Facebook Thread

Reading about Facebook as a business the last few months has been interesting. In the last week in particular, it seems about 99% of the public comments on the New York Times and Washington Post sites have been negative on buying the stock. Rarely is there such a consensus in the comments sections, and on what I thought was a somewhat arcane subject (how to price an IPO). Many commenters even call it "Fadbook." The latter was new to me.
That so many seemed to anticipate the decline of the stock from the get-go is impressive. I think Skip W. used to comment here about how widely anticipated events in stocks rarely came to fore. I agree with this. But at the moment, this has been turned on its head. I wonder if many put their money where their mouths are and have shorted the stock.
Facebook's price/earnings ratio of about 80 sure sticks out to me. I guess the packages of the IPO are banking on earnings rising rapidly. I see the forward P/E is about 49. Still no good, AFAIC.
I think those buying Facebook stock are under the psychological delusion that Zuckerberg is a repeat of Jobs and Gates. One might say that sensations like Jobs and Gates rarely repeat. Mr. Zuckerberg does seem to show some smarts by marrying a doctor. Else I do not see him on the same entrepreneurial level as either Steve Jobs or Bill Gates.
I understand Facebook's revenue from present comes from selling advertising space. This is just as newspaper, billboards, radio, and television have done for many years. I do not like the product. (I also do not own any newspaper, radio or TV products, unless they are part of a conglomerate like GE.) So I do not plan to buy any Facebook stock. Still, the history here intrigues.
I read more about IPOs as a result of all the chatter here. I feel Ben Graham would say they are really not something for the masses, even of the "Intelligent Investor" type. Generally he advises purchasing older, established companies.
Does anything stick out to others here regarding Facebook and its promise (or non-promise) as a business?
Reply to
Elle writes:
Facebook's IPO was actually a lot different than most IPOs. Not in the mechanics, legalities, or anything like that, but rather that it had already essentially IPOd (in all but legal name) on SecondMarket.com well before the real IPO.
So there was *lots* more price discovery going on pre-real-IPO with Facebook than is with most IPOs.
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Rich Carreiro                            rlc-news@rlcarr.com
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Rich Carreiro

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