No Time for Bargain Hunting in Facebook

[We never tire of explaining why Facebook shares are just so much worthless crap, but the message seems to have been lost on the clueless hacks who bring us the business news each day. Over Labor Day weekend, they and their dim-witted "sources" (analysts hired under CETA?) were in an apoplectic tizzy over FB's latest plunge to yet another all-time low of 18.03.  Explained the au courant Market Watch: "Facebook Inc. slumped to a record low on Friday after a pair of brokers slashed their price targets on the stock."  Ahh. so that was it!  The Business[alleged] Insider headlined this shocker: “It’s Becoming Clear That No One Actually Read Facebook’s IPO Prospectus…” And the L.A. Times, taking a rare breather from Obama-mongering, had some bad news for government workers: “Public pension funds stung by Facebook’s falling stock…”

So. The pension-fund biggies are in Facebook shares up to tips of their pointed little heads.  Who knew?  To set them straight, and as a public  service, we have republished below a commentary from August 21 that spelled out not only the reasons why Facebook is headed significantly lower, but the exact price where they will attempt a dead-cat bounce: 13.97. For all of you portfolio managers who can’t do the math, that’s 22.8% beneath Friday’s close.  And please don’t tell us later that you weren’t warned not to buy the stock at these levels — or that you never put much store in technical analysis.  RA]

Facebook shares took another hellacious dive last week when the lock-up period for insider selling ended on Thursday.  Gluttonously coveted by investors in the months leading up to the IPO, the stock has become a pariah after falling 50% from its $38 offering price in May. Was it jinxed from the start, as some have suggested?  It is indeed true that technical gremlins on Nasdaq plagued the order book the day Facebook went public. And although some sore losers have sued to get their money back (if not their hands, belatedly, on fire-sale shares) the exchange glitches seemed to us like business as usual. Facebook’s real problem is that it is just another Internet fad that will probably never earn a profit commensurate with the $100 billion valuation it was given by IPO buyers. (…)
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© Rick Ackerman and www.rickackerman.com, 2012. |
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