For those people that bought Facebook’s stock at IPO price and then got burned on the second day of trading, suck it in and stop blaming everyone, look in the mirror because it was your greed that did you in.
Lawsuits are flying all over the place with the most recent happening on Wednesday, May 23, alleging that Facebook’s management knew that revenue was in a decline and that some of the underwriters downgraded the revenue forecasts of Facebook, but only told a selected group; this is contrary to the law because the disclosure from underwriters would have to be public knowledge so everyone would have a chance to make the “right” decision whether to buy the stock or not.
As of the latest closing price yesterday, the stock price was sitting at $32 from its IPO price of $38, a drop of $6 and $13 less from its all-time high of $45 so far.
For those that are crying foul over the stock price’s decline, they should have realized that there is no guarantee that the stock is expected to go up in value so they can make a quick buck. It’s not like these people didn’t get the memo that Facebook is overpriced and, at the moment, does not have a clear plan as to how they are going to monetize their 900 million users. Anything these litigators should have read the prospectus and then do a better job on the due diligence of what they are buying.
From the beginning, since we learned that Facebook was going to take the company through an IPO, there have been backroom deals done already and to some degree, it was orchestrated in an open manner that this company is different and unique in so many different ways. They were selling shares even before the official IPO so anyone who was foolish enough to buy Facebook stock on the IPO day is a fool.
However, we are guessing that the drop in price is also a charade too as some are probably trying to short the stock. In about one or two months’ time don’t be surprised to see the stock pop unexpectedly due to a sudden interest. Those who bought shares, hold on to them and buy now when it is dipping.
Because at the end of the day, having 900 million active users base is quite an attractive position to be in as the management will have to come up with ideas on how the monetization thing is going to work. As a matter of fact, with that amount of loyal users, we can think of about 10 different revenue generating ideas that Facebook can get into easily without even straining a brain cell.
So stop crying over your spill milk for those that bought at the stock’s IPO and make some cheddar out of it because when Google was at $80 we thought that the only way was down and that Google was only a passing fad, but at $609.46 today, we are kicking ourselves right now.