Tag Archives: Nasdaq

When things are too good to be true; Facebook

A memory of a coach telling us as players, “If you dance in the end zone, you better be able to back it up” comes to mind with Facebook, especially given the events that have occurred over the last few business days.

While many of the stories we have seen come from a slant of “The game is rigged!” our thoughts again focus on a price or capitalization that was assumed when the Facebook IPO occurred.

Yes there were issues, GM pulled their advertising, the NASDAQ had opening problems, Morgan and Goldman (lead underwriters) have had mishaps before. While all of these items are true, in the end it appears price does matter even for an alleged very hot issue.

While there are certainly sharks swimming in the Wall Street ocean, the valuations and growth rates used to establish the price of Facebook may have been aggressive, making us feel like, for now, Wall Street is a more realistic place.

Here is a chart of the action since Facebook started trading through mid-day today.

Have a great Tuesday/Monday!




We are not recommending any investment (long or short) in Facebook and do not own or have any shares short at this time.


Facebook Proves Price Does Matter

On Friday the much awaited Facebook IPO began trading. With a storm of issues surrounded this initial offering, it appears that fundamentals overwhelmed hype, which is not always the case. I happened to be with a group of multiple professional investors on Friday, and while we all thought the price was rich, no one called the disappointing (to Wall Street) price action that has ensued.

The Facebook IPO was scheduled for a later am morning issuance so the employees and managers of the company could have a convenient 9 am pacific time viewing. While the NASDAQ made concessions and moved the original open to the west coast, they may have wished they had stayed in New York. After almost 30 minutes of unscheduled delays, trading began as orders were rushed, dumped, and what only a legal battle will soon determine, left few knowing who actually owned shares by the end of the day.

Not withstanding the bad opening and the glitches in the systems, it appears a richly valued company with extreme expectations has done the unthinkable “Broke the Offering price” in less than one day of its trading.

Here is a chart through mid morning trading:

Time will tell how this turns out, but given the questions we have heard from many, we thought it worth mentioning this Monday morning!

Have a Great Day!