News Facebook being sued

[Deebs]

I am so glad that Morgan Stanley is now under investigation around the share price of Facebook. Also the fact that a class lawsuit has been filed against Facebook including Zuckerberg. The share price drop over the last two days has rang alarm bells. Something is not right.....

 

[opticle]

In some ways, with the share prices floating at the ridiculous prices they did.. you almost can't blame Zuckerberg and Co for thinking "Fuck this, I'm loaded" and selling up..

I don't fully understand all the economic implications I briefly read about:

'Until investors can actually short Facebook, they have to keep shorting other things that can give them some sort of proxy for Facebook,' said Thomas Vandeventer, manager of the Tocqueville Opportunity Fund, which owns shares of both the battered closed-end funds.

Read more: http://www.dailymail.co.uk/news/art...ckerberg-sued-shareholders.html#ixzz1vixjZHq9

In case any one fancies educating me ?

Apologies for quoting the Daily Mail, it was the first search result on Google.

P.s. Facebook is shit and I wish it could just default into some kind of address book and photo sharing site. I'm tied to it now for photo memories and that's it.. and doing what I can with the pretty retarded privacy settings :/.

 

[Deebs]

I thought the employees and especially Zuckerberg could not sell for a minimum of 6 months. Could be more....

On a side note I last used FB back in November 2011.

 

[Lamp]

Massively overpriced.

Give me a time machine, and I'll nip back to 1982 and buy £10,000 worth of Microsoft shares. That'll do me

 

[Ch3tan]

I don't think there is anything sinister Deebs, and if people are foolish enough to spend $38 a pop on shares in a company that is clearly over priced, then they deserve what they get.

 

[Jupitus]

Nothing too sinister other than a cluster fuck and the IPO underwriters seeming to have only disclosed key information to a select few customers. That will draw interest from regulators as will the fact that Nasdaq had technical issues preventing the normally essential transparency of the market to investors for the first half an hour or more of trading. BATS exchange recently had tech issues when starting trading on their own stock, which was a major embarrassment, and Nasdaq seem to have ploughed on with the IPO instead of halting trading and getting it sorted.

opticle... what he is saying is that when market players think a stock will go down in price they 'short sell' it.... this is done by borrowing stocks from institutions which hold a bundle, then selling them on the market hoping the price will go down, after which they buy them back cheaper and give them back to the institution which lent them the stock. With IPOs it is harder to do this because the stock is not fully circulated through those institutions they would usually borrow from, so in this case people have been selling their stakes in equity funds which had been allocated some Facebook shares in advance.

 

[Shagrat]

http://www.thisismoney.co.uk/money/...Morgan-Stanley-Zuckerberg-misinformation.html

prompting allegations to emerge that some investors were not given information that showed the company was overvalued.

er helllloooo. naive much?

 

[SilverHood]

Nothing too sinister other than a cluster fuck and the IPO underwriters seeming to have only disclosed key information to a select few customers. That will draw interest from regulators as will the fact that Nasdaq had technical issues preventing the normally essential transparency of the market to investors for the first half an hour or more of trading. BATS exchange recently had tech issues when starting trading on their own stock, which was a major embarrassment, and Nasdaq seem to have ploughed on with the IPO instead of halting trading and getting it sorted.

opticle... what he is saying is that when market players think a stock will go down in price they 'short sell' it.... this is done by borrowing stocks from institutions which hold a bundle, then selling them on the market hoping the price will go down, after which they buy them back cheaper and give them back to the institution which lent them the stock. With IPOs it is harder to do this because the stock is not fully circulated through those institutions they would usually borrow from, so in this case people have been selling their stakes in equity funds which had been allocated some Facebook shares in advance.

Half an hour? Retail (ie individual) customers didn't know if their orders had gone through until after the market closed. Nasdaq has egg all over their face, it was a disaster for everyone except the big institutions who offloaded a bunch of stock at the inflated $40+ price early on.

As Jup said, you can't bet against Facebook yet, so they're doing it by proxy. Zynga shares took a hammering over the last few days because of it.

From reading WSJ the CFO of Facebook asked the major retailers how much they were going to buy, and figured that demand was much higher than the available stock, so he spoke to share holders, and got an extra 25% available for retail investors. This oversupply pretty much caused the price to tank once the initial excitement was over. Technical issues didn't help either.

As for suing Facebook... caveat emptor. Shouldn't be trading if you do not understand the risk. Morgan Stanley talked the IPO price up and up and up. And the market said "no". For now anyway, I can see it going up for the next 60 days, at least until the average Facebook employe is allowed to sell their shares.

 

[Access Denied]

what he is saying is that when market players think a stock will go down in price they 'short sell' it.... this is done by borrowing stocks from institutions which hold a bundle, then selling them on the market hoping the price will go down, after which they buy them back cheaper and give them back to the institution which lent them the stock.

Isn't that exactly what hedge funds are?

 

[SilverHood]

Isn't that exactly what hedge funds are?

A hedge fund is just a business that charges a fee or commission for managing other peoples or companies money. Some manage a few million, others manage billions. Anyone can short sell a security, it's a valid enough investment strategy. It's just that there's not been many shares of Facebook in circulation, so if you were to sell them short in a significant amount, you might end up not being able to buy them, which will get you banned from trading, or the price will rise as you have no choice but to meet the obligation of the buyer of your short sale. Have a read of this, it demonstrates what happens when you get burnt in a short squeeze.

http://www.telegraph.co.uk/finance/...ny-got-revenge-on-the-hedge-fund-locusts.html

 

[Poag]

Theres another "short" selling which is naked short sell. Where you sell shares without having any to actually sell, hoping the price goes down. You then buy some shares at the lower price and give them to the original person you sold to, pocketing a tidy profit for yourself.

Dont mix up the two


The whole facebook IPO has been shady since the start, the launch problems just make it look significantly worse.

 

[Chilly]

Retail investors have no business trading on day 1 of an IPO. They have absolutely no idea what they are doing and should avoid at all costs. Pretty much any IPO open to retail investors is almost certainly overpriced.

Also, who cares if the price drops after an IPO? Serves people right for buying at that price. I don't understand what the fuss is. Assuming some know it all nerd bet his last years $20k bonus on facebook shares rising to $50 and in fact dropped and he lost 1/3 of it. That's what happens when novices get involved in the stock market. Caveat fucking emptor.

Betfair (my employer) had a disasterous IPO. We floated at £13, peaked at £15 and now trade at £7.20 or so. BET.L if you want to see how lol it can actually be. This is purely down to superb marketing in the run up to the float. It's not our fault if we managed to persuade people to buy in at £lol. They had all the info, as did the facebook buyers.

 

[DaGaffer]

Sorry, I think caveat emptor applies here; there were plenty of analysts pointing out the ridiculous valuation of Facebook long before the float. This was never intended as a retail IPO. It was valued on a multiple of 25 when the most aggressive tech floatations over the last few years have been about10

 

[cHodAX]

You know it is a messed up situation when even the far right wing American media are calling for an investigation.

 

[Shagrat]

Theres another "short" selling which is naked short sell. Where you sell shares without having any to actually sell, hoping the price goes down. You then buy some shares at the lower price and give them to the original person you sold to, pocketing a tidy profit for yourself.

Dont mix up the two


The whole facebook IPO has been shady since the start, the launch problems just make it look significantly worse.

I thought naked short selling was pretty much a big no no now and you'd end up in some serious shit if you were still doing it?

 

[opticle]

http://www.guardian.co.uk/technology/2012/may/24/facebook-ipo-mark-zuckerberg-nasdaq?newsfeed=true

Sentiment also ran against the sale after it was revealed that Facebook's early backers were increasing the size of their selloffs. Some 57% of the shares sold came from Facebook insiders. Typically the percentage of insider sales is under 10%. In other recent tech IPOs including Groupon, Zynga and Yelp the percentage was less than 1%.

I find this pretty interesting.. If you've got an opportunity to essentially make yourself loaded and set for life.. Why not sell up ? There's a point where the amount of money you are guaranteed to make, it just becomes a little crazy not to.

On top of that, if you have an inkling things might be overpriced..

The fact that over 50% of shares sold were from company insiders is pretty mental.. abandon ship ? KKthxbye.

P.s. Ta for the explanations, appreciate it.

Trading is mental.. When it comes down to it, its all just extra-complicated gold-plated betting. Sometimes it just sounds borderline illegal and that the financial sector has just made up some rules completely arbitrarily for its own benefit / the profit of those on the inside that make the rules and understand it, only its too complicated for normal folk on the outside to realise. Particularly the naked short-selling.

 

[Chilly]

Often the board will restrict the amount you can sell during a float to prevent exactly this. You dont want too much stock floating about pulling the price down. Top execs will often have 6-9-12 month lockouts or be heavily restricted on what they can sell.

 

[Raven]

I wonder if the people who bought facebook shares would be interested in helping me with a large amount of forgotten Iraqi gold

 

[SilverHood]

http://www.guardian.co.uk/technology/2012/may/24/facebook-ipo-mark-zuckerberg-nasdaq?newsfeed=true



I find this pretty interesting.. If you've got an opportunity to essentially make yourself loaded and set for life.. Why not sell up ? There's a point where the amount of money you are guaranteed to make, it just becomes a little crazy not to.

On top of that, if you have an inkling things might be overpriced..

The fact that over 50% of shares sold were from company insiders is pretty mental.. abandon ship ? KKthxbye.

P.s. Ta for the explanations, appreciate it.

Trading is mental.. When it comes down to it, its all just extra-complicated gold-plated betting. Sometimes it just sounds borderline illegal and that the financial sector has just made up some rules completely arbitrarily for its own benefit / the profit of those on the inside that make the rules and understand it, only its too complicated for normal folk on the outside to realise. Particularly the naked short-selling.

The best way to look at day trading is gambling in a casino. It's a mugs game where the house usually wins. There are exceptions, but they're far from common.

As an individual investor, you have no share holders to satisfy, so you can afford to take a long view, over a year or longer. Your daily profit and loss is not important, so you can hold shares during bad performance an market downturns, as long as you believe the company will recover.

As for naked short selling, it's really not that complicated. The following is a pretty decent explanation of short selling:
http://www.investopedia.com/articles/optioninvestor/09/naked-short-selling.asp#axzz1vp7SDjJo

 

[Wij]

I wonder if the people who bought facebook shares would be interested in helping me with a large amount of forgotten Iraqi gold

Much cheaper to invest in my magic beans tbh

 

[Moriath]

Not going near you magic seed wij sorry

 

[opticle]

Much cheaper to invest in my magic bean tbh

Fixed.

Ta Silver I understand the concept of naked short selling.. Some of the rules behind the mechanisms and tricks for trading just baffle me though in the sense that they sound so arbitrarily made up - who decides these things are Ok ?

Then again, the world of shares, interests, exchange rates, currency trading, etc. all baffle me a bit and I sometimes wonder if we shouldn't just go back to barter.

 

[Job]

It;s quite obvious that we need to shut down the stock markets and return to dividend only profits like it used to be, pretty drastic on the short term, but those gambling, workless dickheads will lead us into shit time after time, shut it down and point them at a casino with their own money.
Then the world can slowly build secure profitability based on reality, I mean seriously, it HAS to happen, probably will after WW3.

 

[Zenith.UK]

They'll be the first against the wall when the revolution comes?

Sounds very Douglas Adams.

 

[Job]

Gambling on share prices was no the original purpose of the stock market, the big money attracted the loonies and the money they falsely created attracted the pension funds and the rest is history.
One great big pyramid scheme gone mad.

 

[Hawkwind]

The reason for the class action is that they knowing held back information key to the future of the business that would have directly affected the share price.

Months ago they commissioned reports to look at the future business which is wholly based on advertising revenues. Unfortunatly, the reports which were only shared with a select few showed that a tiny percentage, much lower than anticipated, click on the advertising. That directly relates to how much money they will earn. Their whole business model was to take a huge chunk of the multi billion dollar worlwide advertising business. The reports suggest their share of that will be much lower than they forecast. They intentionally hid that information from the public domain. At least that is what the plaintifs will try to prove.

 

[opticle]

Advertising baffles me. They pay so much money but such a tiny fraction must even acknowledge the adverts..

A little off topic, there's a lawsuit against a company in the US making a box that records the telly and gives you an option to cut out the adverts - the TV companies are going crazy over it as the advertisers pay silly money for the ad spots.. but most people either leave the room, fast forward or pay zero attention to what's on the screen anyway.

Advertising again often seems to me to be a pretty false enterprise created and hyped up by those on the inside.. companies are paying millions for the X Factor ad spots, but does it actually gain them much in sales at all ?

I know it used to be a big deal, but I only notice the things I see in the stores now, I don't watch adverts and I don't look at posters as they're all lies.. I'll buy something if it's good and I won't bother if its shit.

 

[Ctuchik]

Ads still are a big deal, even more so now then it used to be. If not for ads, FB or Google wouldn't even be half as big as they are now.

And you may not notice that you look at ads or posters or what not. But unconsciously you still register parts of it. And it still influence you to a degree.

I mean, even product placement is included here you know. And even though most of that is to fucking obvious, most cooking shows for example do them quite sneakily...

So you are still looking at that stuff, not just the "official" things..

 

[opticle]

I have never read or acknowledged a Facebook or a Google ad And then I got Adblock..

I disagree, maybe it's just me, but the vast majority of adverts wherever they are mean sweet fa to me. I buy what looks good in the store (washing powder, frying pan, deoderant, food, meh) and/or has a good review (electronics - mp3, camera, tablet, laptop).

I think they have very little impact [on me because I just don't trust them] and I'm surprised people set so much stock (and money) on them - which I suppose is why the ad revenue for Facebook was vastly overestimated.

For big names that are actively competing which eachother like Apple/MS/Phone Manufacturers or Pepsi/Coca Cola I get it, they need to get their name in people's heads, but for the vast majority of things I couldn't give a toss unless it's a new product that sounds cool (when iPods first came about springs to mind - those were good).

TV ads have more sway with me, but internet ads mean sweet fa - perhaps because they're so diluted with dodgy ones, even the ones on Facebook that I used to see looked like cons.

 

[cHodAX]

Same, I block ads on principle, not because I don't want to support good sites and services but because the adverts are so invasive and often target you on a subconcious level.