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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (47455)	2/1/2012 7:17:58 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 70282

Facebook's IPO: Do not buy by Molly Wood February 1, 2012 2:29 PM PST Facebook just filed to go public after a long, tense wait today, and so it seems like a good time to remind everyone who's not in tech and finance to just forget it's even happening. Facebook's IPO will make some bankers, some venture capitalists, some privileged early investors, and some early employees rich. Everyone else should steer clear. For one thing, you'll have to steer clear, at least at first. What happened today is simply a filing for a public offering--meaning that you Normals will have to wait months before you can buy Facebook stock, if you can actually get any. When that day comes, though, I'm begging you: do not buy. As the Gizmodo article linked above points out so well, the common stock (there's a reason they call it that) will only become available after the major investors have stripped all the meat off the bones. You're not going to get the chance to buy low--that privilege is reserved for the one-percenters. Meanwhile, there are a lot of reasons investors and financiers are pushing hard for a massive Facebook IPO--reasons that have nothing to do with you and your portfolio. For one thing, the filing is estimated to generate some $500 million in fees for the investment banks involved. Also, Wall Street needs a win--the hope is that a successful outing will float all boats, attracting nervous investors back to the scary, scary stock market. Even the state of California is hoping for a payday in the form of capital gains taxes. So, don't get me wrong: a successful Facebook IPO isn't a bad thing: it's the system doing what the system does, and it might even get some potholes filled along the way. But a lot of individual investors may, down the road, be tempted to buy into Facebook thinking that its household name status, like Coke or IBM back in the day, means it's a blue-chip buy--a steal at any price. Personally, I'll be pretty surprised if that's true. Although Facebook's IPO filing points to it making some serious money (profit has more than quadrupled in the last two years), growth is reportedly slowing. After all, how much growth potential is there in a company that already has 845 million users, per its filing? I don't doubt the company will be successful for a long time, but I suspect the days of hockey-stick growth are over. A wise man tells me often that you only make money by not doing what everyone else is doing. Even if I could invest in Facebook, something tells me it would only disappoint. Molly Wood is an executive editor at CNET, host of the Buzz Report, Buzz Out Loud, and Tech Review at CNET TV, and author of the Molly Rants blog. When she's not enraging fanboys of all stripes, she can be found offering tech opinions on CBS and elsewhere, and offering opinions on everything else to anyone who will listen. [Johnny: I agree with this appraisal. Investors and customers are finally getting a look at their operating model now that they are going public. I hear a news stories that suggest 1/2 of their users are access Facebook through mobile devices. Unfortunately, people don't see the ads when they access Facebook through mobile devices due to the limitation of the mobile browsers. As an advertiser I will be re-evaluating my subscription fees if I was only reaching 1/2 of the audience I expected. It is still a good way to reach people, but are the ad rates approrpriate for the viewership. For many businesses it will be for others it won't. Getting to see the warts of their business model with the good for the first time gives people a chance to really evaluate their business model separated from the hype.]