The ongoing decline in Facebook stock is little more than a reassessment of the private market’s valuation — now recognized as somewhere between wildly optimistic and clinically insane.

Bloomberg calls Facebook the “the worst-performing large initial public offering during the past decade” losing more than 20% in the 10 days since the IPO.

 

Category: Investing, IPOs, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Facebook Valuation Reassessment Continues Apace”

  1. Bob A says:

    couldn’t happen to a nicer bunch. do I even want it at $25 now or should we shoot lower?

  2. advsys says:

    Think they should change the name to Faceplant.

  3. VennData says:

    I can’t begin to say how wrong you are but first, did you know your frend(s) Peter Boockvar and John Maudlin and Wasingtons blogs have all improved the look and ease of use of their blogs with then Like button…

  4. PeterR says:

    Fa(r)ceBook trading = consumer sentiment, measured in real time.

    The market no longer needs the University of Michigan to do this way after the fact.

    Down 10% today?

    The winds of change are in the air.

  5. MARGROSE says:

    FACEBOOK lacks a product and appeals to teenagers who never look at ads or buy anything. Its IPO reminds me of the tulip mania of years gone by.

  6. Even using the revised EPS estimates for 2013, FacePlant trades at 45x 2012. Basic fundamentals don’t even apply. Comparing FB to LNKD doesn’t apply. LNKD has a subscription model, a premium model that makes money. With FB, if you even charge a dollar – yes . a DOLLAR – a month, users will flee. This is the problem of the free model.

  7. bear_in_mind says:

    Wouldn’t touch it with a 10-foot pole. Saw an article this weekend estimating fair market value (w/ projected earnings) @ $18.50 per share. If this assessment is accurate, the price still has a long way to fall.

  8. The Cynic says:

    Barry:
    You should have one of your famous challenges for naming this Facebook debacle!
    For example:

    Facebook Flop or Facebook Faux Pas.
    Some others may enjoy more colorful language beginning with the letter ‘F’.

    It’s down 24% from the IPO price ($38)
    31% from the first trade ($42)

  9. lalaland says:

    Well, it’s hard to value the stock when nobody who isn’t a hedge fund, bank, HFT or day trader will touch the stuff. I think it’s a freaking bargain but am I going to jump in now? Hellzzzz no, not while the ‘pros’ are still having at it.

  10. subscriptionblocker says:

    Ethics set aside – no buried….. Zuckerberg is a genius. His investors – not so much.

    There aren’t many kids or Californians who can fleece Wall Street professionals :)

    Wonder what Malarky they’ll use to explain mutual fund losses to Mr. & Mrs. 401K bag holders…….

  11. Jojo says:

    From just 6 days ago:
    ————
    Wall Street struggles to find Facebook’s worth
    22 May 2012

    NEW YORK (Reuters) – In its three days of trading, Facebook’s stock has dropped 18 percent from its $38 issue price. For the thousands of investors that bought at the IPO, that’s bad enough, but one analysis of its earnings prospects suggests it could get a lot worse – more like $10 a share.

    Setting aside the hype and the cultural phenomenon that is the online networking site, Facebook Inc would be fairly priced at $9.59, according to the smattering of Wall Street estimates analyzed and modeled by Thomson Reuters StarMine.

    Data from six brokerages modeled by StarMine forecast the company’s estimated annualized earnings growth over the next 10 years at 10.8 percent. That’s almost exactly the mean for the technology sector and far below the 24 percent growth rate implied by the current stock price.

    http://news.yahoo.com/wall-street-struggles-facebooks-worth-204757844–sector.html

  12. tradeking13 says:

    Does this call into question other companies’ private market valuations (e.g., on SecondMarket, etc.)?

  13. toschek says:

    Is this going to be a buy at some point? Lower than $25? Lower than $18.50?

    My friends keep talking about buying it, I just don’t see how this is a good investment at any price.

  14. RC says:

    Wonder what Malarky they’ll use to explain mutual fund losses to Mr. & Mrs. 401K bag holders…….

    @subscriptionblocker,
    They dont have to. That is the beauty of the fraud of 401k. The mutual fund running “professionals” will charge a percentage of assets no matter how of Mr and Mrs 401k’s money they lost. No one really knows how much is that fee. They never tell but when they come to sell their snake oil in large corporations they tell future bagholders that “you can count 8% return on your investment”. What a bunch of fraudsters !!!

  15. InterestedObserver says:

    Personal read – that fair market value estimate above of $18.50 seems achievable, but still requires a lot of things to all go right. I can really see lower, quite a bit lower, being where it should be (i.e. assume the usual bumps in the road happen).

  16. michaelwdavis says:

    Is that a hoodie and shoulders pattern?

  17. James Cameron says:

    The only one not laughing at this claim by now may be Michael Grimes . . .

    “Mr. Grimes declined to comment, but people familiar with the matter said he believes he did an excellent job for Facebook.”

    “Other Morgan Stanley officials have spread a similar message: It wasn’t our fault. The stock’s slide should be blamed largely on serious technical problems at Nasdaq”

    Star Banker Is On the Spot

    http://goo.gl/2xecb

  18. blackjaquekerouac says:

    “worst in 10 years”? Really? Which one was that? This was a 100 BILLION DOLLAR IPO that has FAILED. That means given the 30 percent decline “five days to date” someone is OUT THAT MOULAH. The American people have so given up on the market the fact that equities rallied anyways goes to show just how bad the IPO really was. Worst EVER by FAR! How the particulars of the risk shake out of course “is the devil in the details.” Since JP Morgan was the one pounding the table (according to Bloomberg) for an even higher IPO price i don’t think we’ll have to look far to find “who took the biggest hit” however. Even though Goldman low balled the initial you can bet they were long this puppy too. the rumors that Morgan Stanley was in fact short is the only good news/rumor to date. That and the fact that MS financed that successful rocket launch to the Space Station. “sounds like we have a winner” to me!

  19. 873450 says:

    873450 Says: May 19th, 2012 at 9:26 am
    Contest
    Predict the day Facebook share price = $.09

    Facebook may be a penny stock sooner than previously anticipated.

  20. NMR says:

    As I’ve observed here several times this was and is a 15-20 dollar stock and even then there’s a sizeable element of speculation in it. Finally the media in the widest sense seems to have woken up to this fact. I say widest sense because there were a lot of blogs who were buying into the hype either by joining the chorus of applause or just remaining silent about the downsides.

  21. 873450 says:

    VennData Says:
    “… did you know your frend(s) Peter Boockvar and John Maudlin and Wasingtons blogs have all improved the look and ease of use of their blogs with then Like button…”

    What percentage of www users realize pressing that “Like” button enabled Facebook to register them as one of its 900 million users and plant cookies tracking their www use?

    Facebook claims their personal data is routinely scrubbed and not used, shared, sold, recorded, retained or otherwise permanently stored for future purposes. Privacy must be protected.

    That was then.

    Now Facebook is owned by millions of disappointed, angry shareholders feeling cheated and suckered into a con game. Privacy must be monetized.

  22. dscollon says:

    Just curious, are the underwriters compensated based on a percentage of the IPO issue price or market price post-lock up? If it’s based on the former, there are some serious conflicts of interest at play.