Thursday, May 24, 2012

Welcome To The Real World

So, it's been a momentous few days for Mark Zuckerberg. Friday's Facebook IPO moved him from mere millionaire to billionaire. Saturday he got married. Monday Facebook's stock dipped. He's still a billionaire (I suspect), but he's lost a chunk of change, more than 99% of the people will make in ten lifetimes.

David Horsey, whose cartoon heads this post, has a few salient comments on the whole affair.

Congratulations to Mark Zuckerberg on his surprise wedding last Saturday. I certainly hope his marriage gets off to a better start than Friday’s initial public offering of shares in his social networking colossus, Facebook.

Wall Street analysts are now saying the opening share price of $38 was too high for investors wary of buying into a business that delivers millions of messages and photos from college drinking parties but produces a comparatively modest revenue stream. As a result, at the close of trading on Tuesday, Facebook's estimated market value had dropped to $85 billion from the $104-billion value set by the IPO.

That means a lot of people lost money, not just Mark Zuckerberg, but hey! that's the market at work. As Horsey points out, "the market" is for suckers, for gamblers, it's one big casino, and nothing points that out more than this Facebook episode. Only the house and its shills win. And that's an historical fact, Jack.

People who were talked out of a pension and into a 401k 15 years ago have, more often than not, seen that nest egg go rotten. Wall Street has become a bigger gamble than Las Vegas, and there aren't even free drinks to soften the blow when you lose. Everybody is in the market these days, but only a few very big players actually get to play. Hedge fund managers, derivatives hawkers and slick guys in suits from banks that are too big to fail place all the bets and roll all the dice. We just stand on the sidelines watching our modest investments take a stomach-churning roller coaster ride. [Emphasis added.}

What is really exceptional about the Facebook debacle is that even some of the major players got screwed, and got screwed royally.

As Facebook shares continued their slide, regulators launched inquiries into whether privileged Wall Street insiders were alerted to the company's weakening financial projections, leading them to shun the stock or dump shares just as buying was opened to the public.

Morgan Stanley, which led the Wall Street effort to bring the social network public, came under fire following reports that the bank had told some favored clients that the bank was cutting its revenue estimates for Facebook. The lowered expectations came after the tech giant expressed caution in a public filing about its advertising sales on mobile devices.
[Emphasis added]

Apparently there is a ranking even within the ownership class. What a surprise, eh? The only difference is that some of the big boys are not having any of this crap and have the money and the muscle to get the SEC and other regulatory agencies to move in and have a look-see, something the rest of us don't have.

If it weren't for the fact that a lot of little investors got caught up in this debacle (yes, they were foolish, but it was a safe investment, so they were told), this might be fun to watch.

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Blogger ifthethunderdontgetya™³²®© said...

Facebook's market cap is about $90 billion, and Mark Z. owns a little less than 1/4 of it.

So he's still worth more than double Steve Forbes, for instance.

2:21 PM  

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