SFGirl

[TheCatsMeow]

From lurking your posts before, I gather that you/your husband works/worked at Facebook. Why is the stock doing so poorly? I really expected something better. Is there something the public doesn't know? Thanks.

[niq]

May 21, 2012 18:55:06 GMT -5 @TheCatsMeow said:

From lurking your posts before, I gather that you/your husband works/worked at Facebook. Why is the stock doing so poorly? I really expected something better. Is there something the public doesn't know? Thanks.

I know this sounds strange but the stock staying mostly flat post-IPO is a good sign. If the stock jumps it means that the IPO underwriters underpriced the stock, and the company could have given away a smaller %age of the company to raise the same amount of cash. Because it was a high profile IPO, Facebook was already getting better pricing on underwriting fees than most companies. And now they seem to have gotten the best share price they could.

Obvs if you are an individual FB employee with a handful of shares or options, the more the stock goes up the better. But for Facebook as a company holding flat is the best thing that can happen.

FB's valuation doesn't match current revenues at all. You have to believe that Facebook can both (a) increase the number of users -- hard to do when you already have almost a billion "users", and (b) increase the amount of revenue per user by a pretty large multiple. There have been a fair number of articles in the finance press starting to question whether or not FB can ever hit those targets. Are the skeptics right? I don't think anyone knows at this point.

The shares were sold in the $34-$38 range, so the current price is at the low end of the IPO. Mostly I would wait a few quarters to see what happens.

(I don't work for FB. I went to college with a fair number of people who have been at FB since 2006 or even earlier, I talk to them a bit about what the company does, not from a money perspective but from a technical & privacy perspective. So I don't have any inside knowledge but yakking about the FB IPO has been a water cooler conversation in the tech industry for a while now .