There Is No Plan

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Everyone’s Wrong: Facebook Played Its IPO Brilliantly.

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Zuckerberg’s sitting on $10 billion. Not bad
for some vaporware. 

I know, I know, the CW on this is quite the opposite, but in the light of what institutions, analysts, journos and just about everyone has been saying for months about FB’s mobile monetization woes, fifteen bucks is a very fat benchmark for the company (and the price is currently $20). Everyone’s dumping the desktop platform – and Facebook’s share of the miniscule mobile ad-spend is, let’s just say, miniscule. With its market cap still at still half that of McDonalds, one has to ask, how did they do that!?

The answer may be very simply this. That when the pump machine was working overtime, the guys backing this IPO knew the truth. They knew retail investors were going to climb on and then take a bath. But here’s the thing. They were going to take a mobile-concern driven 50% haircut if they’d priced the IPO at a fairer $20, and if they did that, the price would now be a thin and unhealthy $10, so they went all out and piled on, knowing that with the drop, they’d still be in the $15-20 range. They used the vastly over-inflated venture capital “valuation” of the company based on past equity purchases, to suspend disbelief that $38 was just a ridiculous opening price. And now they’re sitting pretty with a good price as the market’s low.

In this case there may well have been a plan at Facebook. Too bad the rest of the “analysts” and retail schmucks didn’t have one, or the price would be where it should be – at $10.

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Written by coolrebel

September 25, 2012 at 10:04 am

Posted in Facebook, IPO, Wall Street

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