Much anticipated Facebook finally made IPO last Friday. Many people were very excited about the opportunity to purchase this popular company. I think I read somewhere that their earning was about $1 Billion and there seems to be great potential for their earning to increase. However, when Facebook opened for trading at $42, it quickly reached $45 before falling. Today, FB is trading in $31 range, a loss of more than 25% in three days.
Did you know that companies like Morgan Stanley and Goldman Sachs trimmed their outlook on Facebook just before it went public on May, 18. Many analysts including SEC were very surprised to hear this and thought it was very strange. The worst part was that only a selective few of big investors received this news and nobody took the initiative to communicate to the public, which is probably a violation of some law out there. Were you one of many people who bought FB above $40 on the day of IPO? If you had know this fact about cutting estimation on FB, would you have made that purchase? This is exactly the reason for the down fall of Facebook. I have a feeling now there will be bunch of law suits on the horizon. I’m sure Facebook company was hurt by all of this in some way.
Now, given Facebook is now trading at $31 range, is this a good time to buy? If you are a long term investor, then it might be worth investing at this price. What do you think?
Looks like FB was priced right after all at $31. The problem with thier model is that it is all branded advertising, direct response is just not a good way to go there. When the GMs and Targets of the world are re-thinking their ad spends…watch out. Maybe the hoodie should start wearing a suitie….