Greetings, all, In my opinion, Facebook is the ultimate in self-preoccupied silliness. If any of my brokers suggested buying Facebook shares, he would immediately lose my account.
But then, there will be fools who do rush in, or persons who don't care whether their investments contribute to society or to its sicknesses. I think, Keith, that your thought that Facebook is pushing up their IPO because they realize that time is working against them is astute. Fortunately, there are a lot of good investments available, and ones that won't bring a flush of embarrassment to the investor. Cheers, Lawry On Feb 2, 2012, at 4:06 AM, Keith Hudson wrote: > There's no doubt that the stock exchanges in Asia, America and Europe have > been in a dither for the past few months, and particularly in the last couple > of weeks. Share prices have been expected to double-dip to new lows by the > economic-pessimists, or to rise exuberantly by the optimists who see economic > growth ahead of us. Both sets of opinionaters are agreed, however, that we > are presently poised in a very dangerous situation. Consumer sales and house > prices in America are still sinking. Eurozone problems are still unresolved. > China is precariously balanced between making a soft or a hard landing from > high inflation. With one or two small exceptions, all advanced governments > are seriously in debt, and China probably also if the true balance sheets of > its largest city governments were known. > > In my opinion, the final straw may be the fate of the largest public > flotation ever by an Internet company, Facebook. Now that Facebook has > suddenly brought forward its expected 2013 share offering to May this year, > hysteria has been growing. Indeed, I think it has been Facebook alone which > has caused shares generally to rise in the last couple of days. Consensually > valued at $100 billion, a small tranche of its shares is expected to realize > between $5 billion and $10 billion and its founder, Marc Zuckerberg, with 24% > of its shares, is likely to be able to tuck at least $2 billion into his bank > account. > > So far, there is every reason to believe that the initial offering will be > wildly successful. Large hedge funds and other big investors might be making > large purchases and the initial price of the shares might go sky-high. The > crucial point, however, is whether they will be buying the shares because of > their long-term income prospects or whether they intend to sell their shares > fairly quickly afterwards and make a big profit. > > If I were a hedge fund investor I would be guided by two facts already known > about Facebook. One is that although it is receiving a huge and growing > advertising income from, it is said, a million companies, they are mainly > banner ads. Few of them are specific product ads as they are on Google which > are there as immediate byproducts of specific searches for information by > individuals. Furthermore, if any of the billion or more Facebook users want a > specific product then they'll go to specific product websites or to Google, > or Amazon or EBay or their equivalent in their country. Because of this lack > of specificity, Facebook has a very low ClickThroughRate (CTR) for its ads. > Whereas Google has a CTR of 8%, Facebook's is 0.04%. Moreover, Facebook's > previous Online Sales Manager, Sarah Smith, says that the CTR from even the > most successful banner ads falls within two weeks of their initial > appearance. > > I would also note that since its saturation coverage of America and Canada, > Facebook lost 7 million users in 2011. How many will it lose in 2012? I > suspect that the reason why Facebook's Initial Public Offering was brought > forward from its expected launch in 2013 was because it will undoubtedly lose > even more users from these two countries during this year. I would regard > this as ominous. Even though Facebook may still grow in leaps and bounds for > a year or two in the rest of the world (though not in China, where it's > prevented), its users might well follow the American pattern. > > For these two reasons, if I were a hedge fund investor I would want to learn > a great many more up-to-date details from the documentation that Facebook > will have to lodge with the regulatory authorities. And, if these don't fully > allay my fears then I'll not apply for shares in the first place, not only > because of the risk I'll be taking but also because many more potential > investors may have come to the same conclusion and the shares may flop from > the start. > > In short, despite all the fantastic razzmattaz which is now gearing up in the > media, Facebook's launch may well be a disaster for Marc Zuckerberg. Indeed, > it's possible that the present hysteria will start declining in the course of > this month and possibly even more so during April when more facts emerge. The > Initial Public Offering may never take place at all. > > It might already be happening. The mini-exuberance in share prices of the > last two days has already subsided. Maybe a few thousand key investment > managers and hedge funders have, like me, decided to read more about Facebook > on Wikipedia in the last day or two and their mood has already fallen back to > their previous ground-state of indecision as to where to invest next. A > repeat version of the 2000 dotcom crash is not going to happen until at least > the 2008 credit-crunch is finally out of the way. There could still be a > world-wide currency catastrophe due to an as-yet unknown trigger without > Facebook needing to be the catalyst. > > Keith > > Keith Hudson, Saltford, England http://allisstatus.wordpress.com > > > _______________________________________________ > Futurework mailing list > [email protected] > https://lists.uwaterloo.ca/mailman/listinfo/futurework
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