FB new low (18.23), down 52% from 38 IPO price

http://www.google.com/finance?q=NDA:fb

by veyron • 14 years ago

36 50 14 years ago

thejerz• 14 years ago

Can anyone clarify whether the IPO was technically at $38 or $42? On the day of the IPO, everyone in the press was saying the price was $42. But now a lot of the online charts (google finance, yahoo finance, etc.) are showing it opened at $38. Obviously there were a lot of technical glitches that morning. What is going on here?

reefoctopus• 14 years ago

I believe it IPOed at $38.

"The $38 IPO price is the rate at which Facebook's underwriters will sale shares to their clients."

http://money.cnn.com/2012/05/17/technology/facebook-ipo-fina...

NoPiece• 14 years ago

The IPO price was $38. When it opened the price rose to $42 in early public trading before the price started to fall.

http://www.businessinsider.com/this-is-what-traders-saw-when...

rdevnull• 14 years ago

Worth to say thou that the real price was 42$ in fact. I bought via my bank and I could not get a trade confirmation for days (even big banks like UBS did sue about this) so it was more 42$ than 38$ for the few unlucky :)

batgaijin• 14 years ago

Okay, I feel crazy but I definitely thought the IPO was $50, or I'm positive that I read that somewhere. Looking on google it seems like that was the expected price jump on the first day.

veyron5• 14 years ago

38 dollars per share was the price that the institutions who participated in the IPO paid. Facebook received slightly less than that.

Investors who paid 42 per share at the IPO received shares from the underwriters.

TomatoTomato• 14 years ago

The very first trade of a stock in the open market is by most accounts considered the IPO price or opening bid which for FB was 42.05. The IPO offer price was $38.

http://seekingalpha.com/article/217235-ipo-offering-vs-openi...

http://i.stack.imgur.com/35bNv.jpg

lanstein• 14 years ago

Compare that with SPLK. Apparently there's something to this whole 'build stuff people will buy' thing.

dirtyaura• 14 years ago

Funny, I just today found Splunk, when I was searching for sparkline implementations and theirs was open sourced. I browsed a bit and thought this is a cool company, which I need to evaluate for investing. A tad too late to benefit from today's spike in SPLK's price...

MichaelGG• 14 years ago

Let's compare, shall we? Last year, Splunk lost a few million dollars on revenues of 66M. Facebook profited $1BN on revenues of 3.7BN.

Guess there's something to businesses that generate lots of snarky comments.

stevievee• 14 years ago

It is going to be a bumpy road if they miss future earnings estimates. Negative sentiment around this stock is strong.

16s2• 14 years ago

I plan to buy it if it falls to 4 dollars or less.

brandoncapecci2• 14 years ago

I originally said the same at at $10, which it's on track to hit. Sentiment is making me reconsider...

16s2• 14 years ago

It may bounce back or firm-up. Hard to say. They have a lot of great minds.

WiseWeasel• 14 years ago

I bet it won't fall that low. $4 would be valuing the company at about 10x their 2011 income of $1B, which is extremely low for a company expected to grow. I wouldn't expect to see a valuation under 20x, or about $7-8 per share. My guess is ~$10 per share is the floor on this one.

http://www.forbes.com/sites/tomiogeron/2012/02/01/facebooks-...

cube13• 14 years ago

Is Facebook really expected to grow that much? Even counting the 13% or so fake accounts, they have around 800 million active accounts.

That's a bit over 10% of the world's population. They can't really get the growth that's expected with their P/E, especially because of the difficulties that they're having with getting higher returns/user. They can't grow their userbase by that much either.

antr• 14 years ago

"expected to grow"

i'm still waiting for the famous growth numbers to be made public. everyone talks about growth, but FB has not made estimates/target numbers available.

jahansafd• 14 years ago

Hmmm... Isn't facebook still growing? aren't they making money? aren't they expanding?

theorique2• 14 years ago

Yes. But the question is "how much?"

If I offered you FB stock at $10,000, what would you say? "Too much", I hope.

If I offered you FB stock at $0.05, what would you say? Probably, "Hell, yeah, that's a bargain".

So there's a rational price that the market agrees upon, within certain boundaries. The market seems to agree that the IPO overpriced the real market value of the shares. It's a real time machine that tells us what people think the shares are worth.

colmvp• 14 years ago

Some small additional info:

http://uk.reuters.com/article/2012/08/31/uk-facebook-shares-...

404error3• 14 years ago

They should just start charging a couple of bucks a year to use the damn thing. They have so many users even if some drop off they would still be making money.

(I don't use it so it's easy for me to say)

MichaelApproved• 14 years ago

It wouldn't be some, itd be most. What make FB appealing is that so many people use it. If most drop off, it would be less appealing and the amount of people willing to pay would be even less.

dclowd9901• 14 years ago

Or freemium servicing.

404error3• 14 years ago

I never understood how giving things/services away for free made sense to anyone. I still don't get it. Sure you have a huge user base but no way to make money.

leothekim• 14 years ago

Should someone add a FB ticker to the HN home page? :-D

But seriously, is there something about Facebook that hit the news that is leading to this drop and is worth discussing? Or is this just to spur some discussion on stock price speculation? If the former, what's the news? If the latter, what's the point?

veyron5• 14 years ago

The reason why this cross is important is because it dropped more than 50%. Regulation T, which governs margin requirements in most accounts, says that you are allowed to borrow up to your cash balance to buy shares. So if you had 1900 dollars in your account (for simplicity of math), you could borrow 1900 more dollars to buy FB shares (3800 dollars = 100 shares). Now that FB dropped below 19 (and it looks like it'll close below 19), basically those investors lost ALL of their money (the value of the shares is now 1825, so your equity in the position is 1825[current value] - 1900[borrowed money] = -75) and we should expect another wave of selling pressure as those investors are forcibly closed out of their positions.

The importance is that institutions may decide not to participate in future IPOs (or may do so with weak uptake).

thetrb• 14 years ago

They were downgraded, that probably is partially leading to the drop: http://news.investors.com/technology/083112-624214-facebook-...

mp99e99• 14 years ago

FB has 2.7B shares outstanding, yahoo and other sites have it wrong.

veyron5• 14 years ago

The original prospectus quoted the 2.1B share count that google uses. I'm sure the difference will be corrected after a few filings ...

billpg• 14 years ago

If you thought $38 was a good price, this must be a good time to buy some more with the prices low.

loceng• 14 years ago

$4 - $7 might be a good price to buy at, might.

chollida1• 14 years ago

> If you thought $38 was a good price, this must be a good time to buy some more with the prices low.

Only if you never factor in new information to your decision making.

If you $38 was good with the assumption that there would be a pop to $50 then now you wouldn't buy as it's now clear there won't be a quick pop that gets you to $50.

dkroy3• 14 years ago

This makes me want to start buying up shares just so I could brag to friends saying I bought it when it was super low. Probably not a good reason, but the heart wants what the heart wants.

outside1234• 14 years ago

this isn't super low. $1-2 will be super low.

dkroy3• 14 years ago

You are right, I guess I was embellishing a little. Though it is quite a drop.

dkroy3• 14 years ago

At what price is everyone else going to be tempted into buying some shares?

taytus2• 14 years ago

$5 it's a good price for me :)

mkhalil• 14 years ago

I said it when it first IPO'd that this would be bad. Investors were looking at this company as they did many other things they invested in. What they couldn't understand is that IT IS NOT like the others. It is a social network. People tend to move on and get tired of them. I don't care what the numbers say, they could be misleading. I stopped going on facebook. And when I do go on, my 1000 friends or so don't have much posting going on. It has become pretty much a more popular version of photobucket or flickr. And when I go on, I don't get that "feeling" that I used to when I used to go on back in the days. A lot of my friends have deactivated and most others aren't on much. Unsuprisingly I might add.

veyron5• 14 years ago

"Investors were looking at this company as they did many other things they invested in."

tl;dr: Investors were looking for the IPO pop and then dumping it. Problem is, if everyone follows that idea, there's no upside left.

It was obvious from when FB first started trading on SecondMarket that the "IPO pop" would happen before the IPO. The IPO pop stems from a supply/demand mismatch (lots of people want to get in but are unable to). And because the accredited investors got in before the IPO, the only people left were "retail" investors (and we know how that story ended). Many analysts and investors don't understand that key point, which is why a lot of people were caught with their pants down.

FB new low (18.23), down 52% from 38 IPO price

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