FACEBOOK IPO M.O.-- screw the employees?

Discussion in 'Wall St. News' started by tortoise, Feb 2, 2012.

  1. tortoise


    Ok. Apparently, Facebook employees are "freaking out" (in the words of an acquaintance, who is one such employee) over the upcoming IPO. "Freaking out" over the amount of money they (allegedly) stand to make. "Freaking out" over the six month lockup period that prevents them from unloading any of the stock until six months after the IPO. "Freaking out" over whether or not to sell some (or all) of their stock right now on the secondary market.

    Here's my theory. My theory is they're getting setup by the big boyz.

    Here's why:


    According to NYT, FB shares will debut at $53, giving the company a book value of $100b. This is full valuation. It suggests that VC investors demanded full value for their shares because they think FB growth (FB already reaches half of the world's internet users -- arguably the half with money) has peaked, but that they believe there will be ample retail demand for fully-valued FB shares due to the understandable hype surrounding the company and its stock.

    The stage is set, in other words, for pump and dump.


    FB shares have been selling most recently on the secondary market for a little less than $32.

    My guess: Institutions are willing to purchase employees' shares now with the knowledge that they'll be able to unload in May for a 50% (or better) markup. Those employees who do hang onto their shares will have to wait until after the election(!) to sell, at which point the market will likely be in the dumper...along with their $5/share FB stock.

    At which point the cycle will begin anew.

    Thoughts, anyone?
  2. sheda


    Not related but made me smile:D
  3. Not sure what the fuss is about. This is all pretty normal for a hyped IPO. And, yes, employees have a good chance of getting screwed in the next six months, if "getting screwed" means only getting a big pile of money instead of a ginormous pile of money.

    The bigger risk is complete lack of focus in the trenches, as people start window-shopping for helicopters and planning hookers-and-blow weekends in Vegas.

    Obladi oblada...
  4. newwurldmn


    That dude has more equity than the COO!
  5. gobar


    same post and same story repeated on et

    First it was LNKD (bubble) then came GRPN and ZNGA

    and now FB is another bubble...

    they made millions in 5 yr with little risk and huge reward.. even the best trader out there cant do it...

    its possible Cali might go from bankrupt state to a healty state again...

    FB will pop up at least 30 or more on opening day
  6. tortoise


    Yes. But what will its shares go for in November?

  7. printz0r


    Unlike linkeden or pandora, facebook is a monopoly. It monopolizes because of its large user base. No one is going to other social networks, which are arguably better, because everyone already uses facebook. Google + is lame. Facebook also can keep its business by expanding their integration with other technology. Starting with cell phone integration, facebook will probably continue to expand their website into the fabric of society.

    A monopoly on social structure is a cash cow! Its a paradigm shift where the norm of society will communicate through the internet. If facebook has a monopoly on this, then their stock price will be go through the roof.

  8. Execution on new ideas and services to take money out of users pockets is key to maintain these lofty valuations. On the other hand FB is rolling out the new timeline look which is inferior to the old one, which means it now has its own share of beancounting narcissists calling the shots. AFew more missteps and in 10 years FB could very well end up as MySpace.
  9. Nicely said, agree 100%

  10. It's up to 40 now.
    #10     Feb 4, 2012