Ryan Cefalu, a 34-year-old data-systems manager and
father of two in Baton Rouge, Louisiana, said he
bought about $4,000, or about a month’s salary,
in Facebook stock and has lost about $2,050 on paper.
“The IPO went terribly,” he said. “I expected it to go
up for a couple days at least before it went it down.
That never happened. It never had a chance to.”
I have zero sympathy for him. His investment strategy appears to have been "find a bigger sucker" and, unfortunately for him, he turned out to be the bigger sucker.
I'm a shareholder in FB, and have lost about 18% of the money I've put in, but I always expected it to go down for a while[1]. I actually never intended to invest until the first lockup period expired, but I got edgy when they finally started revealing their Adsense-esque ad strategy. As it works out, I'm actually at breakeven on the money invested after the first lockup expired. I figure that, within a couple years, my wild and crazy 'buy and hold' strategy is going to look pretty smart.
Then again, I could always turn out to be the bigger sucker ;-)
[1] Of course, my first tranche is down 40%, but I'm actually making it up on volume :P
> I have zero sympathy for him. His investment strategy appears to have been "find a bigger sucker" and, unfortunately for him, he turned out to be the bigger sucker.
While I have no sympathy for him specifically, if a significant risk was deliberately kept from potential investors then I'd support investors more generally (I'm sure there were many who had less silly investment plans, who were genuinely investing in a company to see it and their investment grow long term) if they demanded an investigation into why this did end up staying hidden until after the IPO.
If fb fought to keep the information hidden, the situation can't as easily be filed under "it is the investor's problem that they didn't ask/research" as many stock market moans can be.
The SEC's role is to play devil's advocate. You would think it obvious that FB would fight against that.
To me this article screams: "Waaah, I lost money on FB. Yes, they disclosed all of their risks ahead of time, but I would rather they would have predicted the future so I could go back and not invest".
If you think investing in hype is guaranteed money, you deserve what you get.
I have no sympathy for you either. What you doing is not investing in stocks based on rational decisions that are based on financial statements; you are simply using stock market as a gambling machine. Like a gambler who lost $10k but now is back with another $5k and is "winning back" his lost. But its only temporarily. Noone in his sound mind would invest into Facebook at such a P/E [1]. Yes the stock was up for couple days but its back to south and never broke is downtrend. See you at $8, together with Zynga from $14 to $.40. What are going to do then?? Buy more just to try to "win back"?
And also, can you define "expected to go down for a while". I think you rather meant that you expected this stock to lose a little bit of value [after you bought], but is it still in your stop-loss scenario (never heard any reasonable investor with 18% down stop loss).
[1] And please, lets stop comparing it to Amazon P/E. Why would you compare a company that makes tons of money for years based on the principle that humans need to buy products, with a temporary-trend where company makes money on annyoing ads that nobody wants or likes?
I'm 63.77% down. Then again, my four shares really don't count ;-).
I'm keeping them, hopefully in a year or two they are back to break even, maybe not. I don't care. I "play" the stock market for the fun of it. I certainly didn't expect it to tank nearly as much as it has done so far though.
I have a hard time understanding why people bought FB IPO stock. The P/E ratio was around 100 when it went public, and their main revenue source didn't seem to be growing fast enough to justify this.
I know hindsight is 20/20, but I'm genuinely curious: why did people think this was a good deal? (Aside from the fact that it might have popped a lot more on opening day due to general public interest.)
What we are seeing on the net nowadays is by and large the average people catching up to the brilliant things that every hacker, cracker and geek was happily doing in the 90s already, just on a much larger scale nowadays. All those friend websites, now called "social networks", are just one facet of this.
So what happened with fb's ipo was the average people's dotcom bubble in a way, in my opinion. Ultra-hyped, practically everyone knows and/or uses it "so what could possibly go wrong???", right? I am pretty sure that's what was going on in most average joes' and janes' minds. They didn't question or analyze and just wanted to ride the sweet-sweet money wagon and not miss out on the action, they just trusted the name and hype alone. Much like the crash in the 20s where practically everyone was trusting "super secret ultra hot" stock recommendations from their barbers...
I'm a shareholder in FB, and have lost about 18% of the money I've put in, but I always expected it to go down for a while[1]. I actually never intended to invest until the first lockup period expired, but I got edgy when they finally started revealing their Adsense-esque ad strategy. As it works out, I'm actually at breakeven on the money invested after the first lockup expired. I figure that, within a couple years, my wild and crazy 'buy and hold' strategy is going to look pretty smart.
Then again, I could always turn out to be the bigger sucker ;-)
[1] Of course, my first tranche is down 40%, but I'm actually making it up on volume :P