A few problems with Facebook

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I'm (clearly) not a stock market analyst or Wall Street Whiz (if I was that smart, how come I'm not rich?), but I have to say, some of the stuff that's coming out about the Facebook IPO makes this social media company that lives on its users' content and that's been portrayed as the company of the future look an awful lot like some rotten companies of the past. Sfist has an overview here.

Gawker is particularly harsh:

And the fallout from the most hyped IPO in history bursts not just the illusion that Facebook is actually worth $100 billion, but the idea that Facebook is different than any other corporation hell-bent on making as much money as possible for a handful of very wealthy people ... For a company which Mark Zuckerberg boasted in a letter to investors "was not originally created to be a company. It was built to accomplish a social mission," Facebook sure as hell acted like a company in helping to enrich insiders at the expense of public investors.

The way IPO's often work is no secret -- the underwriters try to create a furor of hype around the company so that the early investors (the pals of those underwriters) get in at a low price that soars quickly so they make a nice neat profit. In this case, that only worked for the folks who bought early and sold very fast.

Now Facebook and the underwriters are getting sued, and corporate lawyers will be getting rich (note to Facebook's counsel: Get paid in cash, not stock).

But the Facebook employees who got stock as part of the IPO will still be pretty rich, and they'll still be driving up real-estate prices in the Bay Area, and my trolls will still be telling me I hate and envy success. (Or maybe I measure success in ways that don't include personal wealth.)

At any rate, a lot of investors lost money on this deal, but Mark Zuckerberg won't miss any meals.

Comments

It closed today at 32, about 15% down from it's launch price but that is in a terrible market. If the Greek workers had taken a huge pay and benefit cut a week ago, you'd be looking at a fat ass profit on FB right now.

And an IPO that goes ballistic and doubles in price is hardly a success either - it just means it was priced wrong.

The only "investors" who lost money were not mom'n'pop, since they could not get in on the IPO anyway. No, the losers were institutions who took a risk - are you seriously telling me you give a crap about some hedge fund that punted and lost? I don't think so.

Rail at capitalism all you like, Tim, but the FB IPO was a historical footnote. You need a new shtick. And if you have a better idea for encouraging risk and innovation in CA's crucial high tech world, let's hear it, and you evidence to back it up.

Posted by Guest on May. 23, 2012 @ 1:20 pm

Regulate the crap out of them, so that they can't make a killing out of selling your private, personal info that they got for free (or should I say 'stole'). Then perhaps the true innovaters -- the artists among us -- can afford to live in this freakin town.

Posted by Guest on May. 23, 2012 @ 1:56 pm

How much did you contribute to the local economy last year?

Posted by Guest on May. 24, 2012 @ 4:49 am

you shoud check out how much revenue our arts, music, food, and culture festivals bring in -- the 4.2 billion dollars in annual revenue from our "bad art" nightlife can be a start -- and get back to us. Not to mention that the main reason people want to move here in the first place is the "bad art" fantasy of SF. Which of course you would never buy into, because how could something historical or cultural be vital? People obviously just want to live in San Francisco because of, er, the great-tasting tap water? The miles of sun-drenched French Riviera beaches? Oh! The gold. It must be the gold.

Keep posting the same thing though! Messaging, darling, messaging. 

Posted by marke on May. 24, 2012 @ 4:59 am

Great article! Here is another article from the Bay Area with a different analysis on the valuation and the optimal price of Facebook stock:

http://www.fogcityjournal.com/wordpress/4578/why-i-cant-like-facebooks-v...

Posted by Guest on May. 23, 2012 @ 3:06 pm

>"this social media company that lives on its users' content"

Yeah. Hey did you know that there are two advertisements on this very page that were served up by Google's Doubleclick program? And that Google recently changed it's privacy policy so that it can collect information on you ranging from the things you search for to the YouTube videos that you watch?

And the SFBG is only too happy to take their money even on the same page that they criticize Facebook for doing the exact same thing????

The SFBG hypocrisy is palpable.

Posted by Troll on May. 23, 2012 @ 3:20 pm

Actually, I missed those ads. I was too busy posting this on Facebook.

Posted by tim on May. 23, 2012 @ 3:57 pm

Facebook lawsuits 'could amount to billions'
Angry shareholders file class-action lawsuit
Facebook "wants to leave Nasdaq, join NYSE"

TRIAL lawyers smell blood as furious investors begin filing lawsuits over losses, with billions of dollars possibly at stake in coming litigation.

More than a half-dozen law firms specialising in investor complaints said today they were launching class-action suits against the social networking giant and its underwriters.

http://www.news.com.au/business/companies/investors-sue-facebook-over-bu...

I think it's called: Burn, baby, burn.

Posted by Guest on May. 24, 2012 @ 5:22 pm

Facebook IPO is decade’s biggest flop: Experts

New Delhi: At the end of five days of public trading, Facebook’s IPO has been declared the worst performing in a decade.

A Bloomberg Businessweek report said official data shows Facebook’s shares have seen value plummet by 13 per cent since the company was first listed on Nasdaq on Friday.

Good occasion for Priscilla Chan to prove she’ll be there by her husband’s side for better or for worse.

---India News

Posted by Guest on May. 26, 2012 @ 4:43 am