Forecasting the Facebook IPO debacle

I wrote this in my blog on 6th July 2011.

“Today, kings are made and unmade on the battlefield of the international capital markets. So I predict the hunchback King Mark’s Battle of Bosworth will be the Facebook IPO. This where the US$100 billion hype hits the fan for Zuckerberg and his Wall Street chums.”

I’d compared the movie The Social Network to Shakespeare’s King Richard III and noted that while  the movie ends with Zuckerberg on a high, in a position similar to the Hunchback King Act III in the play, we still had Act V to come, with the Battle of Bosworth and the tyrant’s defeat.

And on 17th July 2011 I commented on Morgan Stanley’s temptation to overhype the coming Facebook  IPO, having shown the multiples would be unjustified by advertising revenue — exactly what’s happened in the last 4 days.

“There’s no way they can justify the hyped $100 billion valuation being floated ahead of next year’s stock market IPO on this revenue model. After all, Microsoft’s investment valued the business at $15 billion in 2007.  Now, it’s as though some teenage brokers’ analysts broke into Morgan Stanley at night, ransacked former Wall Street diva Mary Meeker‘s old desk and in back of a drawer found a battered tobacco tin with a label marked: “Tech Bubble 2000: strong shit! Not to be tried for another decade.” They snuck off with it for a giggle on the fire escape before coming back to press the big red button in the trading room marked “official market rumour.”

No, I didn’t buy the stock, and should we really be that sympathetic toward those who did?

Richard House


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