Wednesday, May 23, 2012

OMG! They Killed Zucky...!!

Actually, they killed Zucky's unlucky punters. Yeah, well, what did you expect ? Paying stratospheric prices for something more or less impossible to value on any model is a mugs game. I have little sympathy for any involved.

Those seeking headlines are now falling over themselves pointing fingers at "the process", but surely this misses the most pertinent point: FB (and anything else flogged) is worth what The People will pay. The IBs, like Sotheby's auctioneers, are hired to maximize the proceeds to the seller. They have no frickin' idea "what it is worth". Skeptics (like me) will tell you they wouldn't pay more than $5 or $10 (already an impossible large margin of error. Optimists will point to all manner of metrics and prognostications that justify multiples many times greater than that. Old-timers will remember the days when one of the most trusty investment strategies was to short ALL IPOs, whereas their (privileged) sons (and occasionally their daughters) have subscribed and flipped their way to riches, watching and participating in debut price-vaults that would make the consigners of impressionist art at auction weep.

It is shock to my sensibility that people rationally seek deals that tether value to need in almost every aspect of their life, lose all sense of errrr umm rational expectation [value, measure, proportion etc] when it comes to the Hot IPO. And while 2-cent nickels can pile up unloved in the eddies of slow-growth, or earnings downgrades, the $5-dollar quarters attract financial magpies like a shiny pull-top from an aluminum can.

Maybe FB will metamorphosize into a GOOG, an AAPL, or an AMZN. Maybe not. But I see nothing in the process that is any different from an unwary punter paying $2000 (or $4000!!! for the '88)-a-throw for a "Le Pin", and subsequently complaining it wasn't as good as they thought it would be, or as good as Parker rated it.  This is NOT an apology for the bankers, or the touting analysts, who's honesty ranks just above Nigerian Scam Artist-Phishers and Payment Protection Insurance Salesmen. But the ultimate responsibility lies with the buyers who should look introspectively rather than point fingers.


doc w said...

You have thrust a spear into the heart of the markets.

Much of the value (or non-value) of stocks is in the minds of buyer and seller.

Is it the Superbowl or the hype that matters? The bottom line is the score and FB, as ephemeral a thing as it may be, may not score at all at the end of all this.

phoneranger said...

I just looked up PPI in Wikipedia. Neat stuff but it seems to be primarily available in UK. Maybe Angela shd write some for the PIIGS.

Lance N. said...

The Facebook IPO was well done- the sellers got the most money possible.

Now, why you should buy FB from its current owners is quite another question.