goon to feel up all of your private areas with the fronts of his or her hands.
Not only that, but the U.S. government has now deployed VIPR (Visible Intermodal Prevention and Response) teams to set up security checkpoints at bus terminals, subway stations and on major highways.
The America that so many of us once loved is rapidly disappearing.
But it is not just our man-made systems that are rapidly changing. Something seems to be happening to the entire planet. Flooding of biblical proportions has hit Australia, Brazil, China and Pakistan over the past 12 months. Scorching heat caused massive crop failures all over Russia last summer. Record-setting cold temperatures and snowfalls all over the northern hemisphere have scientists scratching their heads. On top of everything else, mass deaths of birds and fish are suddenly being reported all over the globe.
Even the crust of the earth is becoming increasingly unstable. Did you see that volcano go off in Japan the other day? Over the past two years it seems like volcanoes have been suddenly erupting all over the world.
Not only that, but sinkholes have become an absolute epidemic all over the planet. Some of these sinkholes have been so large that they have swallowed entire apartment buildings.
In addition, it seems like there is a magnitude 6 or magnitude 7 earthquake somewhere in the world almost every day now. They have become so common that the mainstream media barely even takes notice of them anymore unless one happens near a very populated area.
None of us really knows what the world is going to look like ten years from now. What will the “new” Facebooks and YouTubes be? Will Ben Bernanke’s reckless money printing destroy our economy by then? Will our U.S. dollars still be of any value ten years from now? Will there even still be a U.S. dollar?
Will we still be able to feed most of the people in the world by 2011? Will shortages of food, water and oil start driving people crazy? Could some amazing energy discovery completely transform society?
Who will be the president of the United States? Will there even be a president of the United States? Will war have erupted in the Middle East by that point? Will the United States be in another war by then?
The truth is that things are changing so fast that it is hard to even come up with the right questions to ask. The world is going to change faster this year than it did last year. In 2012 the pace of change will be even faster.
So buckle up and hold on tight because this is going to be one wild ride.
For much more on how incredibly fast the pace of change is in our modern society, check out the video posted below. It is entitled “Did You Know?” and it has been viewed more than 12 million times on YouTube….