Originally Posted by Imports>Muscles
Facebook is not failing hard. Their IPO was valued too high, it should had been in the $10-20 range according to their P/E ratio. People's expectation were too high for Facebook and most of the buyers really had no direct knowledge in stocks besides buying big names. Buying Facebook stock is like paying $45,000 for a $15,000 car.
In other words, no Facebook will not rebound back up to their IPO price of $38, unless you generate HUGE revenue which I don't see happening because, lets be honest, who doesn't have adblock or who actually click on the ads?
Originally Posted by DayoftheGreek
It has nothing to do with the service, and everything to do with the financials of the company. There is little investor confidence in the CEO especially after he bought that one company recently. The company also doesn't have much tangible value. If something came along that replaced facebook, the company would be worth almost nothing overnight because of how quickly users would move to something new. As more and more users move to mobile phones, facebook makes less and less money because they haven't figured out a way to monetize that platform. Another recent announcement shows that a huge amount of accounts are fake, which doesn't help them at all. Watching how quickly MySpace burned out provides a bad precedent for investors in social media and nobody wants to see billions of dollars evaporate the second people jump ship to the next platform. And their IPO was too high.
That said, it might be worth watching closely. Facebook still has a huge brand name with a massive userbase. If they find a way to tap into the userbase and turn it into much safer and steady cash flow, the stock will go up a lot more than it is going down now. Do keep in mind OCN that lowering stock price doesn't mean Facebook is going away.
I'm not a stock expert by any means, but I've been doing a heck of a lot of reading lately to keep my investments up to date and this is what I took away from that.
Thank god for people who know about this stuff. Personlly I know nothing about this sort of thing, In sixth grade we had a contest where we grouped up and using fake sum of cash, to research and "purchase" stocks.
Unfortunately, it was a short term gig. And the ones I helped choose didnt do well so we didnt win.
Basically I have no Business being involved with stocks and stuff. I would probobly have been the guy to go bankrupt from stocks so i fugre Im no worse off by just not playing the game. same with lottery, people blow thousands a year on lottery and win nothing. Iguess id rather not take the chance =(
But thanks for clearing that up, I knew they started out high and then plumeted, that was the extent of what i actually knew,