Now that the over priced Facebook IPO has come and rightfully
tanked, let’s take a revealing look beneath the over-hyped illusion of the
social-networking website itself ~ but more importantly what its IPO fiasco
tells us about a blatantly rigged stock market, where short term greed still
overrides fairness, and how we all got Zuckered : Allen
L Roland
I’ve never been a big fan or advocate of
Facebook although as a columnist I use it as a publishing platform among many
other publishing platforms. I was asked by the producers of my monthly radio
show ( Truth Talk ) to join in order to broaden their radio
exposure ~ but I spend virtually no daily time on Facebook, probably
know less than 10% of my so-called “friends” and have never clicked on a
Facebook Ad. I’ve also spent 11 years as an Investment banker, some of it on
Wall Street, and know how the Wall Street casino really works.
So anyone who is valuing
Facebook by its user base is obviously counting
"eye balls" that flat out do not exist. More
important...here's some extremely insightful humor, courtesy of the Onion, that
sums up the short and long term prospects of Facebook in 60 seconds...
Video:
Photo of Mark Zuckerberg and his overjoyed Facebook insider
friends who made Billions on an inflated bubble that rightfully tanked but at
least lived up to their slogans of “Move fast and break things” and “Done is
better than perfect”.
It's pretty clear now that the Facebook IPO was a fiasco. At an outrageous opening price of
$38 dollars a share ~
it was 100 times earnings “among friends.”
Today it closed at approximately $26.00 dollars
a share ~ a loss of millions to those who bought it at the opening price and
thought it was another google. Before today, the stock
has lost almost 30 percent since it started trading at $38 on May 18.
But yesterday it was also revealed that Facebook
founder Mark Zuckerberg knew company shares were overpriced before the May 18
initial public offering and allegedly quietly dumped around $1 billion in
shares ~ according to TMZ;
“A new lawsuit claims Mark Zuckerberg
pulled a billion dollar fast one on Facebook investors," TMZ reports;
"The class action lawsuit ~ filed by disgruntled Facebook shareholders ~
claims the 28-year-old CEO had inside info that the stock was grossly
overvalued, and he protected his own financial hide by quickly unloading a
ton of Facebook stock."
"This is the second time in two weeks a group of FB shareholders have joined together to accuse the mogul of withholding information."
TMZ did not cite any sources or specific financial details.
"The lawsuit claims Zuckerberg and his cronies hid the fact that there was a foundational flaw in the Facebook business model ~ that there was not nearly enough advertising revenue to support a stock valued at $38 a share," TMZ adds.
"The lawsuit claims Morgan Stanley, JPMorgan, and Goldman Sachs ~ all sounded the alarm before the IPO that Facebook was seriously overvalued, but that information was 'selectively disclosed' to only the largest investors."
Read more: http://www.moneynews.com/FinanceNews/Zuckerberg-Facebook-Shares-ipo/2012/06/05/id/441194
"This is the second time in two weeks a group of FB shareholders have joined together to accuse the mogul of withholding information."
TMZ did not cite any sources or specific financial details.
"The lawsuit claims Zuckerberg and his cronies hid the fact that there was a foundational flaw in the Facebook business model ~ that there was not nearly enough advertising revenue to support a stock valued at $38 a share," TMZ adds.
"The lawsuit claims Morgan Stanley, JPMorgan, and Goldman Sachs ~ all sounded the alarm before the IPO that Facebook was seriously overvalued, but that information was 'selectively disclosed' to only the largest investors."
Read more: http://www.moneynews.com/FinanceNews/Zuckerberg-Facebook-Shares-ipo/2012/06/05/id/441194
Here's one guy ( David Weidner )
who wrote 10 Reasons Not To Buy Facebook Before You Buy It Anyway ~ that
got it right before hand and he’s also a user ~ but not a believer ~ who
admits he probably would not pay to use it.
Here’s number 7 ~ which now looks
prophetic as well as the equally relevant number 10;
(10) The ceiling. We may already have hit it with Facebook's valuation.
“Consider that Facebook's 88% growth rate last year was something the company acknowledged was "unsustainable." Or that 10% to 15% of revenue comes from Zynga ZNGA and other game companies that use the Facebook platform. Or everything in this list: skeptical advertisers, a young management team about to become amazingly rich, a history of social-network flameouts, deep-pocketed competition and the privacy issue…. It should give an investor pause, right?
5 minute Weidner Video interview:
Right, David ~ but it’s all in a day's work for Wall Street's chummy club of Investment underwriters and crooked
auditors who are well versed in making stock market fantasies a reality at
everyone else’s expense.
Here’s the glue that holds it all together
~ "Compliant" auditors (i.e. crooks)
Here’s how it works...Francine McKenna ( author of the Auditors ) explains on
Capital Account with Lauren Lyster that Facebook’s earnings or future earnings
are rightfully suspect with obvious conflicts of
interest;
McKenna explains how auditors (in this case,
Ernst & Young) literally cook the books and that there is more than
enough reason to suspect their accounting methods. She also explains how nobody
had really looked under the hood of Facebook and that CEO’s often make up there
own matrix to explain away losses. This would certainly apply to a non-gap
matrix where management decides and manipulates reported earnings in order to
make their fantasy a reality ~ which appears to most certainly be the case with
Farcebook (Facebook).
Video: ( watch first 13 minutes )
Lynn
Parramore correctly writes on AlterNet what the Facebook fiasco tells us about
our rigged Stock market ~ and remember I was part of that scene for over 11
years; “Why does this happen? Well, mostly because the public is playing
a rigged insider game known as the stock market. Generally it goes like
this: An IPO, especially one that has been hyped more than the Second Coming,
makes a load of cash for a select group of inside investors, both those giving
up their shares – people like the founders and the venture capitalists -- and
the privileged group of banks that are underwriting the stock issue. When
the ordinary investor gets to bid for shares on the stock market, the banks
hope to get a big boost in the price, and sail away to their yachts with huge
gains…. Facebook is scrambling to place the blame for the fumbled IPO on
technical glitches at NASDAQ, but it seems that the public is not buying what
they’re selling on that one. No, it looks like Zuckerberg and the
underwriters were just greedy, trying to hustle as much money as possible, the
public be damned.” See article: http://www.alternet.org/economy/155587
Matt
Taibbi, Rolling Stone, definitively nails it when he writes “ I was on the
phone last night with a former hedge fund CEO who was talking about this ~
"Facebook," he said, "is a colossal example of a complete
clusterfuck where everybody wins except the ordinary investor." His
point was that virtually every week now we see stories like this that hint at a
kind of two-tiered market system in which most of the real action takes
place inside an unregulated black-box network of connected insiders who don’t
disclose their relationships or their interests, while everyone else, i.e.
the regular suckers, live in the more tightly-policed world of prospectuses and
quarterly reporting and so on.”
See
The Facebook IPO Clusterf**k
http://readersupportednews.org/opinion2/279-82/11583-the-facebook-ipo-clusterfk
http://readersupportednews.org/opinion2/279-82/11583-the-facebook-ipo-clusterfk
So there you have it, Facebook tanked and what really happened is the
public got Zuckered ~ and get this ~ many of those laughing faces at Farcebook
obviously knew it.
Allen L Roland
Freelance Alternative Press Online columnist
and psychotherapist Allen L Roland
is available for comments, interviews, speaking engagements
and private consultations ( allen@allenroland.com )
Allen L Roland is a practicing
psychotherapist, author and lecturer who also shares a daily political and
social commentary on his weblog
and website allenroland.com
He also guest hosts a monthly national radio show TRUTHTALK on www.conscioustalk.net
The Facebook IPO is dramatic evidence of on going Stock market deception and the obvious need for Wall Street reform.
ReplyDeleteI think that is an interesting point, it made me think a bit. Thanks for sparking my thinking cap. Sometimes I get so much in a rut that I just feel like a record.
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