It seems everybody just loves to hate Facebook these days so much that only a video of Chris Chrocker shouting Leave Mark Zuckerberg Alone can explain how ridiculous I think this is (a spoof on the famous Leave Britney Alone video) .
I have never seen so many people bash a company like the recent bashing of the Facebook IPO. Some are even calling it the Facebook IPO Scam. Why is this a scam? Did Facebook commit to a higher price?
The Facts
- F
acebook IPO was the most hyped IPO in recent history, allowing for a Speculative Bubble to raise the price higher at the IPO, rather than post IPO. - Not enough Facebook shares to meet demand
- Facebook/Bankers Increase IPO Price Range To $34-$38 A Share
- Facebook IPO Gets a Boost: 84 Million More Shares For Sale
So if everybody knew that demand is heating, and that there is no financial guarantee in the price (even today) then why is anybody surprised that it dropped? It seems like when managing an IPO, a company needs to actually make sure there is room for upside for investors post IPO, something bankers used to leave for institutional investors to come back for the bankers. I think no one explained to Mark that he needs to bribe the institutions, and when he saw extra demand he did what anyone would do, and took advantage of it.
Facebook is a distribution channel, with 1 BILLION engaged subscribers. As long as they learn to monetize it and keep users engaged, they can be easily worth $100B. They simply need to sell their shares on their distribution channel and execute the Social IPO, when they will the price will go higher.
I have to admit the falling price of facebook shares has not only caught me by surprise, but had also imapcted any social technology business, on every startup, and specifically social startups (Y Combinator’s Paul Graham Just Emailed Portfolio Companies Warning Of ‘Bad Times’ In Silicon Valley). It even made me miss my weekly blog posts since I went into short term depression that we are not yet in the dream phase mentioned in Peter Thiel’s Stanford course (which is so great it requires a blog post in itself).
In the dream phase Facebook can replace movie theaters as the main GLOBAL distribution channel for buying movie tickets ($10B a year), and apps funding becomes like in Hollywood: raise $100M, work on a startup for one year, distribute in Facebook to 100M users, and start over.
Better times are ahead.