Friday, June 01, 2012

Facebook Goes Public or The IPO has not Clothes


Facebook changed the world. It facilitates the ability to stay in touch with everyone and everything.  It lets us know what our friends are doing, where our family members are, and whether Abraham Lincoln: Vampire Hunter is going to be as awesome as it looks. So when Facebook announced they were going to go public, meaning that people could buy a percentage of the company. Tons of people clicked the “like” button to their brokers without hesitation. Many saw this as getting in on McDonald’s in 1950’s or Apple in the 80’s. But it’s a bit more like getting on the ground floor of 3D.Which hasn’t been a tide of excitement for quite some time.

After the film,The Social Network, people saw how much the idea for Facebook was basically timing and luck. If they had only known those nerds back in the day they would be bazillionaires. And buying stock in Facebook was a way to get in on that action. But what a lot of analysts said, and people later found out, was that nerds had kind of already locked the doors behind them. Even if Facebook grew they had already achieved McDonald’s like heights in the US,and the real growth markets, Asia,and India, Facebook has no hold. So there is no real market for any growth, i.e. the stock won’t be shooting up like youtube video with a musical cat on it anytime soon.  Facebook isn’t over, there’s still grandmothers and kids in Africa who still aren’t on Facebook. But it will never implode the way it did. It will never break across college campus’ like a new Kayne West album again.

But if you look at the way Facebook handled the situation I think they saw the writing on the wall or more annoyingly their timeline. They made sure that the banks backing them kept the prices up, at least in the beginning. They did this so the stock would not plummet like a canadian goose on the wrong side of an jet engine. If the stock went low right away then the regular joe’s wouldn’t buy it and at least make going public worth Facebook’s wile. Because the people at Facebook knew that regular joes don’t sway prices, those spots are reserved for guys who own their own islands.

Those heavy hitters wouldn’t touch the stock with a titanium shower curtain rod.  Which worked for Facebook because everyone in the company became millionaires no matter what happened. So it was kind of a win for Facebook, they did lose some money as a whole but the people who work there still came out ahead. But it was a pure lose for the NASDAQ and everyone else.  NASDAQ was hoping Facebook would pump life into their flagging station in the world, but instead they did the kind of pumping where you leave money on the dresser on your way out the door.