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.”

http://wp.me/p1wyWy-29

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.”

http://wp.me/p1wyWy-3i

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

Richard House

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