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FaceBook Investors Zuckerberged, 36% Crash, Clueless Telegraph Implies Cheap at $38 But Expensive at $29

Companies / Mainstream Media May 30, 2012 - 12:51 AM GMT

By: Nadeem_Walayat

Companies

Best Financial Markets Analysis ArticleFacebook Investors have most definitely been Zuckerberged as the Facebook stock price has crashed by 36% since its first day trading high of $45, currently down about 25% on its $38 IPO with more losses to come.


Hours prior to the IPO of Friday 18th May 2012, I made my opinion crystal clear on the Facebook IPO (FaceBook $100 Billion Internet IPO Emperor Has No Clothes, Investors Could Lose 85% ) that it was ridiculously priced and probability favoured an ultimate 85% price crash by virtue of the fact that its valuation at over X100 earnings were just as crazy as anything seen at the very peak of the last dot com mania, especially as its revenue growth was already flat lining.

The reality is even worse for subsequently digging into the Facebook figures reveal the IPO was priced at more than X150 earnings!, This and other subsequent revelations is prompting legal action by investors who having realised they have bought into pure media hype, who have now gone crying to their lawyers. The only problem is that the facts were already apparent for many months PRIOR to the IPO, so I doubt legal action will go very far.

However, I can well understand how the mass of retail investors were led baahing like sheep to the Wall Street slaughterhouse, because it does not matter how many voices of reason there were in the alternative media ? Passion driven, could not care less about upsetting advertisers free media ? Because all voices were easily drowned out by the clueless mainstream media that is populated by journalists who refer to academics for their facts the result of which tends to be the blind leading the blind which can be financially very dangerous when real world investing decisions are involved.

For instance back on IPO day, the Telegraph was pushing a story out as to why the Facebook stock price would climb higher!

18th May - Telegraph view: Expect Facebook share price to climb

The story shows that the Telegraph whilst having virtually the same facts as me at hand , i.e. the IPO trading on X100 earnings and valued at over $100 billion, instead took the exact opposite line that the stock price would rally and not fall for several years!

The Telegraph's Katherine Rushton predicts that the share price will rise.

As Facebook began trading on the stock market, the Telegraph's Media, Telecoms and Technology Editor describes how the initial excitement of the flotation might pan out.

"I would expect that the share price is going to climb quite substantially and probably stay at quite a good level for a few years," she said.

And what's worse is apparently the Telegraph's Media editor made the statement AFTER the stock rose to $45 and started its fall back to the $38 IPO price! Investors who consistently put their own money on the line would fully understand that the close of $38.23 and low of $38 were highly suspect that stank of artificial support of the stock price to prevent a negative IPO close, a huge warning for the stock price's future prospects.

"We can't judge [Facebook's] success in these early days and early hours," Ms Rushton added.

And what about today, less than 2 weeks on ?

What is the Telegraph's Katherine Rushton now saying about Facebook, is it still "going to climb quite substantially and probably stay at quite a good level for a few years," ?

30th May 2012 - Telegraph - Facebook crashes below $30 in 'worst IPO in a decade'

The social network has lost more than a fifth of its value since its faltering Wall Street debut on May 18, while its 28-year-old founder Mark Zuckerberg has been honeymooning in Rome. It is now unlikely to recover in the short term, analysts claimed.

After placing at $38, Facebook’s shares briefly peaked at $45 before sinking back to $38.25 on their first day of trading. They have fallen every day since then, and today plummeted nearly 10pc to a low of $28.84 at the close in New York.

And then dear reader you wonder why 90% of investors and traders lose, they LOSE because 99% of what they are exposed to is WORTHLESS. Those with the loudest voices (mainstream press) are constantly clouding your judgement with clueless gibberish. Your literally better off by flipping a coin ! At least you will have a 50/50 chance rather than less than 10%.

Your analyst counting down to euro-zone financial armageddon.

Source and Comments: http://www.marketoracle.co.uk/Article34901.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2012 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Scott
30 May 12, 10:15
newsletter updating on financial armageddon

"I'll send out a newsletter updating on financial armageddon expectations over the next few days, weekend at the latest.

But yes, Panic is in the air!"

Hello Nadeem,

I was wondering if you were able to get to this on the weekend.

Apologies for asking and any impatience implied.

Sincerely,

Scott

PS. Hope this post works....


Nadeem_Walayat
30 May 12, 18:00
Financial Armageddon NL

Hi

Its 80% done, I will likely send it out tommorrow.

Best

NW


DRS
30 May 12, 20:04
Video Asserts a Deflationary Depression Is Coming

Hi Nadeem,

What do you make of this video:

Video Asserts a Deflationary Depression Is Coming

http://www.hsdent.com/replay052012/index.html

Some say hyper-inflation is coming but this video states the opposite.

Who to believe? Surely there is a method, an objective analysis that concludes which one it will be rather than a subjective view.

Thanks.


Kuli
31 May 12, 06:58
Financial Amageddon

HI,

Please issue Financial Amageddon info asap as im sure we are all waiting eargly and keep up the good work.

Regards

Kuli


Steve
31 May 12, 15:16
Financial Armageddon???

I thought it was only the blogosphere and media hounds that liked to sensationalize so.


BLOGOSPHERE
31 May 12, 20:41
the great collapse of western civilization

AHHH YES! We will see the great collapse of western civilization and the world. Get in your bunker because there will be martial law with the military on the streets. Your days of freedom are counting down because after the collapse you will be a slave and all your wealth will be confiscated!


Nadeem_Walayat
31 May 12, 23:43
FA coming...
Hi

It may be late, but it will still be ahead of the curve ;)

Heres a taster -



I don't think I will be able to send it out before Saturday.

Best

NW

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