Facebook (FB) Clueless About Its Own Stock

One of Facebook’s top honchos recently met with the top dog at BlackRock (BLK) because Zuckerberg and crew have no idea why their share price is going down the tubes. If they’d been reading the handful of blog posts I devoted to their company they could have saved themselves the trouble.

Pricing the stock high enough to discourage flippers was a dumb rationale. No corporate executive should try to outguess what a bunch of random traders will do once shares are in public hands. Just ask Dick Fuld of Lehman Brothers (LEHMQ), who famously told his executive team that he wanted to “kill” short sellers for betting against his company. Facebook (FB) would have been better off leaving some money on the table and pricing its IPO somewhere in the high $20s. Let the underwriter and initial traders get their pop and then back off.

Morgan Stanley (MS) must be one seriously messed up firm for allowing a client to be more concerned with a handful of flippers in the aftermarket than the insiders who have held on since Facebook’s beginning. I’ve said in the past that FB should be priced in the single digits. I might as well say the same thing about MS now. Companies this dumb with business models based on nothing but hype deserve each other.

Full disclosure: No position in FB or MS at this time.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

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