Facebook got listed on the Nasdaq today. Would you buy shares at $40 a share? If yes, why? If no, Why not?
I thought it would fail. Presently it is a $40, $2 over its listing price of $38.
Mundane Musings: The Great Facebook IPO
In one word NO
Some pointers as u have asked to justify the answer:
1. The major reason why almost every analyst has a NO recommendation for FB shares is FACEBOOK itself !!
Mark has gone mad and is charging exorbitant rates for ads on FB and the market is on a steep decline as far as ad revenue is concerned !!!
2. Revenue is on decline and Q1 results have been negative for FB,First time ever in the history of this company.
3. Other HOT BC IPO's like google,yahoo,MSFT when started trading on the exchange were backed up by strong Q-Q results whereas in case of FB,its just the opposite.
4. Google/MSFT/YAHOO are still a safe bet just coz of one factor --------diversification..Just imagine,if google only had ORKUT & Yahoo only had messenger as their major revenue source at the time of their IPO,their stocks would have been somewhat trading @ 1-2 $'s per share today
5. BIG US/EU Brands dont advertise (generally) in INDIA(biggest FB user base).....Thats also one of the reasons why FB revenues will follow a flat curve
I have valued FB in my excel spreadsheet....will post detailed analysis and valuation @ some later date...!!!!
Verdict-- Hell NO !!!