Comments on: Are you seriously thinking of buying Facebook shares? http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: CDN_Rebel http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39062 Wed, 16 May 2012 05:30:07 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39062 Considering they’ve up their IPO price 50% since the initial announcement I doubt there is much more than a 24hr spike. The stock that comes to mind is Tim Hortons; in Canada it was huge news and everyone wanted a piece, the IPO re-upped a couple of times, the stock spiked 30% the first day, gave it all back the next few days, flat-lined for 3 yrs (literally had a 2% range over that time.) Until this year it never reached its first day highs – five years later!

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39044 Tue, 15 May 2012 19:27:54 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39044 I think you called this one right, Felix – following is the title of an article on CNN Money right now: “Seniors clamoring to invest in Facebook IPO”.

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By: weiwentg http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39042 Tue, 15 May 2012 18:27:38 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39042 Facebook is such a hot IPO that it’s likely to be overvalued. Buying the shares would most likely be a momentum trade, and I don’t do those.

I’d likely buy the shares. I think that Facebook is going to dominate its niche. It could be very, very profitable in the long term. But I’m not buying at the IPO price.

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39041 Tue, 15 May 2012 18:05:26 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39041 >> the sheer number of people who use it must count for something I suppose.

It only counts if it can be monetized. The only way Facebook can do that is if it can fully engage the power of social networks to influence purchases as groups; in other words, to create the kind of buzz across networks that result in trends of mass purchases. Think meme or flash mob for the commercial world – all of a sudden everyone in our network has the same new trinket.

Can Facebook enable those sorts of influences? I am doubtful, but I’m also a lousy prognosticator.

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By: realist50 http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39040 Tue, 15 May 2012 17:28:31 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39040 Expanding on the points made by TFF and TinyTim1, the fallacious chain of logic followed by too many retail investors (and superficial talking heads) is popular product/service necessarily equals good company/business model and good company/business model necessarily equals good stock. Plenty of late 1990’s dot-coms were in the first category, along with (in my opinion) Groupon and Twitter. Expanding beyond tech, look at the airline industry – ubiquitous service whose use has grown dramatically over the past couple generations, yet the industry as a whole struggles to be profitable. Facebook is a profitable company with a sound business model, but I can’t see how it’s a good stock at this valuation. As pointed out, though, there’s always the greater fool theory in the short term.

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By: TinyTim1 http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39037 Tue, 15 May 2012 17:02:46 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39037 Given the hype a one-day punt with 5% of AUM might be worth it if you can get any allocation.

The fundamental valuation doesn’t stack up but since when has that mattered in Web2.0.

Price discovery >24 hours.

Caveat emptor!

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By: TFF http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39036 Tue, 15 May 2012 16:45:28 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39036 Try discussing this issue with a 9 year old…

My son eloquently explained to me why it typically makes sense to buy something that is popular. As he put it, if a car is popular, then many people are convinced it is good.

Since your average investor is only slightly more sophisticated than a 9 year old, it is no surprise that they are jumping for Facebook shares. Definitely popular, and what more recommendation do you need?

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By: SouthNorth http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39035 Tue, 15 May 2012 16:39:54 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39035 As someone who grew up in Rockville Centre and now lives in the South, I can say that RVC is in no way a representative slice of America. It is a first-ring, NYC suburb full of relatively well-off people, many of whom work in financial services, and many of whom wish the late 1990s boom would come back. That said, I agree that the hype about Facebook is silly and thee valuations puzzling. The strength of Facebook is the network, but everything else is not so hot.

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By: FifthDecade http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39034 Tue, 15 May 2012 16:25:45 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39034 Perhaps because I don’t live in a place where you can advertise on anything and where everything is advertised on, I don’t see Facebook as a good investment. But then, I couldn’t see why Google was valued at $5bn at its IPO either and just look at it now! So when it comes to social media and Web 2.0 stuff, I seem to be too rooted on firm ground to speculate on this one.

Anyway, as has been said, IPOs aren’t what they were in the 90s, profits are almost always scooped up in revaluations prior to the IPO (as seems to have happened here) after which they stay flat, or join the others which fall in value. A valuation of $100bn (the same as Google) does seem a bit steep considering Google has first mover advantage on the internet ad market.

If I were going to invest, I certainly wouldn’t bet the farm on it, but the sheer number of people who use it must count for something I suppose.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/05/15/are-you-seriously-thinking-of-buying-facebook-shares/comment-page-1/#comment-39030 Tue, 15 May 2012 15:48:34 +0000 http://blogs.reuters.com/felix-salmon/?p=14057#comment-39030 It’s ironic that Blodgett is calling Facebook “muppet bait”, because Blodgett 1.0 would have been the putting the bait on the hooks. Has he ever publicly acknowledged what a fraud he was, by publicly pushing stocks that he was knocking privately?

@right, Felix has lots of readers who would never be part of his social circle. They almost always resort to name calling and insults, but they still read this blog so they insult people and call them names.

If there wasn’t a facebook IPO, there would be a twitter one, and they would probably be even more over-priced. Or some other IPO, as America loves lotteries, even when the only winners are the ticket sellers.

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