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Facebook Shares continue to drop than IPO Price; US Regulators to review Facebook IPO
By Jithendra Antonio
Despite several IPOs that came down below its IPO price in island nation Sri Lanka in latest years since mid 2011, earlier so called US $ 100 billion world top analysts valued world famous Harvard Dropped out Mark Elliot Zuckerberg led premier social network, Facebook's shares fell as much as 13.7% Monday the 21 May and Tuesday 22 May and went below the initial public offering price of US $ 38 on just its second day of trading. It was described as a black eye for all those involved with the social networking company going public, according to reports.
Meanwhile today it was reported that world's largest capital market driven economy United States' capital market watchdog the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority are to review issues concerning the Facebook's IPO according to Reuters.
Two top U.S. financial regulators had said the issues around the initial public offering of Facebook should be reviewed, putting fresh pressure on the company, its embattled lead underwriter and the Nasdaq. After Friday's nearly flat close and Monday's 11 percent plunge, Facebook shares closed 8.9 percent lower at $31 on volume of 101 million shares. At that price the company has shed more than $19 billion in market capitalization from its $38-per-share offering price last week according to analysts.
Reuters reported late Monday that the consumer Internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering, information that may not have reached many investors before the stock was listed. Meanwhile, JPMorgan Chase and Goldman Sachs, which were also underwriters on the deal, each revised their estimates during Facebook's IPO road show as well, according to sources familiar with the situation.
Reuters reported that Morgan Stanley selectively disclosed the change in Facebook estimates, which drew the attention of the main regulator of U.S. brokerages.
"That's a matter of regulatory concern to us and I'm sure to the SEC," Richard Ketchum, the Financial Industry Regulatory Authority's chairman and chief executive had said adding "And without saying whether it's us or the SEC, we will collectively be focusing on it."
On the contrary United States' Securities and Exchange Commission (SEC) Chairman Mary Schapiro said investors should be confident in investing, but she conceded there were questions to answer as well.
US indices closed broadly flat despite a positive start and an increase in existing home sales in April on concern about Greece. The semiconductors and materials sectors traded lower while the diversified financials and consumer durables & apparel sectors gained ground. The S&P 500 (1316.63) remains below its 20d moving average (1359.3 - downward slope) and 50d moving average (1379.5 - downward slope).
Asian markets were down today (Nikkei 225: -1.98%, Hang Seng: -1.33%, China's CSI300: -0.41%, South Korea's KOSPI: -1.1%). European indices are sharply down. European leaders are due to meet today in Brussels to discuss Europe's financial crisis in general and the situation of Greece in particular. US futures call for a weak start.
On its first day of IPO Facebook (FB +0.61% to $38.23) started trading after pricing its IPO at $38 per share, the top of the estimated range. The closing price was disappointed according to traders. Facebook, Inc. held an initial public offering on May 17, 2012, negotiating a share price of $38 a piece, valuing the company at $104 billion, the largest valuation to date for a newly public company.
It was co-founded as a private company in 2004 by Zuckerberg and classmates Dustin Moskovitz, Eduardo Saverin, and Chris Hughes while they were students at Harvard University.Mark Elliot Zuckerberg is the largest individual shareholder with 28.4 percent of the common stock and controls 56.9 percent of the voting power.As of 2012, his personal wealth was estimated at more than $19.1 billion, making him one of the world's youngest billionaires. Zuckerberg is one of the 30 richest people on Earth.
However it was reported after the Facebook's IPO, Zuckerberg will retain a 22% ownership share in Facebook and will own 57% of the voting shares.The IPO raised $16 billion, making it the third largest in U.S. history.
Unfortunately, the shares began to be traded on May 18, and though the stock struggled to stay above the IPO price for most of the day, it set a new record for trading volume of an IPO.
On the other hand the selloff in Facebook shares deepened on Tuesday 22 May, as investors continued to question the stock's valuation after Reuters reported that underwriters cut their revenue forecasts for the company before the IPO. Facebook's shares hit a low of $30.98 on Tuesday, 8.9 percent below Monday's close, and a loss of 18 percent from their $38 IPO price.
But several analysts world wide outlined that the Dominant Social Theme of the Facebook is that 'The failure of Facebook is a success, nonetheless. It's Zen; don't try to understand it'
Meanwhile free market analysts said that Facebook's stock price is down something like 20 percent from the IPO price and the damage control is being done two ways.
"First, the downward spiral is being treated as business-as-usual. Second, it's being treated as part of a larger upward ascension" they added in Free Market thinkers reports.
"We don't see it either way, of course. The Facebook fumble will now further confirm the general alienation that the US baby-boom generation is feeling when it comes to stocks and investing generally" the reports added. Free Market thinkers highlighted that they have written a number of articles about Facebook IPO's failure, much earlier and they have called what occurred in the 20th century a "dreamtime" – an era when central bank money printing sent stocks upward with gravity-defying force.
"Fiat money is the stock market's best friend. But in the 21st century – by design or otherwise – investing as a methodology of securing one's retirement is increasingly being revealed as a promotional ploy of the powers-that-be" Free Market Thinkers pointed out adding the power elite that wants to run the world also evidently and obviously controls central banking.
"If one wants to chain the world to paper money then the best way to do so is to give people a stake in it. And the best way to do that is to tie people's "retirements" to fiat money. And that's just what has happened" they added.
According to Free Market Analysts but in the 21st century, thanks to what has taken place in the larger economy and thanks to the abysmal performance of the stock market itself, people are growing increasingly distrustful.
"Anyone else notice how CNBC blocked comments on Facebook articles during the IPO. Facebook is a fad and the IPO is just one big "legal" pump and dump" a top US Free Market Analyst report added in The Daily Bell (http://www.thedailybell.com).
"Finally CNBC allows us to comment on the whole pump and dump facebook IPO. For a moment I thought CNBC was blocking all bad facebook propaganda. The only thing I am concerned with is that I hope small investors are not the ones that got shafted by MS! Remember once people start to see adds and information being sold then goodbye users" it said.
"People, even those whom one would think might be sympathetic to market-based participation, are growing wary. Too much has taken place in the past four years for even the most committed investor to be sure of the veracity of the system as it is"
"The question then becomes ... is this by design or happenstance. The answer in our view involves the organization of the modern market itself. it is, unquestionably, an artificial phenomenon and, as well, a manipulated one" The Free Market thinkers opined.
"It is manipulated day-to-day by such quasi-government facilities as the "plunge protection team" and it is manipulated in the larger sense by the interaction between central banking and securities money flows. As has been amply shown in the past four years, even such investment stars as Warren Buffet have a hard time "investing" during bear-market cycles" they added.
According to world's top analysts in fact, the world's stock markets, certainly the Western ones, continue to struggle with a bull-market in money metals and a bear market in fiat-paper money. Central bank money (fiat money) did well in the '50s, '60s and in the '80s and '90s. Gold roared back to life in the '70s and 2000s.
Free Market Thinkers note that those involved with the markets, managers, brokers and planners instinctively defend the market as it is.
"But it seems to us that it is a market at war with itself. Those at the very top who organized, orchestrated, the current marketplace are also in our view those who are responsible for its current funk" they said.
"It is a delicate balancing as we have remarked previously. World government of some sort is being prodded and pushed forward along with a good deal of chaos. The trick is to develop enough, but not too much" they added.
According to Free Market Analysts the public markets are not "coming back" until the current bull-metals cycle has run its course. And that will take a good deal of additional time.
Facebook Marriage : Mark defends his billion dollar social network property against California's Communal Property Laws?
Despite a tumbling technology stock that controls a society with over 500 million global populace, on last Saturday (May 19), just one day after Facebook went public on the stock market, Mark Elliot Zuckerberg updated his relationship status to “married,” capping off a very busy week for the couple with world wide publicity on news stands.
Mark’s 28th birthday was week ago; Monday (May 14), the same day his batter-half Priscilla graduated from medical school at the University of California in San Francisco; and on Friday, Mark took his 8-year-old company public in one of the most anticipated stock offerings in the history of Wall Street, which crashed below its IPO price of US $ 38 after three days.
According to close friends, Zuckerberg and Chan met and Harvard before Mark started Facebook, and have been dating for almost 10 years. The wedding ceremony took place in Mark’s back yard in Palo Alto, California (CA) in front of less than 100 guests, who were originally told that they were coming to celebrate Chan’s graduation, but when they arrived, found out that they were there for a wedding. “Everybody was shocked,” one guest said, speaking anonymously on behalf of the couple to reporters.
Mark wore a suit, while his bride wore a traditional white wedding gown that reportedly cost $4,700, and was designed by Claire Pettibone, a Los Angeles-based designer. Mark also designed the ring featuring “a very simple ruby” according to reports.
On the contrary The New York Times and other media outlets noted that by waiting until the day after Mark cashed in on Facebook, Mark conveniently protected his billion-dollar fortune from California’s communal property laws that state that everything a couple earns or buys after they get married is split evenly between them if they get a divorce … but anything they owned individually before the marriage is theirs to keep.
Mark married his college sweetheart the day AFTER Facebook went public, clearly establishing his pre-marriage net worth.
In another report Los Angeles-based designer Claire Pettibone said Priscilla Chan was wearing one of her dresses when she married Facebook CEO Mark Zuckerberg. Pettibone wrote on her blog that she didn't know Chan was wearing one of her most popular creations until she saw one of the photos released from Saturday's surprise ceremony.
Pettibone's publicist said Tuesday that based on a review of sales records, the designer believes Chan used a different last name to buy the dress with an Italian lace overlay at a Denver bridal shop in October. It sells for $4,700.
Reports added that Facebook representatives didn't return emails seeking confirmation. The owner of the Little White Dress Bridal Shop, Cate Malone, had told KMGH-TV that Chan returned to the store to buy accessories in April and that she didn't know who Chan was.