Something to know before buying into the Facebook IPO

[Sammich]

With all of the ridiculous amount of media hype surrounding the FB IPO it is starting to look like a mega pump and dump. Here is an interesting related article: FACEBOOK IS "GETTING WORSE, NOT BETTER" -- It's Not Just GM That Thinks Facebook Ads Don't Work On the eve of the Facebook IPO, the country's third-biggest advertiser, GM, announced that it was pulling its entire $10 million ad campaign from Facebook because the ads don't work. This was obviously bad news for a company that many people still think will one day be bigger than Google. GM's competitor, Ford, quickly suggested that GM was the problem, not Facebook, by saying that its own Facebook ads work perfectly well. But other huge companies also appear to be having serious doubts about the value of the Facebook platform. If you would like to see an actual pump and dump in operation there are numerous videos on youtube from people that got ripped off by an organization called National Inflation Association/inflation.us. Interestingly, it is being run by none other than Jonathan Lebed, the boy wonder and media darling of about 10 years ago who was crowned a financial genius as he turned huge profits in the stock market while only a minor. Well, that was until the Securities and Exchange Commission prosecuted him for the pump and dump scams he was running. -- -------- Post added 18-May-2012 at 03:31 AM ---------- Previous post was 17-May-2012 at 09:16 PM ---------- Here is another article in Forbes by a media buyer that dropped Facebook because of negative returns. Why I Lost My Faith In Facebook Advertising Long before GM pulled its $10M in advertising from Facebook, I lost my faith in the platform. As an online media buyer for American Apparel, I had cut the majority of my spend each month for the preceding 12 months. From the time that Facebook stopped serving banner ads through Microsoft to now, the spend I oversaw fell from nearly $1M per year to a few thousand dollars a month. As I told Direct Marketing News in March 2012: “The return is not there. Unless you’re selling apps or lead generation, I think Facebook ads are underwhelming. I see bad things ahead for the Facebook IPO and perhaps, rising dissatisfaction among clients.” He goes on to describe how Facebook is a giant ponzi scheme: Facebook is a Ponzi Scheme Now that you know what a Ponzi scheme is, I will tell you how and why Facebook is like a Ponzi Scheme. The argument is similar to how Paul Graham describes that Yahoo was a ponzi scheme in 1998. Facebook posts huge revenues. In fact, recent reports are that Facebook is very profitable. This boosts both their respect in the world and their valuation. However, these returns, while real, are unsustainable. They exist and are sustained in the same manner that Ponzi schemes are. Facebook is a Ponzi Scheme. Have you ever bought a Facebook ad? I have. I have talked to many, many people who have. We have spent hundreds, many have spent thousands or even more, experimenting with Facebook ads. They are worthless. Nobody ever looks at them, and nobody ever clicks on them. I just talked to someone who was trying to promote a book. He found it cost him over $100 in ads to sell one book. Moreover, as you increase your ad spending, people get used to the ads and just ignore them. So, your already low click-through rate plummets even further. People go to Facebook to interact with their friends. It is fundamentally different from the ad platform that is Google. People go to Google to find something they need, possibly ready to buy, which a good percentage of the time can in fact be solved by someone’s ad. Facebook ads, on the other hand, annoy users. They yield no real value, and thus no profits. I feel really bad for all of the sucker...uh...investors who aren't part of the high frequency trading big money elite and are going to get hooked into this albatross only to watch their life savings disappear after the big boys make a co-odinated dump of shares. This isn't like putting money into something like McDonalds or Apple. These companies produce an actual physical product, whereas FB only produces an intangible fad.

[Tricky]

The more corporate facebook gets the more I'm turned away from it. I do still use it because it is the simplist way of keeping up to date with what old friends are up to now we're all scattered far and wide, but I didnt join it to be hounded by adverts. I'd rather pay to use the service and for it to go back to the format it was in 4/5 years ago when it was basic and without ads than use it as it currently stands. I just want to keep in touch with friends, not buy loads of shit and have advertising surveys pushed at me. Myspace went down the same route and everyone abandoned that quite quickly (partly down to facebook too). Also more of an age thing than anything else, a lot of my friends have had kids now, and all they post on Facebook is pictures or statuses about their kids which gets boring very quickly. I dont care if their little princess slept all night or rolled over all by herself. new parents dont seem to get that nobody else is actually interested beyond the "hope the family is all well" thing.

[MinionZombie]

^^^ Tricky, get yourself AdBlock Plus (free and popular browser add-on) - you won't see an advert ever again. Simples. You know what made me laugh, in advance of FB's new timeline feature, there were loads of articles from utter idiots screaming that you'd be exposed as some heathenous scumbag and other such poorly informed stories of drama and totally misplaced panic - nevermind that there's a load of privacy options available, and that the individual is responsible for the content that is uploaded...

[Tricky]

I dont suppose AdBlock will stop all those ones that appear down the right hand side of the facebook browser though? the ones that want you to "like" specific groups and brands or question you about things your interested in etc (which they target you with through software that analyzes words you post in your status updates). I can ignore them of course, but their presence annoys me. Luckily I mostly access it through my smartphone these days and none of the adverts appear on there. YouTube is getting bad as well now, at least half of the videos you try to watch have adverts attached to them which you have to watch so much of before it lets you skip past them. Then a lot of the music videos on there are through Vevo now, always frontd by an advert and they are usually the censored versions with half the lyrics missing, does my napper in!

[Christopher Jon]

That bandwidth ain't free. Has youtube even made a profit yet?

[MinionZombie]

I dont suppose AdBlock will stop all those ones that appear down the right hand side of the facebook browser though? the ones that want you to "like" specific groups and brands or question you about things your interested in etc (which they target you with through software that analyzes words you post in your status updates). I can ignore them of course, but their presence annoys me. Luckily I mostly access it through my smartphone these days and none of the adverts appear on there. YouTube is getting bad as well now, at least half of the videos you try to watch have adverts attached to them which you have to watch so much of before it lets you skip past them. Then a lot of the music videos on there are through Vevo now, always frontd by an advert and they are usually the censored versions with half the lyrics missing, does my napper in! Not sure about the former, but regarding the latter question (YouTube), it removes the ads before videos.

[Tricky]

You know what made me laugh, in advance of FB's new timeline feature, there were loads of articles from utter idiots screaming that you'd be exposed as some heathenous scumbag and other such poorly informed stories of drama and totally misplaced panic - nevermind that there's a load of privacy options available, and that the individual is responsible for the content that is uploaded... I think the concern for a lot of (pathetic) people was that because they were now in a relationship, their current gf/bf would be able to easily see all their other past posts on their timeline that involved either exes or conquests or their sleazing on other people while they were single, and that it would somehow wreck their current relationship. Fair enough it probably could if you're an insecure jealous arsehole, but any girl who gets involved with me knows I come with a past, and I know she comes with one too which I'm not bothere about, so its really no concern! I know girls who have deleted me from their friends list when they get into a relationship presumably because their terrified their new boyfriend will dump them purely for having other lads as friends, pathetic!

[MinionZombie]

I think the concern for a lot of (pathetic) people was that because they were now in a relationship, their current gf/bf would be able to easily see all their other past posts on their timeline that involved either exes or conquests or their sleazing on other people while they were single, and that it would somehow wreck their current relationship. Fair enough it probably could if you're an insecure jealous arsehole, but any girl who gets involved with me knows I come with a past, and I know she comes with one too which I'm not bothere about, so its really no concern! I know girls who have deleted me from their friends list when they get into a relationship presumably because their terrified their new boyfriend will dump them purely for having other lads as friends, pathetic! Probably quite a sound theory - and one that makes the panicky petes look all the more silly, because you can delete anything you want at any time (the panicked 'news articles' seemed to pretty clearly claim that once the timeline went up you wouldn't be able to delete anything ever, which is just moronic).

[Danny]

I had to restart my facebook this week since a site i used for as long as hpotd- including meeting freinds from their in person to hang out- was going down and it was just a default way for us to keep in contact and honestly? i dont see the point of the ads. they always advertise shit nobody is in the right mindset to consider when browsing a social network site. If it was music labels or something i could get it but mine had an ad for f*cking DAZ washing powder on it earlier. what in the what.

[AcesandEights]

I don't usually look at the right side of the screen while logged into facebook and just tune a lot of the ads out, but from what I've seen hpotd does a better job of matching up what I've recently been searching for to some of the ads they include the mix. Honestly, I could care less about anti facebook propaganda, it just bugs me that Saverin is going for a full tax dodge.

[Sammich]

It appears that the public didn't fall for the excessive and relentless hype or have more important things to spend their limited amount of money on like food and rent. The people that blindly dumped their life's savings into FB stock are going to be hurting really bad next week when they have to dump the stock for much less than what they paid for it today. Facebook IPO: Big Volume, But Little to Show For It Facebook set a record for volume on its first day of trading, but the stock otherwise failed to live up to all the hype and posted just a modest gain for the day. After an attention-grabbing half-hour delay to start its initial public offering, Facebook shares opened at $38, surged as much as 11 percent during the day, but ultimately finished just above unchanged after hitting an intraday high of $45. Late in the trading day the stock threatened to hit negative numbers, vacillating around unchanged as underwriters put up a vigorous fight to defend the breakeven point. So in other words these "underwriters" were frantically buying up FB shares to artificially inflate it's value, just like what the fed's "plunge protection team" does to the stock market. -- -------- Post added at 09:16 PM ---------- Previous post was at 08:57 PM ---------- Uh oh, this doesn't bode well for the IPO. I wonder how low the price will go next week. Facebook Suit Over Subscriber Tracking Seeks $15 Billion Facebook Inc. (FB), the social network operator whose shares began trading today, was sued for $15 billion in an amended complaint by subscribers who claim the company invaded their privacy by tracking their Internet use. In the complaint filed yesterday in federal court in San Jose, California, the plaintiffs say Facebook improperly tracked users even after they logged out. Twenty-one cases making similar claims have been consolidated before the court. The latest filing seeks to proceed on behalf of U.S. residents who subscribed to Facebook from May 2010 to September 2011. Facebook, which sold stock in an initial public offering valuing the company at about $104 billion, has been scrutinized by regulators in the U.S. and Europe over how it protects users’ private information. Last year, a German data-protection agency said it may fine the Menlo Park, California-based company over facial-recognition software used for tagging photos. -- -------- Post added at 11:52 PM ---------- Previous post was at 09:16 PM ---------- You all saw the "pump" and it appears here is the "dump": Facebook insider sales are huge red flags Commentary: Think you’re smarter than Peter Thiel or Goldman Sachs? SAN FRANCISCO (MarketWatch) — If you had inside knowledge of a hot investment that you expected to be worth more in six months or even three months, why would you sell your stake this week? That’s a question retail investors should be asking themselves now that the level of stock-dumping among Facebook Inc. FB +0.61% insiders has reached a level that can only be described as “Grouponesque.” Here’s just how much certain Facebook insiders are selling. With the additional sales planned this week, early investors are now selling more Facebook stock — and pocketing more money from the offering — than the social network itself.

[Christopher Jon]

Let's see what it's worth in a year, five years and ten years. LinkedIn opened at $45 and is now at $99. Facebook should see steady gains to similar numbers even if the first day or first week aren't spectacular. Investing isn't an instant gratification slot machines.

[Sammich]

The difference with LinkedIn was that the opening price was $45 and closed at $90. Plus LinkedIn serves an actual service to professionals, unlike FB which essentially is a place where kids post pictures of pet cats and other b.s. FB struggled to stay at the opening price of $38, with the help of a reported purchase of $1 bill in shares by the underwriters. Then this week came the $15 billion class action breach of privacy lawsuit and also a patent infringment lawsuit by Yahoo: As It Warned, Yahoo Sues Facebook Over Patents Yahoo stepped up its new feud with Facebook on Monday, suing the social-networking giant and accusing it of infringing on 10 patents tied to an array of Web technologies. According to the lawsuit, filed in Federal District Court in San Jose, Calif., Yahoo contended that Facebook had knowingly and improperly violated some of the company’s core intellectual properties. The patents, which were issued from 1999 to 2010, cover advertising, privacy, customization, social networking and messaging. IMO, physical silver and gold still remain the only stable investment. You won't be getting dividend checks, but the purpose of precious metals is wealth preservation.

[Christopher Jon]

I think you have a grudge against facebook. It is the second most visited website, after google, on the planet. It's more than just a place where kids post pictures of pet cats and other b.s.

[LouCipherr]

"Something to know before buying into the Facebook IPO" Yeah, "DON'T BOTHER!" (sorry, couldn't resist) It's more than just a place where kids post pictures of pet cats and other b.s. You're right - it's a place where Zuckerberg, the CIA and the FBI (and whoever else FB is in bed with) can gather all the data they want from people who aren't smart enough to realize what information they're just freely throwing their direction. *puts on tinfoil hat*