Facebook IPO Seen Deepening Investor Distrust Of Stocks
By Elizabeth Ody and Margaret Collins – May 25, 2012 10:01 PM MT
Facebook Inc. (FB)’s initial public offering, plagued by trading errors and a 16 percent drop in the share price, will push more individual investors out of a stock market they already distrust after the financial crisis.
“This is clearly the latest in a long string of events that is eviscerating the confidence investors have in the market,” said Andrew Stoltmann, a Chicago attorney who represents retail investors. “The perception is Wall Street jiggered this IPO so the underwriters made money, Facebook executives made money and the small investor got left holding the bag.”
Ironically I feel pretty much the opposite of the headline. If the IPO worked well and crowd mania held sway, I’d say that the market is irrational and impossible to make money or predict correct behavior. Facebook is grossly over-valued as are all social media stocks. Technological obsolescence is so great in this industry, it’s hard to put long term growth rates on any business. Furthermore barriers to entry are low and behavior is fickle. Tomorrow’s disrupter is happening somewhere right now. The Internet, cloud, web, whatever is becoming balkanized. Facebook, Linkedin, Google +, iPhone, etc are all full steam ahead creating silos of users instead of the grand connected experience that advertisers are banking on Once they realize the web is mature in this country and soon most of the world, it’s growth rate won’t be much more than population rates and a fight for market share. This is not a high multiple growth business as the stocks indicated. They are all shorts, everyone of them.
via Facebook IPO Seen Deepening Investor Distrust of Stocks – Bloomberg.