Skip to comments.Facebook’s market meltdown is far from over
Posted on 08/08/2012 4:41:28 AM PDT by SeekAndFind
It would be all too easy to wager that Facebooks market meltdown could be coming to an end. After all, the social network led by Mark Zuckerberg in just a couple of months incinerated as much as $50 billion of shareholders wealth. To put that in context, even after a recent rebound, Facebook since its Nasdaq debut in May has lost value nearly equal to the current market capitalizations of Yahoo, AOL, Zynga, Yelp, Pandora, OpenTable, Groupon, LinkedIn and Angies List combined, plus that of the bulk of the publicly traded newspaper industry.
As shocking as this utter failure may come to the nearly 1 billion faithful Facebook users around the world, its no surprise at all to anyone who read the initial public offering prospectus. Worse still, all the red flags that were flying when the company debuted overpriced shares, shoddy corporate governance, huge challenges to the core business and a damaged brand remain at full mast today. In this respect, Facebook looks like a proverbial example of whats known on Wall Street as a falling knife that is, one that can cost investors their fingers if they try to catch.
Start with the valuation. To justify a stock price close to the lower end of the projected range in the IPO, say $28 a share, Facebooks future growth needed to mirror that of Googles seven years earlier, according to an analysis by Reuters Breakingviews and Anant Sundaram, a professor at Dartmouths Tuck School of Business. Under that scenario, Facebook would have had to increase revenue over the next couple of years by some 80 percent annually, while maintaining high profit margins all the while.
Thats not happening.
(Excerpt) Read more at blogs.reuters.com ...
is this surprising given a college kid with no business experience is running it - the kid got played by wall st
I'm not really seeing that with the Facebook.
Top brand to trash.
He does support gay marriage though. Maybe they’ll bail him out.
What is happening now is Facebook is swimming with the sharks. The sharks are trying to leverage a old fasion takeover. The sharks see big dollars but what they don’t understand is they will commericalize it more and turn off many people in the process. The little boy who is running it thinks he is smarter than the sharks. I see it with smoke rising and nothing worth much left in the end.
What did Facebook produce? What physical product was produced by Facebook? What product produced by Facebook in January of this year is still in use today?
Facebook is/was nothing but a very fancy chat room where people can exchange emotions.
How long would this web site, Free Republic, last if it was listed on the stock market?
Doesn't anyone remember the big flurry and instant millionaires from the “Dot.Com” bubble?
In addition to all the stated business concerns, Timeline has been a disaster for FB. No one likes it and it has reduced usage and interaction.
There’s a Zucker born every minute...
Facebook like all fads eventually fades. The novelty of posting family pictures is over — drowned by BS and propaganda from every enity that has a “facebook” page.
I believe that there is a finite amount of advertizing revenue available to the media of all typoes.
Also only about 1 percent of folks with a facebook page use it once a week or less.
The ‘little boy’ can hire all the help he needs. This ‘little boy’ seems to have done pretty well so far.
Yes he did but going public opens the company to stock buying and takeover. The boy is out of his league there.
I feel sorry for the small investors who got taken by this.
Like the Duke brothers in Trading Places-SELL! SELL! SELL!
yeah he should go out and hire a Harvard grad, oh wait he is one
You keep denigrating him. He’s done a lot of things correctly and has built a great business.
I strongly disagree with his politics but thats not what your argument against him.
idol worship, ha
No idol worship, just a dislike for people making ignorant comments. You act like he’s all on his own.
When it goes into the low single digits it may be a buy.
Well, his name isn't Patel, is it now.
Why do you feel sorry for them? If they couldn’t look at the fundamentals of this company and see it was a dog...then they have no business being in the market.
Rule #1 Don’t invest in businesses you don’t understand.
Rule #2 The laws of business apply to all businesses, even the shiny internet based ones.