Financial world going nuts over Facebook IPO

Thumbs up for FB!

You can’t turn anywhere without seeing yet another story or headline about the Facebook IPO. What price will be set for the offering? Current wisdom said $38 a share.

What will the current shareowners do with all their money? Will the taxes on it save the state of California? Most of the shareowners are in California. Will the proceeds from the sale save retailers and Silicon Valley real estate agencies?

It’s a Pop culture event, too. The topic is trending on both Yahoo and Google. Finally, after a series of delays, it happened. But what a letdown… the shares closed a few cents higher than the $38 suggested and actual opening price after a little pop. Guess the hype scared a lot of people away.

The people’s financial advisors, Dave Ramsey and Clark Howard, were urging caution, so that kept most of the little guys out.

But the news cycle must move on. Now, we’re all atwitter, if you’ll pardon the expression, about Mark Zuckerberg’s wedding to his Chinese girlfriend of nine years, who just graduated from med school. You realize, of course, that their children will be gorgeous and brilliant.

Or not.

However, our own biggest gripe about this is the intense hatred and jealousy directed at Mark Zuckerberg. Why?

Has success become so hurtful to the slackers out there that they are driven to hate anyone who does well in the world? Does this explain the same venom directed toward Israel? What has happened to our pop culture? It used to be so much fun.

And what about Jeff, better known as Sorkh Razil, the Red Rascal, of Doonesbury fame?

Sorkh Razil

Have you seen the reader comments about him as his successful novel has taken off and he has just bought a huge mansion? The commenters are begging for a nasty fall for him.

We fervently hope that we return soon to a world where productivity and success are admired and aspired to. This nastiness is bad for the haters’ health.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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2 Responses to Financial world going nuts over Facebook IPO

  1. RD Pierini says:

    It will be interesting to follow the path of the company and its evential maturation as a public company. Assuming that roughly 20% of the investors are “private” everyday people investors and the rest are institutional/Wall Street investors, the company will need to mature fairly rapidly on a few fronts:
    1. To satisfy both types of investors, the company will have to prove that it can generate ad revenue quickly. The P/E of this company will have to be respectible within a quarter or two or the analysts will eat them alive and both investor groups will flee.
    2. To satisfy the institutional investors and a lot of the mature everyday investors, the company and its family will have to project a better image of maturity and maybe showboat a little less trendy. Hoodies are OK running around Silicon Valley but even Jobs wore a blazer over his tee shirt when on Wall Street or when conducting serious business interviews. Besides, Jobs had already proven himself in films and software. Zuckerberg would have to create monster P/E’s quickly in order to be able to keep being trendy. Otherwise he better show that he has a solid professional side that includes sound business management skills capable of running highly capitalized public company.
    3. Assuming about a half of a percent of the everyday investors are 35 or below, the company may be able to skate for a while longer than with the Wall Street or more mature private investors.

    The good news is that a lot of wealth was created with this IPO. This will in turn help the economy in the short and medium term and perhaps even breathe some life into consumer confidence, perhaps. Whether the founders and the employees benefit from this windfall in the long term will have to await the ultimate stock price when they are able to actual sell off their restricted stock. Many IPOs intially give its founders a paper gain that is eventually eroded over time. It is up to Zuckerberg and his team to make sure this does not happen and that $38.00/share is just the beginning for a long term profitable company. Remember, even Apple had to be helped out by Microsoft’s cash some years ago to stay afloat. If Zuckerberg falters, maybe there will be an angel close by…

    • Thanks for the great comment. I only disagree with one, tiny part of it. To me, this is not wealth creation. It is simply moving some of those electrons that some bankers view as dollars from one electronic account into other electronic accounts. Illusion! All illusion!

      Those electrons could have been distributed to humans in the form of pay for productive work. Said humans would use the electrons to buy real goods, like food, clothing, cars, etc. While I have a FB page, I do not think it is a wealth creator. Most software isn’t, except productivity software, like word processors, spreadsheets and the like.

      The FB electrons will pay off the original investors who helped FB pay salaries and build huge buildings – that’s real wealth, too.

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