PUMP and DUMP!!!
John Maxfield wrote a strong indictment of the Wall Street inner circle who seem to have played some clients off against the rest by maybe giving information about possible problems at FB that could materially affect the valuation given to the company by buyers.
Buyers might have even turned down the offering of over-priced shares of FB. To my mind, the stock exchange listing FB needs to be looked at for any participation in the scheme to sell FB to one group of 'clients' while another coterie of 'clients was going short on the stock.
Also, a large percentage of the offering was made up of insiders selling their 'founding' shares. which is a "Red Flag" in itself.
"57% of the Facebook stock being offered in the IPO is coming from insiders selling shares."
For some context on how unusual that is, the Wall Street Journal reports that only 37% of Google's IPO offering came from insiders, and 0% for Amazon and Yahoo came from insiders.
In Facebook's case, it's going public at a later stage in its development, so investors are itching to get out. And word is that Facebook asked insiders to sell during the IPO so they don't crush the stock when the lock-up period ends."
Oops! Wall Street Did It Again - DailyFinance
By John Maxfield, The Motley Fool
Posted 7:28PM 05/31/12
Posted under: Investing
Wall Street's role in the orchestrated Facebook debacle including Lloyd Blankfein, the CEO of Goldman Sachs (NYS: GS)
Eric Bleeker wrote that while Goldman was underwriting Facebook's IPO, it was also lending out shares to short sellers who "were likely acting on the knowledge of Facebook estimates that were reduced downward just days earlier -- again, information that was only selectively disseminated and wasn't known by the average individual investor racing to buy Facebook shares."
First, run in the opposite direction anytime somebody insinuates a change in paradigm.
Revenue, sales, and other traditional valuation metric were discarded during the dotcom bubble in favor of measurements such as "eyeballs" -- that is, page views -- only to be adopted again once the dust finally settled.
The same can be said of Facebook. At the IPO price of $38, the social networking giant was valued at 97 times earnings despite the fact that nobody knows for sure how it intends to monetize its user base.
Second, be wary of anything in which you're competing against Wall Street for a piece of, as they see it, their pie.
The investment banks on Wall Street didn't float Facebook's IPO so individual investors could get rich.
They did it so they could get rich, collecting an estimated $100 million in underwriting fees.
Source:
http://www.dailyfinance.com/2012/05/31/oops-wall-street-did-it-again/
by John Maxfield, The Motley Fool
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