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Facebook insider sales are huge red flags

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posted on May, 18 2012 @ 07:16 AM
Metaphorically and hypothetically speaking, I wouldn't buy a single share of a certain overhyped blimp with your money, never mind my own. I expect a quick pop upwards followed by a brief sideways grind and then a long, hissing decline. Not that this constitutes advice to buy hold or sell any instrument, Facebook or otherwise, mind you (obligaory disclaimer).

I don't usually bash or laud specific investments on this board, and on the rare cases I when I do, I usually stick to the area that most reflects my personal experience, which is commodities, not stocks. But seeing the hype around Facebook makes me think of 1999 all over again, and not in a good way. Like I said, nothing I write here should be construed as advice. But it bears notice that a number of insiders are dumping large amounts of their shares right out of the gates - not something that inspires confidence.

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. 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.

That’s similar to what happened during several early funding rounds of Groupon Inc., whose stock is now trading far below its IPO price.

More at Source (Market Watch)

edit on 5/18/2012 by silent thunder because: (no reason given)

posted on May, 18 2012 @ 07:24 AM
I'm so disgusted with this whole thing. It's like Google's IPO. I waited, waited and watched for two years for it's IPO. Then finally, the big moment was approaching. I called a stock broker to learn that only those having a minimum of one million dollars invested with Morgan Stanley (I think it was) would be able to make the initial purchases. The "boys" were billionaires within two hours.

It's the same with Facebook. And did you see that one of the owners will take his billions and leave the country because it will save him something like 34 million dollars in taxes?

I'm so fed up.

posted on May, 18 2012 @ 07:32 AM

How bad is it? The AP points out that in a big IPO, institutional investors typically nab up to 90% of shares before Joe Investor can get involved. And chances are, there are plenty of Joe Investors with bigger wallets and better ins than you and I have. Shares will be available eventually, of course. Just as soon as the stock's risen enough that the big dogs feel comfortable cashing out.

So Should I Buy Facebook Shares Later?

Actually, maybe! But that depends on two things: timing, and your intentions.

Today is out of the question. It's going to be a pure bacchanal, institutional investors gorging themselves on inflated prices, then unloading shares on the way back down, using hopeful schlubs as their own personal vomitorium.

edit on 5/18/2012 by BellaSabre because: (no reason given)

posted on May, 18 2012 @ 07:48 AM
Eduardo Saverin is moving to Singapore, after giving up his American citizenship.

The move has drawn ire from Senators Chuck Schumer (D-N.Y.) and Bob Casey (D-Penn.), who accuse Saverin of taking advantage of the United State’s relative economic strength and stability, only to leave without contributing his fair share back to the country where he built his fortune.

“Mr. Saverin has decided to ‘defriend’ the United States of America just to avoid paying his taxes,” said Sen. Schumer in a statement. “We aren’t going to let him get away with it so easily.


Saverin is denying it. Pfft. Maybe I'm just bitter.

posted on May, 18 2012 @ 07:51 AM
I thought google did a Dutch auction on their IPO which really pissed off a lot of big money people. Could be wrong there though.

IPO's are an opportunity for a company to raise capital by selling shares to the public, but often times it is used as a way for those who were able to invest before going public to cash out on their investment. I expect the insiders and early investors to make a killing today with all the bag holders itching to own a piece of facebook. Any retail investor who is a buy and hold investor, buying today IMHO is stupid. There will be money made of Facebook today though, mainly by early investors, but also by those nimble enough to day trade it. The pricing is at $38/share I expect first posted price to be $60ish maybe higher and it will trade higher than that before pulling back. I'm going to take a guess and say high tick will be $85ish and will close the day around 60. However I think you will be able to get it for

posted on May, 18 2012 @ 08:07 AM
reply to post by jefwane

No, apparently you are correct. I didn't even know what a "Dutch Auction" is. The source gives Google as an example.

In a Dutch auction IPO, potential investors enter their bids for the number of shares they want to purchase as well as the price they are willing to pay. For example, an investor may place a bid for 100 shares at $100 while another investor offers $95 for 500 shares.

Once all the bids are submitted, the allotted placement is assigned to the bidders from the highest bids down, until all of the allotted shares are assigned. However, the price that each bidder pays is based on the lowest price of all the allotted bidders, or essentially the last successful bid. Therefore, even if you bid $100 for your 1,000 shares, if the last successful bid is $80, you will only have to pay $80 for your 1,000 shares.

The U.S. Treasury (and other countries) uses a Dutch auction to sell securities. The Dutch auction also provides an alternative bidding process to IPO pricing. When Google launched its public offering, it relied on a Dutch auction to earn a fair price.

Source: more:

posted on May, 18 2012 @ 08:08 AM
Wonder what that slime bag Bono is doing with his share's?That will give you a indication where this is going.

posted on May, 18 2012 @ 08:18 AM
reply to post by BellaSabre

I thought so. The reason it pissed off so many institutional and big money people is that they weren't as able to gobble up all the shares at the open while running the price up and sell to the retail investors for a quick gain like they are with normal IPO pricing.

Much luck to anyone buying Facebook today though. I hope for your sake I'm wrong about the long term price targets. If it holds over $50 for a while I'm going to look at some puts as soon as an options chain opens.

posted on May, 18 2012 @ 08:19 AM
Oh Jeez, I'm talking to myself again. Buh bye.

Reply to jefwane: Oh, a person! lol.

Anyway, yes, I probably will see how things look later too. But all the 'big money' will be made quickly, and only the crumbs left of course. We'll see.
edit on 5/18/2012 by BellaSabre because: (no reason given)

posted on May, 18 2012 @ 08:50 AM
reply to post by silent thunder

I am so glad to see someone posted this thread as I was just about ready to do it myself after reading 2 articles posted at Reuters. I am totally disgusted by this, capitalism at it's finest.

According to one of the Reuters articles I read this morning, this is seen as a complete slap in the face to the average Joe investor:

The scramble for shares in what is one of largest initial public offerings in U.S. history quickly divided the haves from the have-nots on Thursday. Those with big brokerage accounts and a long history as customers of Wall Street firms likely got at least part of their orders for Facebook shares filled, but would-be buyers who had no such ties were lucky to get any.

Insight: Who got Facebook shares? Fairness may not come into it

[sarcasm] Yes, yes, Facebook cares about you the subscribers!! The one's that made us who we are today!! But, sorry.. you sods are not so important to us that we are willing to take a chance on the common scrubs who made us who we are and are instead going to deal with the fat cats who can make us richer faster. Hope you enjoy your canned tuna while we dine this evening on Kobe beef and wash it down with a fine bottle of Dom" [/sarcasm]

I realize this is not illegal, but I question it's morality to a degree and this move by Facebook makes me even more certain that my move to not have a Facebook account in the past was the right move and can cement the fact that I will never have a Facebook account in the future. If FB had gone about this much as the same way Google did, I would not have nearly the hard feelings towards FB that I currently have. As explained in the same sourced Reuters article linked above, this is how Google went about things:

Google, whose founders made "Don't be evil" a core principle, in 2004 issued its stock through a more transparent process known as a modified Dutch auction. Underwriters gathered bids from investors regardless of their connections or size of their portfolios.

That created more of a level playing field for potential investors. Google's shares were priced at $85, climbed to $100 on Day 1 and are now trading at about $623.

This seems more of a fair way of going about things and allows the everyday Joe who supported them from the beginning the opportunity to show their support further by investing in the company. Whatever beef I may have with Google, at least I cannot fault them for going about this in a more equitable way than FB is.

What I see happening is the FB shares will rise, make a couple of sideways moves and then increase in price even more however much I would wish to see it fizzle out. This social media juggernaut just seems to have the midas touch and with it's fans unwaivering attitude that it's the best thing since sliced white bread I just don't see any way of stopping it. If you couple that with the fact that the fat cats are investing in this heavily, they will not let their new Wall Street darling slip into a more 'common' position, in my opinion.

Perhaps if the general public will wake up, like GM did this past Tuesday by dropping all advertising on FB, this high speed train that ends with increased deposits 1%'s already burgeoning pockets can be slowed, but I doubt it. I for one have instructed my broker that if FB ever becomes available to me I want no part in it... as I have done in the past with other companies that I find questionable. I realize this may eventually cut my own throat in terms of profit in the future, but I for one, would rather the money I invest go into companies who's business practice and mission statement I can support on a moral basis. To do otherwise is the height of hiporcisy in my opinion.
edit on 18-5-2012 by MyMindIsMyOwn because: (no reason given)

posted on May, 18 2012 @ 08:58 AM
reply to post by silent thunder

IPO's are meant to allow insiders to cash out. Thus the insider sales are not alarming. I can tell you the class of investor calling their brokers is the same class that falls for all the penny stock pumps. The sophisticated investor is waiting it out unless they got IPO shares. Be careful out there folks.

posted on May, 18 2012 @ 03:21 PM
Fleecing the people's money, only shortly after fleecing everyone's privacy.

People have to understand what they are buying when they invest in a tech company like this. Tech is so volatile... it's inevitable that companies like this grow 'till implode because that is the nature of business today; how it's taught even and who gets investment money (perpetual growth as the sole goal vs. a means to an end of having sustainable profitability/happy customer/user base/balanced healthy home life after work/etc.). And then it's down the tubes just as fast as MySpace did, with the people at the top leaving to play the game all over again ASAP via another venture. Because of HOW people do business today, nothing good lasts as long as it would have if ran under "older-school" ethics/principles.

Yes, people will cash out as bazillionaires. But it won't be you -- you are just another advertisement profile.
edit on 5/18/2012 by AkumaStreak because: (no reason given)

posted on May, 18 2012 @ 03:23 PM
It would be like myspace making a public offering.....this entire social media going public is a joke. Facebook will become irrelevant in a year when nobody can afford high speed Internet, and the younger generation (which keeps Facebook afloat) decides it isn't "cool" anymore.

posted on May, 18 2012 @ 03:29 PM
Well, I was way off. That action is almost same. I saw reports that the under writers had to step in to keep it from going under the initial price. I wonder how much jpm had to buy to keep it from going under the offering price.

posted on May, 18 2012 @ 03:36 PM
do you really need to raise $16 billion to run a free service website, where the majority of users are all about me.

now where the returns are going to come for facebook isn't from facebook itself and its ad spamming, it's going to come from what the company and executives who use those billions to buy other companies and corporations to build a corporate empire.

after a day of trading, investors made a whopping 23 cents on each share.

but for people who bought $380 million worth, or 10 million shares, they made $2.3 million. not bad for one day of work.

it takes money to make money.

edit on 18-5-2012 by randomname because: (no reason given)

posted on May, 18 2012 @ 04:26 PM
DO NOT touch Facebook stock with the longest possible stick that you got. I repeat...DO NOT touch Facebook stock.

posted on May, 18 2012 @ 04:34 PM

Originally posted by amongus
It would be like myspace making a public offering.....this entire social media going public is a joke. Facebook will become irrelevant in a year when nobody can afford high speed Internet, and the younger generation (which keeps Facebook afloat) decides it isn't "cool" anymore.

I believe you hit the nail on the head.

Facebook is just another fad. Before long something else will come along to replace Facebook. Fact is there are already numerous social networking sites. Even a friend of mine created one strictly for Military persons.

posted on May, 18 2012 @ 06:46 PM

....Today was all about one thing - the disaster that was/is/and will be Facebook - between late openings, overwhelmed systems, a dump to the syndicate bid and almost 600mm shares traded with the syndicate just soaking it all up at $38.00 early and into the close... Not a pretty end to the ugliest week in six month for the S&P 500 as it nears its 200DMA into the close.

posted on May, 18 2012 @ 09:29 PM

Originally posted by amongus
It would be like myspace making a public offering.....this entire social media going public is a joke. Facebook will become irrelevant in a year when nobody can afford high speed Internet, and the younger generation (which keeps Facebook afloat) decides it isn't "cool" anymore.

Yup - not sure why you would invest in a company that at the whim of teenage girls could send the whole thing in the crapper like Myspace.

posted on May, 19 2012 @ 01:25 PM
Facebook's IPO fails to live up to all the hype

In the end, Facebook’s IPO fell flat.

After jumping more than 10 percent at the start of trading, shares of the social network pulled back in their debut Friday to gain a mere 23 cents a share, suggesting a cooler-than-expected reception for one of the most anticipated initial public offerings of stock in years.

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