Here we go. The investment community and media, which are really one and the same, are fueling the next Facebook bubble. The insiders are in the process of making their second killing at the expense of the naive public investor and the U.S. population (and the world) as a whole (401k’s and retirement all linked to hedge funds). Before I get started, can I request that some artist create a picture of Zuckerberg blowing a bubble? She is much nicer to look at, but it would be more poignant had I a picture of Zuckerberg and the insiders all blowing bubbles together.
Facebook’s stock price is up to almost $26 bucks today, which is an 8% increase from yesterday. At $26 bucks, the stock price has increased 30% from November 13th (the day before the big lock-up period expired) and 46% from September 4th (the all-time low for the stock). What explains this rebound? How can the company go from being valued at $100+ billion on the day of the IPO (back in May) to a valuation of just $46 billion as of September 4th (all-time low), to a current valuation as of today of around $56 billion?
What new material information has caused these incredible swings? It certainly isn’t the financials reported in the last two quarters, which I covered in the previous post. I will tell you what new and insightful information we have learned — absolutely nothing. Oh, Facebook is entering the e-commerce space with the new gift businesses…yawn…we already knew this. In fact, we knew about the “innovative” gift business when they bought Karma Science back in May. We always knew Facebook was going to try to take on Amazon, just like we know Facebook is going to try to take on Google. Good fucking luck. And, we also knew, prior to the IPO in fact, that Facebook was going to try to monetize users that access Facebook primarily via mobile devices. What new information have we learned to account for all these dramatic swings?
What we are seeing is the media and investment community (the “analysts” and hedge funds) pumping out a bunch of pro-Facebook propaganda to create a second demand for the stock after the same punks already made some nice gains on shorting the stock. All we are seeing is the same song and dance that we have seen over and over again. The media and the investment community blow hot air and form a bubble — when the insiders are in the big money (including those high-fliers within the company loaded up with their pre-IPO shares), they let the bubble pop by dumping huge amount of shares onto the public. The result — a few get extremely rich and the naive public investor and the public in general (on the outside) get stuck holding the bag. The below articles give a nice little sample of the song and dance. Enjoy the waltz, until the music stops.