Face Palm

I assume the majority of my audience is familiar with the premier social networking site Facebook. If not you should really get out from under that rock, it’s filthy down there and you’ll catch a cold. What my dear readers may be less familiar with is the fabulous debacle that has been the IOP (initial public offering) launch of Facebook as a publicly traded company.

As of May 29th, a mere 11 days after the IOP, the price of FB stock has dropped 24%. On May 29^th specifically there was such a sudden drop in the price that special SEC rules had to be instituted to prevent further drops from predatory short selling. Furthermore, several lawsuits have been filed against FB alleging insider trading. One of the lawsuits claims that FB and its underwriter, Morgan Stanley, failed to properly share negative forecasts with investors prior to the IPO. Since FB profits are down there is probably something to the lawsuit.

While FB misfortunes in the stock market are bad for Mr. Zuckerberg, I love every minute of it. Mostly it’s because I loathe Zuckerberg and think he’s a git, but I have more logical reasons as well.

I would like to draw your memory to the late 90’s and the Dot-Com boom and bust. It was that fun time when everyone thought it was a great idea to invest all their money into companies that didn’t do anything but were on the internet so it all made sense…somehow. Eventually this model imploded in a spectacular fashion and the same thing is happening to FB albeit in a less spectacular fashion. 

FB doesn’t really make or produce anything, instead it gets money through two primary methods: First, it gathers and sells consumer data to advertisers. Anything and everything you’ve ever written or listed on FB has already been sold to some ad man pretending he’s Don Draper. Second, FB gets money when users click those annoying links on the side of the browser and buy something (ads which most of us ignore).

What FB lacks in substance it makes up for it hype, or as least it did. For the last year the rumors of FB going public have been lurking all over the internet, but when it actually happened it was a whole lot of Meh. While I may not have the most stalwart faith in the corrective power of the market, I think this is a case of it working wonderfully.