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Facebook: please fall to about $20



May 22, 2012 – Comments (2) | RELATED TICKERS: FB

Some in the finance world are wondering about what's going to happen to Facebook now that it's had a busted IPO.

My take is that actually, this is a nascent business with sustainable competitive advantages over its competitors - actually, it doesn't have any real competitors (aside from Renren in China, and China's a special case).

The IPO was just very richly priced. Is it really a busted IPO if the banks managed to sell the shares?

My take is that ideally, owners of private companies conducting IPOs are selling to maximize  their own revenue. After all, that's what I'd do. And they succeeded. And if the share price is falling, then too bad for the suckers who bought.

My other take is that I'd buy Facebook around $20. Not a large position, but I'd buy. 

2 Comments – Post Your Own

#1) On May 22, 2012 at 1:56 PM, leohaas (30.15) wrote:

Why call the IPO 'busted'?

From the company's perspective, it was an enormous success! If the price of the stock would have gone up after the IPO, then the company priced the stock too low. Now the price of the stock is going down after the IPO, the company overpriced the stock, and--considering how much they sold--got away with it. Good for Facebook!

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#2) On May 22, 2012 at 2:54 PM, Frankydontfailme (28.86) wrote:

I agree. Not sure with the arbitrary price of 20, but once it stablizies I will be intrigued.

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