Jump to content
House Price Crash Forum

Facebook


 Share

Recommended Posts

will it go below on opening day. now that would be something. if it cant even hold its own on day 1. its allready obvious they have been greedy and priced far to high, leaving nothing in it for the private invester. the market makers wanted all the profit for themselves, looksto have backfired though.

Link to comment
Share on other sites

  • Replies 499
  • Created
  • Last Reply

Top Posters In This Topic

the market makers wanted all the profit for themselves

Actually in this instance the underwriting group took a serious haircut; they only captured 1.1% of the capital raised (more normally three times that), and the loot is being split an eye-watering 33 ways.

, looksto have backfired though.

No argument there - a truly astonishing amount of sell-side capital was vaporised today defending the line; probably negative net on the deal for most of the gang of 33...

Edited by ParticleMan
Link to comment
Share on other sites

will it go below on opening day. now that would be something. if it cant even hold its own on day 1. its allready obvious they have been greedy and priced far to high, leaving nothing in it for the private invester. the market makers wanted all the profit for themselves, looksto have backfired though.

The underwriters get paid. Market makers don't hold a position, they make money on volume on the spread.

Over the course of a day FB itself hasn't changed on jot. So any share selling / buying is a zero sum game. Some won some lost. Not sure who lost out the most if the stock drops. Probably the banks who worked with the underwriters and got first refusal. Once the secondary market is fully underway if FB drops to $32 are retail investors immoral for stepping in and cost a hedge fund $6 per share?

What about people who bought google stocks after banks underwrote their flotation? Doubtless many at the time said you couldn't make much money from adverts on a web page.

Link to comment
Share on other sites

The underwriters get paid. Market makers don't hold a position, they make money on volume on the spread.

Over the course of a day FB itself hasn't changed on jot. So any share selling / buying is a zero sum game. Some won some lost. Not sure who lost out the most if the stock drops. Probably the banks who worked with the underwriters and got first refusal. Once the secondary market is fully underway if FB drops to $32 are retail investors immoral for stepping in and cost a hedge fund $6 per share?

What about people who bought google stocks after banks underwrote their flotation? Doubtless many at the time said you couldn't make much money from adverts on a web page.

yes the underwriters, thanks for correcting me, im an enthusiastic learner. the market makers make what ever happens i take it?

best regards

Link to comment
Share on other sites

yes the underwriters, thanks for correcting me, im an enthusiastic learner. the market makers make what ever happens i take it?

best regards

Apparently there is about 176 million in fees to be spread between 33 underwriters. This does not include the shares that the likes of Goldman Sachs had as early stage investors and/or for services rendered.

But the financial sites are full tonight of talk of billions being spent by the underwriters to try and prop the price up. I don't know enough about what goes on in this regard other than to say that is what is being written on-line currently.

Link to comment
Share on other sites

bbc headline

Facebook shares spike on debut

its only after a couple of lines in it mentions its infact moved back to the start price, so bbc bosses, why the heck the fancy big headline for a share that has hardly moved in price?

But surely it's only a "spike" because it DID move back to the start price?

Otherwise the headline would be "Facebook shares rise on debut".

A spike goes sharply up, then sharply down again doesn't it?

Link to comment
Share on other sites

Man, that's an ugly debut. Who's left holding the baby now? That they went ahead in this market means they think/know worse is to come, or it was simply group-think and hubris.

I think we can say that the "IPO window" is now closed.

I'm not clued up on public companies but what exact responsibilities does Zuckerberg have now in running a company seeing he has a majority voting stake and I assume $16 Billion in the bank. Is he now allowed to buy out 16 friends startups with a billion dollars cash each or is there more necessity to prove value to the other shareholders first. I'm not sure what happens when he can always vote for it himself. So in the more extreme case what stops him from basically giving himself the cash if he can get the vote through, though I'm sure there is some standard rule to stop that happening, apart from obliterating the value of the shares he still holds.

Link to comment
Share on other sites

I'm not clued up on public companies but what exact responsibilities does Zuckerberg have now in running a company seeing he has a majority voting stake and I assume $16 Billion in the bank. Is he now allowed to buy out 16 friends startups with a billion dollars cash each or is there more necessity to prove value to the other shareholders first. I'm not sure what happens when he can always vote for it himself. So in the more extreme case what stops him from basically giving himself the cash if he can get the vote through, though I'm sure there is some standard rule to stop that happening, apart from obliterating the value of the shares he still holds.

Fascinating isn't it? I don't think I'd be able to concentrate on the day job with billions in net worth - he does seem remarkably level headed, so far.

I do think we'll see some bizarre behaviour from the senior FB directors though in the coming months and years. Zucker's words have always been "investor be wary", saying it's all about the technology and not the returns and that the IPO was primarily a necessary pay back for the first round investors, rather than what he desired and that he wasn't sure how the money would be used yet.

But in general his interests are aligned to those of his shareholders, except for the unavoidable fact of his huge F.U. fund (key-man insurance anyone?) and his disregard for returns. I guess he will invest/spend the money on defensive acquisitions (1 more was announced today) and developing mobile. So yes, there is very real potential to mis-allocate capital to his cronies.

Link to comment
Share on other sites

I see it's becoming quite common to share logins among sites. For example "Log in with your Facebook account".

Prediction:

At some stage, Facebook will be hacked.

Because of the above dynamic, the consequences will be disastrous.

And that will be the end of it.

Link to comment
Share on other sites

I see it's becoming quite common to share logins among sites. For example "Log in with your Facebook account".

Prediction:

At some stage, Facebook will be hacked.

Because of the above dynamic, the consequences will be disastrous.

And that will be the end of it.

Firms are increasingly integrating their websites and ecommerce into Facebook. At some time Facebook will have to start charging for heavy API usage I guess, unless there are substantial kickbacks to them from tracking logged in user behaviour across the internet. J Egdar Hoover would have been proud of Facebook.

I disagree with some poster comments about Google traffic from Adwords and organic search. The traffic from Facebook should be far more qualified with a degree of social trust. It can be targetted more precisely. If you only want to sell to 50 year old gay men in Utah who sail, you can do. Its far more targeted than Adwords

A problem Google is trying to address with Google Plus. Given the scams Google (Yahoo and others) have worked with PPC with the use of junk domain parking site traffic, I'm surprised the Directors are not in jail to be honest.

Edited by "Steed"
Link to comment
Share on other sites

Guest eight

I see it's becoming quite common to share logins among sites. For example "Log in with your Facebook account".

Prediction:

At some stage, Facebook will be hacked.

I think it's more likely to be "nationalised" (in so much as you can nationalise a cross border entity, anyway). Some kind of official endorsement or embedding in the social permaculture at any rate. Too big to fail, with a soporific effect on the general populace, and now even the BBC are flying the flag.

Link to comment
Share on other sites

Friendface - a social network for white elephants...

http://uk.reuters.com/article/2012/05/19/uk-facebook-morgan-stanley-idUKBRE84I01820120519

As a result, Morgan Stanley may have spent billions of dollars to support the stock price by buying shares in the market. Some market participants said that the underwriters had to absorb mountains of stock to defend the $38 level and keep the market from dipping below it.

The firm did this by tapping into a 63 million share over-allotment option, or greenshoe, according to sources familiar with the deal.

As an indication of the cost, had Morgan Stanley bought all of the shares traded around $38 in the final 20 minutes of the day, it would have spent nearly $2 billion. Underwriters are not obligated to prop up a stock on debut, but typically do.

Morgan Stanley declined to comment.

Link to comment
Share on other sites

yes the underwriters, thanks for correcting me, im an enthusiastic learner. the market makers make what ever happens i take it?

best regards

No, they can loose too. However if they track the market and buy as much as they sell they get to keep the spread. That obviously depends on buys and sells netting out at the same price.

Link to comment
Share on other sites

The flat line at $38 suggests someone was buying to defined that price. If MS did buy $2bn that is not gone. They have to offload it at the same price and could make a loss of say 20% so $200MM. So that's all their fees gone in such a scenario.

Link to comment
Share on other sites

The flat line at $38 suggests someone was buying to defined that price. If MS did buy $2bn that is not gone. They have to offload it at the same price and could make a loss of say 20% so $200MM. So that's all their fees gone in such a scenario.

There's zero doubt in my mind that the gang of 33 were net buyers at $41 and $38 target.

If you have access to a level2 tape look at how the size moves and on which side of the book over the course of the day.

The other thing I have no doubt on at all is that FB's backers got frozen out by the classical buy side firms - the institutional buying patterns you'd expect to see from long-only funds were completely absent after the session started.

My next prediction is that MS will live to rue the day they shut the leading tech sell-side firms out of this; people are already questioning the wisdom of this approach...

All in all - a highly profitable trading day - for everyone not in the underwriting group...

Link to comment
Share on other sites

There's zero doubt in my mind that the gang of 33 were net buyers at $41 and $38 target.

If you have access to a level2 tape look at how the size moves and on which side of the book over the course of the day.

The other thing I have no doubt on at all is that FB's backers got frozen out by the classical buy side firms - the institutional buying patterns you'd expect to see from long-only funds were completely absent after the session started.

My next prediction is that MS will live to rue the day they shut the leading tech sell-side firms out of this; people are already questioning the wisdom of this approach...

All in all - a highly profitable trading day - for everyone not in the underwriting group...

Whoever has access on the first day, in 60 days time it will have reached it's "true" value, whatever the underwriters do. Though I agree the underwriters will not have wanted to use their fees defending $38.

No access to l2 data. Can one even tell institutional buyers now? They are going to use a broker who is going to use an algo eg VWAP/iceburg. How to spot the big buyer?

Link to comment
Share on other sites

No access to l2 data. Can one even tell institutional buyers now? They are going to use a broker who is going to use an algo eg VWAP/iceburg. How to spot the big buyer?

The same way* you can tell when an elephant (or a whale) is in the room.

I haven't seen anything this interesting since the day the SNB set their €1.2 target; unlike the SNB however, even MS can't print money - this hole will be duly filed in a 10Q and their shareholders will spank them for it.

(* either you can or you can't; I could, which is why I observed the market creating the most amusing synthetic short positions I've ever had the pleasure to see; it was also fascinating to see that trading has evolved to the point where for a single stock with _no_ history at all, how quickly the market figures out not only where the sell side's resistance is but also where their first rung on their selling ladder is; the story you see on the tape is to a man the market joining the inside at resistance then dumping the lot just before the first target level, effectively forcing the underwriting group to offer the entire market a zero cost stock loan and infinite liquidity)

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.




×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.