Monday, 21 May 2012

Facebook Tumbles Below Issue Price as Investors Scramble to Sell Shares

THE DAILY TELEGRAPH: More than $10bn (£6.3bn) was wiped off Facebook's value on its first full day as a public company, rattling investors and provoking criticism of the social network's banking advisers.

Facebook slumped as much as 13pc over the first hour of trading in New York as shareholders scrambled to sell shares in what had been pitched as the greatest growth story of the decade,

The company's founder Mark Zuckerberg, who married his long-term girlfriend over the weekend, saw the value of his fortune drop by more than $2bn to just under $17bn.

"The market is now collectively reflecting the real risks around Facebook," said Brian Wieser, an analyst at Pivotal Research Group, which has a "sell" rating on the company. "The danger for Facebook, is that when you price it very high, the risks to that price now become the overarching narrative for the company."

The much vaunted $104bn flotation – the largest ever by a US technology company – is rapidly turning into a major embarrassment for the social networking site and Wall Street. Technical problems suffered by Nasdaq delayed the opening on Friday.

The company's main banking adviser Morgan Stanley is thought to have bought up shares in significant volumes to support Facebook's stock after the lacklustre float last week. That support is likely to have been withdrawn in part yesterday, accentuating the share price fall. » | Richard Blackden, US business editor | Monday, May 21, 2012

My comment:

Facebook is a bubble just waiting to burst. It's worthless tripe hyped up by people who should know better. Just goes to show how little the investors know about investing. How can a company that deals in chit-chat, gossip, and banalities be worth so much? What does Facebook own, what are its assets? What does it make? What business experience do these nerds have? What does it contribute in real terms to the economy? I think the answer to all those questions is a resounding sweet little, or even nothing. Facebook will sooner or later go the way of all the other bubbles. It will fart its way into the four winds. – © Mark

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