I will not buy Facebook shares, says Warren Buffett

Billionaire Warren Buffett said he will not be buying shares in Facebook but dismissed fears that financial markets are in a second dotcom bubble.

Facebook said this week that it expects to be valued at up to $96bn when it floats later this month.

That valuation for a company that made $205m of profits in the first quarter has prompted some to warn that investors are risking getting carried away with internet hype just as they did in the late 1990s.

However, Mr Buffett said: "It is not a bubble... this is not what we were seeing in late 1999 all the way into 2001. We aren't in any bubble phase of anything."

The Telegraph

If you work out the price earnings ratio ($96bn versus a quarters profit of $205m) you would need to hold the stocks in Facebook for 117 years to get your money back from earnings.

I think facebook is a little over valued.

Well.. I'll tell ya, what Google IPO'ed at under $100. It flew by hundreds in a blink, crossed $600 in 2007 and is now sitting around $450.

If Buffet isn't going for the Facebook IPO, I guess he figures profit at this level is beneath him. Anyone who HAS the money to risk on the outside chance something goes horribly wrong..and doesn't try on this is crazy. Who cares for long term...but this IPO is vound to double/triple almost right away if past ones are anything to go by.

Besides...there hasn't been a juicy IPO that normal people would even know the name of n years. This will have all the normal folk with a few bucks and an online Etrade account giving it a shot too... Oh yeah... Long term may be a loser in these times. but the short term rush of a Vegas ride should be intense while it rockets and then finds it's balance.

^^ All strictly my personal opinion, of course. No one can sue me if it IPO's to a 50% loss of value in the first hour.

Originally posted by Wrabbit2000
Well.. I'll tell ya, what Google IPO'ed at under $100. It flew by hundreds in a blink, crossed $600 in 2007 and is now sitting around $450.

If Buffet isn't going for the Facebook IPO, I guess he figures profit at this level is beneath him. Anyone who HAS the money to risk on the outside chance something goes horribly wrong..and doesn't try on this is crazy. Who cares for long term...but this IPO is vound to double/triple almost right away if past ones are anything to go by.

You could be right, but you and I only ever get to buy IPO shares if the institutional buyers such as insurance companies and pension funds have already turned their nose up at them.

Not a lot of people know that.

Because of that reason, IPOs on average lose money for ordinary investors.

reply to post by ollncasino


Yeah.. tell me about it. I had a small inheritance which could have made me rich on Google...but went to buy the house I'm in before Google came up. Oh...I would have waited.... The worst thing is, I said this with as much certainty about Google a week before IPO.. I could have cried by seeing I was right and w/o stock.

This time..well.. I had an inheritance again..but the economy took it well before Zuckerman decided to throw another millionaire making party. Ugh..... We normal folk just can't catch a break, huh?

A little over valued is an understatement.

The only persons or groups I could see valuing it would be World Police forces & Governments so they can get quick info on people.

Maybe he knows something about the internet,that we don't know........

reply to post by ollncasino


Unfortunately, only a small percentage of shares, perhaps as little as 10% or as much as 20%, will be set aside for retail trade(in plain English, for the non-institutional buyer). However, the set price will almost certainly not be the price the "little guy" pays. Looking at the financials, and pending legislation, as well as concerns by the public over privacy, it is an extremely risky buy. Once the price has inflated, usually without as little as a few hours, or as much as a couple of days, the institutions will start dumping the stop, and then it is every person for him/her self. Although this is not a typical "pump and dump" scheme, the results may be very similar. Proceed at your own risk.

For those that did not heed the warning about buying into the Facebook IPO, I hope in the future you understand what a mistake it is for the retail buyer to jump into these IPOs. Closing price today- $31 per share.

Thanks Obama!

www.facebook.com...

WHAT'S HAPPENING
President Barack Obama will hold a special "Facebook Live" townhall to connect with Americans across the country.

In my opinion it means two things - 1.) even octogenarians know FB is dead and 2.) people realize that the stock market is just fancy gambling for the average investor and everyone knows the house almost always wins.

story just breaking that morgan stanley (lead underwriter of ipo ) had a negative view of facebook and shared it with clients ahead of their own ipo

ouch

Originally posted by sonnny1
Maybe he knows something about the internet,that we don't know........

Dude, your statement is about as alarming as it gets. Did TPTB shove Facebook down the toilet with the anticipation of turning off the internet????????????????????????????????/

OH CRAP...

He will buy them.

Once the shares are $15 or less, Facebook will buy them back.

Less shares in circulation will drive up price.

IPO investors will have effectively made FB employees rich and then the shares will rise from there.

So transparent I can't believe no one is paying attention.

Next stop...Olympics....terror....elections...

Originally posted by syrinx high priest
story just breaking that morgan stanley (lead underwriter of ipo)had a negative view of facebook and shared it with clients

ouch

Facebook's IPO was perfectly planned. They either know the internet is about to be turned off or the world economy will collapse and Europe is headed for war. Morgan Stanly will be the bank that shorts Facebook to 5 bucks a share.

It's not like the banks haven't done this before. Countrywide CEO Angelo Mozilo was publicly praising the mortgage, housing, and mortgage backed securities markets while privately using derivatives to bet against them.

The bankers that have ruled mother Earth over the last 3 decades are perhaps some of the most evil SOBs to have ever lived.

Anyone that uses Facebook had to know that their business model is one which MUST spiral down, as far as profits are concerned. You don't buy a stock because everyone uses their product. You buy a stock because the company sells something that generates profits.
Most people I know have NEVER clicked on an ad in FB, and that is how they are supposed to generate profits.
Furthermore, the only profits generated are those made by the owners of FB, who became billionaires by selling this ridiculously overpriced stock to suckers.
Sorry to be so blunt, but the average small buyer needs to understand the entire process before they dive in and lose their life's savings in the stock market.

reply to post by ollncasino


Surely that is simply common sense?

If Glencore is only valued at $80 billion then how in hell can Facebook be worth anything like a $100 billion? One is for show offs online, the other is the premier global minerals company that has assets all over the world and has monopolies over complete areas within the mineral world (for example over an 80% share of the global copper trade).

Frankly, anyone who bought shares in Facebook last week deserves to lose their money - shows they have far more money than sense......

www.washingtonsblog.com...

Did Facebook Executives Privately Tell Institutional Investors to Lower Their Estimates on the IPO? Did Facebook Feed Inside Information to the Big Boys … While Leaving the Individual Investor In the Dark?

I don't think Wall St. has learned a thing. I wonder if Buffett opted not to buy after understanding there was some funny business? He does seem to champion the middle class far more than the average billionaire.

reply to post by kosmicjack

I'm sure that they did. This FB IPO fiasco is a perfect example of why small investors should avoid buying individual stocks period. If you wish to invest, buy funds that spread the risk over an entire sector or group.Regardless, do your own investigating before taking the opinion of others you barely know.