Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Facebook Insiders Who Made Money Selling on the IPO
Mo, your constant referring back to this painful IPO makes me think you bought the offering.... Otherwise, why would you care so much? IPO's are done to monetize the insider's stakes and, preferably, to bring them significant value for their shares. Nothing is new here.
I think it's an interesting miniature version of the tech bubble. What I find particularly interesting is that Microsoft was a seller. It's understandable that a hedge fund dumps it, but to hear that Microsoft dumped it is really saying something.
What's remarkable is the financial media turning it into a 24/7 pump and dump operation, then CNBC scolding some of the people who called in in the week or so after. Nothing is new aside from the fact that it was the most overhyped IPO possibly in history and was called a "way to get the retail investor involved again" every five seconds.
agree with all your observations, scott. but to the original post, any IPO is designed to 'exit' the early investors and to bring 'permanent' capital. in the FB case, it was only the former, not the latter. the company didn't really need the cash, the insiders did. to this extent, the IPO was a resounding success as the early investors (which, as Mo researched, included not only FB executives, but mutual funds, hedge funds, private wealth clients, other tech firms, etc.) exited on top.
Reply to @fundalarm: Yeah, I definitely agree with the IPO giving the early investors a way to exit, but I think the intent was really to screw retail bagholders. When there was not the demand for shares that was thought - people who didn't expect to get the full allocation did - then it was no longer so desirable and people fell over each other to exit. People thought they would at least get a quick flip out of it and that didn't even happen. Looking at the sellers above it's really clearer than ever that people did not exactly have a "long-term" view on Facebook . I mean, if Microsoft didn't hold on, why should anyone else? I mean, their investment in the Zune probably lasted longer.
Speaking of long-term view, I think what I found the most darkly funny was a couple of months ago when Groupon's lock-up expired and the stock was already down more than half and the day the lock-up expired, people still headed for zee hills.
See Zynga recently, as well, with insiders selling before the stock tanked - and I think what was particularly hilarious is the amount of analyst recommendations that got it completely wrong; ZH had a list of Zynga analyst notes and only one was negative.
People should have done the research, but that just doesn't happen. I agree with what Mark Cuban said after the IPO - "3. I always laugh at all the pundits /analysts who try to tell you what any non dividend paying stock is worth. Its a function of supply and demand. Its never fundamentals. Read what I wrote a long time ago about the stock market. In the case of facebook they put an ENORMOUS number of shares into the market. Too much supply. Valuation has no relevance what so ever. Conventional wisdom says the buyers of stocks will try to determine the value of a stock before they buy or sell and make the appropriate rational decision. Not even in a Richie Rich cartoon does that happen." (http://blogmaverick.com/)
I do think mobile is certainly here to stay after being a skeptic, but I think it's a matter of what few companies have staying power? The cell tower stocks have certainly done well - geez.
But, to get back to FB, after the amount of hype (CNBC had a freaking hour-long special in the middle of the trading day prior and then scolded people who called in not long after about how they should have researched - research, apparently, which would have gone against the ten thousand times CNBC hyped the IPO) and the amount of endless discussion about how it was going to get the retail investor "excited again", the way it was handled from the perspective of insiders is probably very positive. However, it was terrible from a *PR* standpoint in terms of the retail investor (the kind of person who likes Facebook a lot, but may not know what a P/E ratio is, and if you expect people to do the research on things like this, time and time again it has been proven they ain't going to - but they are going to watch countless promos about the "IPO of the Century!" So, I definitely get what you're saying about an IPO letting early investors exit and looking for permanent capital, but the whole thing was handled badly from a PR standpoint.
I thank you for the time you have spent on the Facebook postings.
I did not buy into the offering either as I felt it was a hoodwink on investors ... and, sure enough, it was.
There are those that are going to have issue with your post from time-to-time and I encourage you to keep posting. If readers are not interested in a post when they visit the board ... simply stated ... they want opened and read it.
Anyone can click on the summary and can see how many hits a post gets. As I am writting this; and, in checking the summary, this post has had 74 hits.
From my perspective ... the board needs you ... please, keep posting.
Back in 2007 Microsoft invested $240 million into Facebook. This seems like Microsoft is taking their original capital out and letting the profits ride rather than dumping/bailing on Facebook. Their sale of 6.6m shares amounts to 20% of their holdings in Facebook.
Reply to @fundalarm: I cannot blame on the early investors. They want to invest their capital on promising venues and when there is opportunity to make profit they get out. If there is no prospect of riches for the early investors there would not be an opportunity for many small interesting startups to form. Considering most startups do not actually make money and do not provide return on investment, I find it totally logical for venture capitalist looking for exit at the right moment.
Facebook IPO was botched badly. It was oversold, over hyped. If Nasdaq executed properly it might not be so much a huge disaster. However, investors has to do its due diligence. Given we have gone through episodes of this type of hysteria in the dot-com boom not so long ago, they should have known better but greed is everywhere. They thought that Facebook will be another Google in short time. It might still be if bought at the right price and held appropriately. Research has shown that IPOs are generally a good investment for individual investors buying at IPO prices.
In short Facebook losers are now crying wolf. It is their own doing.
Reply to @Skeeter: my response was out of curiosity and i apologize if it seemed that i "have issue" with the original post. i agree with everone that the IPO was a disaster on many levels, but was wondering whether it was personal for Mo and that's why he was coming back to it. Mo, i read your posts and apologize if i came out anything other than curious in this exchange. There are indeed posters here who prefer put down others instead of just ignoring the posts of no interest to them. This is not the case here.
Maybe I'm alone in this, but I check Facebook (and Zynga) quotes every day even though I have no interest in buying (or shorting) either. It's like a train wreck where you just can't look away. In that sense, I am very much looking forward to the first tranche of Facebook employee stock options to hit the market on August 16.
I think there is interest in mobile payments - Verifone (PAY, although I don't particularly care for the company with what moderate amount I've researched), Ingenico (INGIY.PK, barely traded), Starbucks (SBUX) with their recent investment in Square (would definitely not be a play on mobile payments, but shows interest and may benefit over time), Gemalto (GTOMY.PK, which is more near-field communication and security), Monitise (MONIF.PK, which I own a little of as an extremely speculative play and is part owned by VISA), Ebay (EBAY, w/paypal) and the card companies (V, MC, Amex, Discover, yadda), as well as other foreign plays like Brazil's Cielo (CIOXY.pk, I believe) Asia's Alibaba (Alipay) would be another idea but I believe that's been taken private, although I guess YHOO still has some ownership (?)
I also believe that telecom companies will get further into technology in an attempt to go beyond data plans and get more into providing the whole user experience. You are already seeing that with Singtel's buying of mobile ad company Amobee (as well as other buys of tech and information companies and Amobee's buy of 3-d mobile ad company Adjistu) and Verizon Wireless (which is 45% owned by Vodafone), T-Mobile and AT & T's in-testing ISIS program http://www.paywithisis.com/
I am a little concerned regarding mobile payment that multiple different programs coming out (apparently Target is working with other retailers on a program, Square w/Starbucks and Ingenico/Ebay and Verifone are likely working on their things) that that may become overwhelming/irritating for consumers.
Some companies will stand the test of time in social media (yelp seems to be doing ok), but I have a feeling that the social media ETF will be a lot more concentrated in 1, 3 and 5 years from now.
Comments
What's remarkable is the financial media turning it into a 24/7 pump and dump operation, then CNBC scolding some of the people who called in in the week or so after. Nothing is new aside from the fact that it was the most overhyped IPO possibly in history and was called a "way to get the retail investor involved again" every five seconds.
Speaking of long-term view, I think what I found the most darkly funny was a couple of months ago when Groupon's lock-up expired and the stock was already down more than half and the day the lock-up expired, people still headed for zee hills.
See Zynga recently, as well, with insiders selling before the stock tanked - and I think what was particularly hilarious is the amount of analyst recommendations that got it completely wrong; ZH had a list of Zynga analyst notes and only one was negative.
People should have done the research, but that just doesn't happen. I agree with what Mark Cuban said after the IPO - "3. I always laugh at all the pundits /analysts who try to tell you what any non dividend paying stock is worth. Its a function of supply and demand. Its never fundamentals. Read what I wrote a long time ago about the stock market. In the case of facebook they put an ENORMOUS number of shares into the market. Too much supply. Valuation has no relevance what so ever. Conventional wisdom says the buyers of stocks will try to determine the value of a stock before they buy or sell and make the appropriate rational decision. Not even in a Richie Rich cartoon does that happen." (http://blogmaverick.com/)
I do think mobile is certainly here to stay after being a skeptic, but I think it's a matter of what few companies have staying power? The cell tower stocks have certainly done well - geez.
But, to get back to FB, after the amount of hype (CNBC had a freaking hour-long special in the middle of the trading day prior and then scolded people who called in not long after about how they should have researched - research, apparently, which would have gone against the ten thousand times CNBC hyped the IPO) and the amount of endless discussion about how it was going to get the retail investor "excited again", the way it was handled from the perspective of insiders is probably very positive. However, it was terrible from a *PR* standpoint in terms of the retail investor (the kind of person who likes Facebook a lot, but may not know what a P/E ratio is, and if you expect people to do the research on things like this, time and time again it has been proven they ain't going to - but they are going to watch countless promos about the "IPO of the Century!" So, I definitely get what you're saying about an IPO letting early investors exit and looking for permanent capital, but the whole thing was handled badly from a PR standpoint.
I thank you for the time you have spent on the Facebook postings.
I did not buy into the offering either as I felt it was a hoodwink on investors ... and, sure enough, it was.
There are those that are going to have issue with your post from time-to-time and I encourage you to keep posting. If readers are not interested in a post when they visit the board ... simply stated ... they want opened and read it.
Anyone can click on the summary and can see how many hits a post gets. As I am writting this; and, in checking the summary, this post has had 74 hits.
From my perspective ... the board needs you ... please, keep posting.
Skeeter
Back in 2007 Microsoft invested $240 million into Facebook. This seems like Microsoft is taking their original capital out and letting the profits ride rather than dumping/bailing on Facebook. Their sale of 6.6m shares amounts to 20% of their holdings in Facebook.
Facebook IPO was botched badly. It was oversold, over hyped. If Nasdaq executed properly it might not be so much a huge disaster. However, investors has to do its due diligence. Given we have gone through episodes of this type of hysteria in the dot-com boom not so long ago, they should have known better but greed is everywhere. They thought that Facebook will be another Google in short time. It might still be if bought at the right price and held appropriately. Research has shown that IPOs are generally a good investment for individual investors buying at IPO prices.
In short Facebook losers are now crying wolf. It is their own doing.
I also believe that telecom companies will get further into technology in an attempt to go beyond data plans and get more into providing the whole user experience. You are already seeing that with Singtel's buying of mobile ad company Amobee (as well as other buys of tech and information companies and Amobee's buy of 3-d mobile ad company Adjistu) and Verizon Wireless (which is 45% owned by Vodafone), T-Mobile and AT & T's in-testing ISIS program http://www.paywithisis.com/
I am a little concerned regarding mobile payment that multiple different programs coming out (apparently Target is working with other retailers on a program, Square w/Starbucks and Ingenico/Ebay and Verifone are likely working on their things) that that may become overwhelming/irritating for consumers.
Some companies will stand the test of time in social media (yelp seems to be doing ok), but I have a feeling that the social media ETF will be a lot more concentrated in 1, 3 and 5 years from now.