Being 'Zucked'; The FaceBook saga
The public offer of shares in Facebook; going from high to Zucked.
- Facebook Goes Public
- The Share Offer
- Angry Investors
- What the Press Says;
- a fool and his money...
Facebook Goes Public
The excitement was real. Facebook was going on the market. People could buy shares in Facebook. Oh Wow.
Facebook is a social network. People join for Free. They create pages for Free. They post photographs for Free. They may write blurbs, they may network their articles or items of interest, for Free. They can play games for Free.
Millions of people belong to Facebook. There has to be some kind of way they can be exploited; right?
The Share Offer
On Friday the public was offered the wonderful opportunity to Invest in Facebook at $38 a share. As the price began to falter, Morgan Stanley, which brought out the shares, thought to prop them up by buying millions of shares at that price.
It didn't help.
By Monday they were valued at $34, and by Wednesday $32; down 16%.
Since then it has come to light that Morgan Stanley failed to alert investors that the social network had expressed caution over its revenue growth.
Those claims have led to a number of lawsuits alleging that the company did not disclose information about its prospects.
We know what Sony produces. We know what Apple manufactures. We know what Nestle does. We even know what British Petroleum does to earn revenue. What does Facebook produce to earn revenue?
A handful of Ads no one looks at or clicks?
Whether three million or three billion people join Facebook, the revenue is the same; Zero.
Exactly what did these Investors think they were going to share in?
Many Investors are taking legal action against the company and its backers, and the US Senate Banking Commitee has pledged to investigate allegations that investors were misled, and a new term has been coined on Wall Street - to be 'zucked'.
As recently married Facebook founder Mark Zuckerberg enjoys his honeymoon, his reputation is being destroyed.
According to The Guardian:
"He has gone from hero to zero
as the stockmarket flotation of the
decade flounders amid lawsuits and
accusations of greed, hype and
Everyone seems angry that when the first investors saw that the price wasn't climbing they sold quickly.
"Zuckerberg saved more than £100 million by cashing in before the...price plummeted," reported the London Evening Standard.
What the Press Says;
The Daily Telegraph revealed:
"The Wall Street bank and other advisers on the float, including
JPMorgan Chase and Barclays, shared fees of $176m from the
IPO that saw Facebook and its early investors pocket about $16bn."
The Guardian writes:
"The IPO was an over-priced shambles, of course, but that
is not the same thing as a conspiracy to fleece the public."
The New York Times comments:
"...the Facebook IPO is looking to be a long, drawn-out affair
as the recriminations will now turn into investigations and
litigation... It really didn't have to be this way had the
underwriters and Facebook not pushed the offering price
of the stock up so far. In the end, they brought this on themselves"
a fool and his money...
A website; a place that does not exist in the real world, that manufactures nothing, produces nothing, charges nothing, decides to sell stock, not as 'lindens' (a'la Second Life) but on the real live Stock Market.
The Word made Paper, to paraphrase.
People who are supposed to have the brains they were born with go out and pay for this paper which gives them shares in an entity that does not exist in the Real World.
And now, because they seem to have lost their money want to sue.
Seems about right.