Rarely do you see such a speculative frenzy as the Facebook (Nasdaq: FB) IPO.
The last time we saw something similar here in Australia was Telstra's (ASX: TLS) T3 offering, and we know how that one ended — badly. Sandwiched in between were the Myer (ASX: MYR) and Collins Foods (ASX: CKF) floats — two more shockers.
Facebook's first day of trading as a public company, whilst frenetic, was ultimately fruitless, the shares closing up a measly 0.61% on the day, closing at $38.23.
Yet it was hardly a disaster. The company is valued at over $100 billion. Mark Zuckerberg's Facebook stake of over $21 billion works out to $4,700 per minute of the company's existence. Give or take. Nice money if you can get it.
Is that the end of the Facebook share price hype?
It certainly took all the wind out of the 'Mum and Dad' speculators, leaving it to the institutions and their high frequency traders to fight over the pieces. It's a game best left to the computers.
Over the long-term, Facebook shares will trade on fundamentals, taking into account current valuation, growth rate, profit margin, and size of the market.
Facebook have a lot to do to grow into their $100 billion market capitalisation. But they have time on their side.
Mark Zuckerberg owns 28% of the company he co-founded, but controls 57% of the Facebook's voting shares. And since he already is worth more money than is humanly imaginable, he's likely to use the time to grow, not pandering to Wall Street's short-term focused investing community.
It's hard to imagine Facebook not having a growth hiccup, one that will likely smash their share price, in the years ahead. By then, we'll know more about the company, how it intends, and indeed how it is progressing in monetising its massive 900 million user-base.
One day, Facebook could be a great investment. But for me, that day is not today.
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