Breakingviews

Facebook IPO features best and worst of capitalism

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Facebook’s initial public offering on Friday showcases the best and worst sides of capitalism. Execrable puffery accompanies the entrepreneurial achievement of transforming a dorm-room project into a company worth over $100 billion in just eight years. Poor corporate governance, Silicon Valley cronyism, breathless pundits spewing misinformation, bankers in hoodies and manic investors are all on display. And yet the flip side of such indulgence is worth admiring. 

Wall Street’s premier event of the year turned into an outright circus, including a 30-minute delay for the shares to start trading on Nasdaq despite considerable anticipation of the mega-volume that ensued. At its most benign, otherwise serious thinkers about capital markets devoted unthinkable amounts of time publicly debating whether founder Mark Zuckerberg’s casual dress was a slight to investors while financiers cravenly sucked up to the 28-year-old. But there’s a darker side to the hoopla, too. 

Greek dilemma might come to head before next poll

By Hugo Dixon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

So the world has to wait until June 17 to find out whether Greece stays in the euro? Not so fast. Things might come to a head even before the next poll if deposit flight accelerates.

Botched bailout rebounds on Bankia

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Bank nationalisations are never pretty, but they are generally supposed to reassure savers. That’s why a report that depositors fled Bankia after the government last week took control of Spain’s fourth-largest lender is so troubling. The government has denied the report, and Bankia’s new chairman said depositors can be absolutely calm. Yet the latest share price plunge inflicts further pain on clients who participated in the lender’s IPO last summer.

Facebook tax witch hunt looks in wrong place

By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

There’s outrage on Capitol Hill about one tangential aspect of Facebook’s initial public offering. U.S. Senators Chuck Schumer and Bob Casey object to co-founder Eduardo Saverin’s tax “duck” on his stake in the social network now that he has given up his U.S. citizenship. But becoming a non-American is expensive and complicated. Lawmakers might instead ask what they’re doing wrong for U.S. expatriates even to consider it. 

Samsung investors should worry less about Apple

By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Samsung investors are worrying too much about Apple. The company’s shares have slid on concern the iPhone’s maker might be buying Japanese memory chips to cut its dependence for parts on its South Korean rival. But Apple’s diversification only reflects how smartphone demand is outpacing parts supply. Apple still needs Samsung and Samsung’s valuation has fallen too far.

Tempting mining valuations aren’t hard to resist

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It’s easy to see the temptation to pile into mining industry bellwethers BHP Billiton and Rio Tinto after the sector’s recent pummelling. The miners’ valuations looked depressed even before the market’s recent Greece-related sell-off. After a near-15 percent slide since May 1, the companies’ shares are trading close to forward enterprise multiples last seen during the dark days of 2008-2009. But any rally could be a way off.

Emerging markets hit by double troubles

By Robert Cole and Jeff Glekin

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Emerging-market investors seem to get hit by trouble near and far. They suffer when euro zone troubles erode investment confidence generally. But they also have their own particular concerns about a slowing China and an intensification of resource nationalism.

Law site’s IPO evokes a future beyond dying firms

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LegalZoom’s planned initial public offering evokes a future beyond dying law firms. It’s coincidence that the U.S. self-help legal website’s $120 million filing has landed just as New York partnership Dewey & LeBoeuf is evaporating. But the rise of the online provider of legal documents sends old-line lawyers a sharp warning.

Oracle suit gives Google a chance not to be evil

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

An Oracle lawsuit is giving Google a golden opportunity to regain its non-evil image. The search giant has been thumped lately on privacy, antitrust and governance grounds. But it looks almost virtuous in a patent spat with Larry Ellison’s Oracle.

Facebook winning Keynesian beauty contest

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Give Facebook the tiara. The social network may be worth more than $100 billion on its debut. As a result, the art of valuing Facebook has officially entered what economist John Maynard Keynes called the “beauty contest” realm. In justifying such a lofty number, Facebook’s supporters are resorting to increasingly wacky rationalizations, from the old chestnut monetization of eyeballs to comparing the company to credit scorers. But Facebook’s value, like beauty, is merely in the eyes of the beholder.