Facebook (Nasdaq:FB) comes out with earnings July 26 , 2012. They are still below the IPO price. They are also still below the speculative run up to about $42.00. Just take a look at the fundamentals. But first let’s pay a few moments attention to Jupiter Research which says 2012 internet advertising spend is expected to be $32.5 Billion. That’s really big. I mean Jupiter is really big.
Morningstar has the forward PE at 49. Do the math what can these guys do to fill in reality wise between 49 forward PE and like right now tough numbers.
The IPO was what $38. A lot of guys want it to reach about there and then sell massively just to save their sorry little behinds. Whether GM’s (NYSE:GM) $10 million account comes back or not is not enough to fill in the cracks. With a $65.5 Billion market cap these guys need to come back with something really big. High growth rate for the next few quarters is not going to do it.
I am willing to bet that no and I mean no fund manager is willing to put “I bought the Facebook IPO” on his/her resume. This one is headed toward the scrap heap all on its own. Watch for the pre-earnings gobbledygook as commentators speculate about what is going right for Facebook. When it becomes obvious, the sell sell sell button will wear out.
The quandary becomes a governance one. The supposed transgressions of Morgan Stanley (NYSE:MS) and Nasdaq as a stock exchange will start to fade in the rear view mirror. Management’s every word and nuance will be analyzed and parsed. If they come out with warnings of lesser earnings stock drops and lawsuit city takes over. If they come out with optimism they will be suspect.
By the way the GM account is a bellweather sign. Auto is a big spender when it comes to marketing. If GM is saying out loud that they are not seeing the point that’s bad. Very bad. Marc Zuckerberg needs to become a car sales-person and fast.
George Gutowski writes from a caveat emptor perspective.
- Investors Sue Facebook (FB) and Underwriters (valuewalk.com)
- After Ruining Facebook’s IPO, GM Comes Crawling Back (GM, FB) (businessinsider.com)
- Why Mark Zuckerberg Should Resign from Facebook (247wallst.com)
- Facebook’s Board Do They Have What Facebook Needs? $FB $MSFT $MS $WPO $WMT (financialskeptic.wordpress.com)