NASDAQ:FB fall from grace - Canadian TV, Computing and Home Theatre Forums

99semaj · 2012-08-02, 12:30 PM

With shares of Facebook set to fall below $20 today ($20.08 at the time of this post), my biggest question is: what the hell did people expect?

Zuckerberg has long demonstrated that he is disingenious and plays fast and loose with people's privacy; why should he be trusted with our investment money?

I think FB will be a textbook case of "the harder they fall", and they will be another MySpace in five years. The real test will come Aug 15 when the employees will be permitted to sell shares.

audacity · 2012-08-02, 12:47 PM

While the initial valuation of FB was indeed very high (~100 P/E ratio), I don't see Facebook (the site) becoming a ghost town like MySpace any time soon.

When I see someone glued to their smartphone, they're usually using Facebook, and the "network effect" is hard to break. Just ask Google Plus.

In order for Facebook to lose their users, they'll have to screw up big. That screw up would need to be much more significant than the privacy issues they've had in the past, which their user base didn't seem to care enough about to delete their account.

NeilN · 2012-08-02, 01:38 PM

It's not about privacy or Zuckerberg. It's about how the heck FB is going to make enough profit to justify their valuation. Ad revenue only goes so far (Google's P/E ratio is ~18) and Zynga's latest results don't bode well for the micropayment model.

Arthur Dent · 2012-08-02, 03:16 PM

I agree with audacity on this one. Their shares will fall and stay down, but FB itself is not going away any time soon. Ask those who evaluated and bought them at the IPO price why they did it.

gworg · 2012-08-02, 05:36 PM

I guess the fall in price has something to do with this

Quote:

Facebook’s share price dipped below $20 on Thursday after reporting slowing growth and an admission of an alarming number of fake accounts.
In a quarterly filing with the Securities and Exchange Commission, the social media company said that as many as 83 million of its accounts are fake.

on the other hand facebook $23 August puts are doing great.

North_of_Calgary · 2012-08-02, 07:13 PM

Quote:

Originally Posted by Arthur Dent

I agree with audacity on this one. Their shares will fall and stay down, but FB itself is not going away any time soon. Ask those who evaluated and bought them at the IPO price why they did it.

People are too busy using FB and Twitter to actually start thinking. These sites are key tools responsible for the dumbification of our society! This is a classic case of the Emperor's New Clothes.

The average person bought thinking they were getting in on the next Apple. Difference is that Apple has always (during the good times, the bad, and the now the even better) been getting direct revenue from its users. FB on the other hand has zero direct revenue from its users. But the average person isn't giving this a thought before investing. I know people who bought at $40.

As for the professional investors, I heard one of them on the radio yesterday explaining why FB is still a good buy. In his terms: they have access to the largest group of people in the world and are able to target adds to those people more precisely than anyone else. Basically accurately targeted advertising to a large number of potential customers. How well that targeted advertising actually works is what needs to be thoroughly proved. Sure they might be able to do highly highly targeted advertising but that's useless unless enough users turn into customers. And I don't think it's been accurately proven whether FB users want to become shoppers - they mostly want to make & read posts.

Every time I hear of a new low for FB shares it puts a smile on my face

North_of_Calgary · 2012-08-02, 07:44 PM

As for what revenues they do have and what's got them this far.... just do a search on news stories about Facebook and click-bots!

ScaryBob · 2012-08-03, 01:02 PM

Facebook may have many users and advertisers but it's not generating a lot of revenue. There were warning signs only a week before the IPO. GM cancelled their FB ads due to poor effectiveness. Analysts were sounding warning signs that FB was having trouble generating revenue with its advertising model. The FB IPO was a suckers' bet. It was overvalued and long term value is anybody's guess. As usual, the early buyers made a quick profit by flipping the stock. Long term investors could end up losing everything. These companies aren't dumb. They sell stock when it's to their advantage, not the average investor.

2012-08-02, 12:30 PM	#1
99semaj Veteran Join Date: Jun 2007 Location: /dev/null Posts: 2,667	NASDAQ:FB fall from grace With shares of Facebook set to fall below $20 today ($20.08 at the time of this post), my biggest question is: what the hell did people expect? Zuckerberg has long demonstrated that he is disingenious and plays fast and loose with people's privacy; why should he be trusted with our investment money? I think FB will be a textbook case of "the harder they fall", and they will be another MySpace in five years. The real test will come Aug 15 when the employees will be permitted to sell shares.

2012-08-03, 01:02 PM	#8
ScaryBob Veteran Join Date: Feb 2009 Location: The Dandelion City Posts: 7,133	Facebook may have many users and advertisers but it's not generating a lot of revenue. There were warning signs only a week before the IPO. GM cancelled their FB ads due to poor effectiveness. Analysts were sounding warning signs that FB was having trouble generating revenue with its advertising model. The FB IPO was a suckers' bet. It was overvalued and long term value is anybody's guess. As usual, the early buyers made a quick profit by flipping the stock. Long term investors could end up losing everything. These companies aren't dumb. They sell stock when it's to their advantage, not the average investor. __________________ At 20 I had a good mind. At 40 I had money. At 60 I've lost my mind and my money. Oh, to be 20 again. --Scary

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2012-08-02, 12:47 PM	#2
audacity Veteran Join Date: Jan 2009 Location: 127.0.0.1 Posts: 1,813	While the initial valuation of FB was indeed very high (~100 P/E ratio), I don't see Facebook (the site) becoming a ghost town like MySpace any time soon. When I see someone glued to their smartphone, they're usually using Facebook, and the "network effect" is hard to break. Just ask Google Plus. In order for Facebook to lose their users, they'll have to screw up big. That screw up would need to be much more significant than the privacy issues they've had in the past, which their user base didn't seem to care enough about to delete their account.

2012-08-02, 01:38 PM	#3
NeilN Veteran Join Date: Nov 2004 Location: North York Posts: 1,614	It's not about privacy or Zuckerberg. It's about how the heck FB is going to make enough profit to justify their valuation. Ad revenue only goes so far (Google's P/E ratio is ~18) and Zynga's latest results don't bode well for the micropayment model.

2012-08-02, 03:16 PM	#4
Arthur Dent Veteran Join Date: Nov 2003 Location: Calgary Posts: 2,727	I agree with audacity on this one. Their shares will fall and stay down, but FB itself is not going away any time soon. Ask those who evaluated and bought them at the IPO price why they did it.

2012-08-02, 07:44 PM	#7
North_of_Calgary Veteran Join Date: Aug 2004 Location: Calgary Area Posts: 2,074	As for what revenues they do have and what's got them this far.... just do a search on news stories about Facebook and click-bots!