Facebook makes lower price, 50% drop fom IPO price 9-2-2012

 

 Short Update from our post last May 19,2012 regarding the IPO of Facebook.

It has been almost 4months now since FB, the largest Social Networking site hosted its IPO in NASDAQ. And now the Semiconductor Industry and Tech(NASDAQ) almost made into new highs, this tech stock is still dipping day by day. Its current price is now at 18.06, more than 50% lost in equity value in just 4 months. We already tackled this last time, that its value was "not worth it based on its earnings". 

Today, we visited some Financial site than can help us monitor Earnings and Financial bechmarks accurately, we can see above that its P/E is still 62.48x, from its 100x when it had its debut. 

This is an example of greed, where insiders or the FB Board overprices its IPO price, and be the first to sell their shares to the public.

Now, Morgan Stanley have a huge stake in FB on most of its new Funds, is taking the hit due to Greedy Manipulators deciding their IPO price. Im thinking Morgan Stanley's CEO is having headache day by day on hosting FB's IPO as Guarantor. 

I am not holder of this stock, I love this Company as I am a daily user. But taking a look into its current earnings, its far to short from what they are evolving, they must act now else they may follow Multiply's fall. Assuming FB gets into an average NASDAQ stock at 20x P/E, FB should be priced by $7 a share.

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http://theamazingchart.blogspot.com/2012/05/facebook-ipo-price-rarely-got-above-its.html

Facebook IPO: Price rarely got above its IPO Price on Day1 5-19-2012

Facebook successfully had its IPO Today in NASDAQ after few years of planning, millions and millions f user is increasing YoY, but the one and only question today about the IPO, is this a hype or a good investment IPO?

There are 2 types of person willing to BUY on this stock:
1. Dumb users who are hyped and using FB as a Daily social networking site. Which dont know much on Stock Valuation.
2. Hedge Fund Managers who know how to control stocks and have long term outlook on its income.

But hey, I am the 3rd type of person NOT willing to Buy this stock for a lots of reason:
1. Original IPO price is at 36 USD per share, in an overnight meeting, stock price was increased to 38 a piece. Boosting them extra Billions overnight.
2.  FB needs to earn 1Billion Dollars a year, to make its 18Billion IPO value worth it. Assuming 18 P/E is a good valuation ratio.
3. Looking at todays trading, it even rarely got above 38 USD, When it went to almost 43 a piece, sellers seems to sell down even to the last 38.00 tick.
4. IPO day reflects the valuation of a stock, and todays trading shows it doesnt even go high.
5. The issuers of FB (Morgan Stanley and other institutions) are controlling the 1st day trading to hold aboove 38 mark, as it is their job to make sure it doesnt fall below by using Oversubscription powers/money, using Billions of Dollars to maintain the price, the question is, until when can they do it?

Many reasons NOT to buy, but many reasons to USE Facebook. For me, until FB shows clear direction how they can earn the 1B a year, until then that I will think twice buying this stock.