Facebook IPO: an anatomy of Wall Street overreach

[marmar]

Facebook IPO: an anatomy of Wall Street overreach
Before trading, Facebook's bankers were ready to count their profits in billions. By close, they'd had to bale out their own IPO

Heidi Moore
guardian.co.uk, Friday 18 May 2012


The day of Facebook's first day of trading as a public company brought with it a strange perspective: the highest manifestation of a social media bubble and its ugly aftermath, all in the span of a few hours. Who would have thought that Facebook's much-hyped IPO – in its bold $16bn size, the apotheosis of uncontrolled, frothy, capitalist ambition – may have been just the thing needed to bring Silicon Valley high spirits back down to earth and send ambitious techies snuggling back into their hoodies?

The day opened with crowds awaiting Facebook's debut in New York's Times Square, waving at cameras. Gleeful Facebook employees, with sugar-plum dreams of newly-minted fortunes, crowded with smiles behind CEO Mark Zuckerberg at the company's Menlo Park headquarters. The Wall Street Journal created a Zuckerberg Wealth-O-Meter ($20bn at the latest count) and the New York Times revealed the subtle-wealth secrets of 1,000 new millionaires created by the IPO.

Just to play a concise version of the parlor game that went around the stock markets, Facebook's market value at $104bn – with $3.7bn of profits – would have made Facebook worth more than: internet megastore Amazon.com; global beverage behemoth PepsiCo; petro-giant Total; BHP Billiton; and McDonald's. It was not far off the valuation of JP Morgan Chase, an international bank with $1tn in assets. Over the previous weeks, one brief glimpse of Mark Zuckerberg in a hoodie, heading to an investor meeting, launched the kind of press coverage we've hardly seen since the Beatles. JP Morgan itself, one of the company's banks, flew the Facebook company flag next to the stars and stripes of the United States, and papered its headquarters with Facebook signs.

......(snip)......

Regular investors – just normal Americans – bought 20% of the Facebook IPO. They are usually known derisively as the "dumb money". They have wised up a bit, perhaps, in the decade since the dotcom bubble. Most of the hype, and the expectation of vast riches, came from Wall Street bankers and professional investors – another sign, perhaps, that the finance industry is trapped in its own bubble, out of touch with American sentiment. ..................(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/cifamerica/2012/may/18/facebook-ipos

[zappaman]

1. Good piece.

Thanks for posting this.
It does seem as if the 99% are wising up to this scam.
And make no mistake, it IS a scam.

[onehandle]

2. Facebook and Google's business model of ad spamming us all is unsustainable.

I have no idea why anyone would think those useless entities that make Nothing have any value.

Boner pill email spammers are being put in jail.

Why not Larry Page, Eric Schmidt, Mark Zuckerberg, and Eduardo Saverin?

[Sarah Ibarruri]

3. I feel like an oddball at times, but I see no redeeming features in Facebook

I got out of it after realizing how much I disliked the concept of having everything exposed to everyone out there, and everyone being inundated with private information from everyone. I can't think of many more things as abhorrent, and I can't imagine what people like about it.

[zeemike]

6. I guess I am an oddball too.

I have never seen the attraction in it...it serves no purpose for me.

[Sarah Ibarruri]

7. It's useless and I think it leads to nothing positive but undue exposure of

privacy and private matters.

[exboyfil]

4. The thing I worry about is the unwilling money

going into it. Pension funds, large mutual funds, actively managed retirement accounts, 529s etc. It does sound like Bono is looking to spend most of his $1B in Africa (bless him).

[Turbineguy]

5. It's been that large

sucking sound heard in the markets for weeks. Facebook is not worth $104 (or whatever) billions.

[Sarah Ibarruri]

8. It amazes me how such trash as this can make this much money nt