Facebook Share Price

The only people getting ripped off here are those investors who were too slow. Which goes to show why you should invest in funds which have the tools to act quickly, not try to beat the market on your own.

I don't see any practical benefit in banning underwriting.

 

I agree with a lot of that but I don't agree that corporations, "have a certain responsibility for your employees as well as the environment." That is the responsibility of the government. I believe well run companies take care of their employees but there are tons of companies that are not well run. Companies exist to make profits. Sometimes in order to make a profit they will be good to their employees or do some environmental stuff but I don't believe it is a central responsibility. And I don't have a problem with that as long as there are laws in place to protect employees and the environment from abuse.

 

Because then the free market can operate in the form it was supposed to?

 

That's the crux of it. People (conservatives mostly) don't want the laws either because they think that a business owner has a right to screw its employees any way he wants.

 

What does that mean? Put it in practical terms and then you'll have an argument.

 

A "free market" manipulated by financial corporations. Now, where did we last see that?

 

I explained in the OP. FB shares were over valued when they floated. They started to dive and underwriters stepped in to buy up shares, with the sole intention of propping up the price (artificially). This goes against the principle of the free market. It might be legal, but it should be illegal. A lot of smaller investors will have lost a lot of money, while the initial investors will have made a lot of money.

I'd call this wealth re-distribution, something we spend a lot of time condemning the Left for, but it turns out that the "free market" is allowed to do.

 

Exactly, and the people on Right are defending legal fraud.

 

I don't see how this is a problem. Again, this just goes to show why you should leave stock trading to professionals who have the tools to act quickly.

(And "this isn't the way the free market is supposed to operate" is just an empty platitude.)

 

It's insane that you would defend this. We are all tied to the markets and they should operate in an ethical manner. Employing companies to prop up share value during a floatation is not moral, is not a free market policy and should be illegal.

 

The facebook facade proves the corperate control of the internet and the jelly fish like behaviour of the populations around the world.

And Mr Zuckerberg spitting on his users monitor screens and when they wipe off the drool, underneath is reveleaed a (place your advert here)

 

So it's 'immoral' and it's 'not a free market policy'. Specifically, what practical harm does it do?

 

Are you serious?

People bought shares at an artificially elevated price, then they dropped and these people lost money that they shouldn't have lost!

 

This facebook hysteria to make a profit from a social networking site, sums up current society failed philosophy.

Ie free market profit and greed.

But how long will it last for? Now the clock has started against Facebook and Zuckerberg. As one thing that has been proved beyond all doubt with the internet is passing fads being embraced then forgotten.

Will users of facebook put up with adverts over every inche of their screen space as the big corps stuggle to refund their billions. Or will they move on to the next big thing.

 

This doesn't seem like what you said in the OP, but whatever....

Why shouldn't they have lost it? That's the gamble of stock trading: if you buy an underappreciated stock, you'll gain money, but if you buy an overhyped stock like Facebook's IPO, you'll lose money. Facebook could afford to set its IPO at an artificially high price because it knew people would buy it at that price. Investors who lose money on the stock market have only themselves to blame.

 

It's almost like you're being deliberately stupid. But of course that's not the case.

 

FB committed fraud. What it told the general public was that its revenues "might" fall in the future creating the impression that they are increasing at the moment but there is the possibility as in all businesses that it may decrease. What the insiders already knew was that the revenues were already falling. When you leave it to the free market, that is what happens. The small guy is made a fool of by the big guy who makes a killing while the small buy is often ruined. That is exactly why regulation and government is needed. The existing regulations have come into force only after many such other frauds were openly committed. If there were no regulation, the rich with the inside info will always con the little guy with no connections. Its another way for the top 1% to increase their share of wealth while pushing more and more people to the bankruptcy court.

 

Ah, so the problem isn't the process of underwriting itself but the inside information that was given to the underwriters. That makes much more sense than what the OP said.

 

Investors lost $7 per share on average so far and analysts agree that Facebook's initial $38 stock price was set too high. Investing in a social networking site is always risky and Facebook also downgraded its revenue forecast citing decreasing ad revenues just after its debut on the stock market, which reflected badly on its share price. Facebook may be the largest social networking site but generating revenues has always been difficult.

 

There must be a lot of young people on the forum. We saw this a thousand times in the 1990's during the internet bubble. Companies were paying billions of dollars for a website and a small group of employees. It was insane then and it is insane now. But let's have a reality check.

IPO's are sold by investment bankers. The job of the investment banker is to get the stock sold at the highest price possible for the client. The client is the company offering its stock for sale. The higher the price, the more the client receives for the company and the more money the investment banker earns in commission. The check on the IPO price is the investor. It is up to the investor to determine whether or not the stock is worth the asking price. It is no different than a used car buyer deciding what the used car is worth and what he is willing to pay. If the stock is offered at too low a price, it will rise in price when it hits the stock exchange. If it is priced too high it will fall. The person who determines the price on the exchange is the investor just like the bidder determines the price at an auction. Pretty simple.


Back in the 90's the economy was strong. Lot's of people had a lot of discretionary income. That meant that a lot of money was available for speculative stock investment. Most internet IPO's would take a short term rise - sometimes a dramatic one - and then settle down to a more sustainable price. Since the 90's, IPO's have had lower and lower initial price surges because the investment bankers have set the IPO prices higher and because there was less wealth available for speculative investing. In recent years it has been common for IPO's to be priced at sustainable prices or even fall in price like Facebook did. That information is available to anyone who wants to look for it.

People who are not wall street pros have no business speculating on the stock market. The price decline should have been even more pronounced than it was because people with Facebook accounts should not have speculated in the stock simply because they like the site - or because they thought they could make a quick buck on the investment. That sort of thing is what pros do and the rest of us should not. So the investors need to blame themselves. The company and the investment banker did what they do and should do - maximize profit from the sale. The investors took a gamble. For a typical non professional investor that is no different than putting a dollar in a slot machine. Facebook might be a good long term investment or it might not be. Time will tell. After time tells then it might make sense for an individual investor to add the stock. IPO time is slot machine time.

 

How are the underwriters dumping their shares at a profit? They got pounded as well! If they willingly attempted to prop up the value of their investment by buying millions of shares of it at a price that you consider too high, they've exposed themselves to loss as well!



Your thread is ridiculous. Anyone that buys a stock that then heads down has overpaid; this is no different. The stock market segregates winners and loses by a crystal clear demarckation line: profits and losses.

Those who bought Facebook out of the gate lost. There is no 'interference' with supply and demand.