Facebook IPO Post Mortem – Killer – but not for the reasons you think !

1. Say goodbye to the individual investor on Wall Street. Whatever positive impression they had of the IPO market and the stock market in general was just torched to the ground. When everyone you know associated with the stock market is telling you and the media is confirming that this could be a huge IPO that will make money for those lucky enough to get shares and the opposite happens, goodnight. All confidence in the stock is destroyed. Put your money in the bank or if you want to gamble, at least slot machines in Vegas pay out 98pct.

2. The Valuation Bubble in Silicon Valley is bursting – but not for the reasons you think. Historically IPOs function as a means of getting stock to outsiders. People who were not sold/assigned/granted shares could only buy shares once they reached the public markets. The new secondary markets in private shares changed that. They allowed outsiders to purchase shares in a market with very little liquidity.

The demand for shares outstripped the supply and you know what happens when demand outstrips supply ? The price goes up. So shares of FB on secondary market went up and up and up. (Just as LinkedIn had done before them, but it greater volumes) When it was time to go public the IPO had to be priced higher than the prevailing share price on the secondary market.

To make matters worse, those folks who bought shares in the secondary private market, driving up the share price now had the shares they wanted to buy , so they were no longer going to be the buyers the IPO counted on to eat up shares in the open market.

Can you imagine how pissed you would be if you bought a boatload of Facebook thinking you got in at a better than IPO price only to watch the price on the open market post IPO drop below the price you paid in the private market ? Ouch.

The law of unintended consequences is that the dynamics for how private companies are valued and are able to raise Pre IPO rounds could quickly change if the prices and volumes on SecondMarket and its competitors declined significantly.

3. I always laugh at all the pundits /analysts who try to tell you what any non dividend paying stock is worth. Its a function of supply and demand. Its never fundamentals. Read what I wrote a long time ago about the stock market. In the case of facebook they put an ENORMOUS number of shares into the market. Too much supply. Valuation has no relevance what so ever. Conventional wisdom says the buyers of stocks will try to determine the value of a stock before they buy or sell and make the appropriate rational decision. Not even in a Richie Rich cartoon does that happen.

4. Mobile is going to crush Facebook. The logic for Facebook’s price decline is that they have a problem in mobile. They can’t offer all the games they can in a browser. They can’t offer the same ads or branding opportunities. All true.

From the Wall Street Journal :
“As more people gravitate to smartphones and tablets, they’re increasingly forgoing the desktop to the access the Web. Between 2008 and 2011, the percentage of U.S. adults who accessed the Internet from PCs daily grew to 62% from 54%. In the same period, the percentage of daily mobile Internet users rocketed to 26% from 4%, according to Forrester Research.

“People see this modality of consumption shifting from the PC to mobile,” said Matt Murphy, a venture capitalist at Kleiner Perkins Caufield & Byers. “On top of that, mobile feels like it’s much more the kind of wide open that anybody can win kind of arena.”

All true as well.

However the same is absolutely true for every ad driven internet site. They face limitations in what they can offer on mobile vs what they can offer through a PC brower. Look at the Google search results on mobile. No where near the number of results. Thats fewer click and CPM opportunities and ZERO display ad opportunities. Of course Google has Android, but that still isn’t generating much , if any revenue for them and it isnt currently designed to.

And then lets not forget Youtube. Everyone is supposed to be dumping TV and heading to video right ? Well how can that be if most online consumption is headed to mobile ? With so few mobile users having unlimited data plans, and that number most likely declining, then what is Youtube going to do when users start complaining and going nuts over the fact that they are having to pay for the data they use to watch Youtube mobile ads ? How many youtube ads have you seen on a mobile device lately ?

Which leads to a much broader question. Just what percentage of PC Online usage will mobile displace ? Is it feasible that people will “cut the broadband cord” and live exclusively off of their mobile internet access ? Why not use your mobile as an in home hotspot rather than paying for 2 internet connections ? If you avoid streaming video and downloads its easy to stay within your caps. Do you know anyone that has cut their broadband access to go exclusively mobile internet ?

Bottom line, if you think mobile will displace online usage from PCs then you should immediately short Google and other ad plays and buy TV stations and networks. If you can’t buy an ad effectively on mobile and no one is using a PC to connect to the internet any more, then the only way to reach an audience is going to be via good old tv. And all that over the top video noise, forgettabout it.

I wonder what Netflix thinks about mobile vs pc online consumption ?

5. And in the interest of disclosure I bought 150k shares of FB. 50k shares at 33, 50k shares at 31.97 and 50k shares around 32.50. Its a trade, not an investment. Kind of like buying a Mickey Mantle, a Hank Aaron and a Barry Bonds Rookie Card knowing there is a card show in town next week

126 thoughts on “Facebook IPO Post Mortem – Killer – but not for the reasons you think !

  1. I am hoping what I am creating will play a future on the internet. I think greed is killing humanity and people are ready for a change. Next month we will be starting a non profit coop which combines social networking, a marketplace, credit union, crowd funding and crowd sourcing.  . All types of independent creative and innovative people and small businesses will be able to easily sell their stuff in a social networking environment. Plus people will be able to make commissions through affiliate marketing of their favorite goods, services, and artists. There are other ways that people will make money as well. The money the organization generates from transaction fees and advertising will also go back into helping the membership through programs like education, fashion shows, concerts, grants, and patronage dividends for the most active members. Most of the programs will be sponsored, voted on, and organized by the members. The most important programs we will pursue will be those which help all of humanity like bringing very cheap renewable energy and housing to people,  and empowering people worldwide to grow their own food and better access to clean water. The technologies are already available, we just need a way to implement them.Things will be very transparent and we will be needing people from across the world to get involved. That is the basic concept. Putting people and the planet over profit.Would love your input, you to join the board of directors, or one of those $10.000 phone calls donated :)Have a great day Mark!

    Comment by Anthony Nutt -

  2. You can’t be serious. Mark is worth too much to even bother with insider trading.

    Comment by Alexander Huynh (@SharkSoul) -

  3. Pingback: Mark Cuban Sells Facebook Stake; ‘It was Gambling Money’ – MarketBeat – WSJ « Ye Olde Soapbox

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  10. Web 1.0 & 2.0 was designed with a PC/laptop in mind. The smartphone and tablet are completely different experiences. The cloud migration is a logical evolution from the premises based server architecture, but that is so different from mobile. The only real way to attack mobile is to redefine the user experience. The future is and has always been … context awareness.

    Comment by Mick Kerr (@MADGUI) -

  11. I agree that if mobile is a killer for FB, then every other major ad-reliant sites in the world are stocks to stay clear of. More concerning is what will happen if FB loses it’s “cool” status among the tweens and they start moving to another network.

    Comment by Eric Edelstein -

  12. Reblogged this on chartthestreet.

    Comment by Omar Westerberg -

  13. 6 haters on my comment, and only 2 thumbs up? What a bunch of morons who suck d**k on this blog. These are the guys who don’t have money and who can’t amount to nothing in life, just being a kiss a**.

    Well guess what ya broke bums who gave it a 6 thumbs down…..

    Class A Class Action Suit filed against FACEBOOK. WHY?

    Mark Zuckerberg DUMPED HIS STOCK TO MAKE MONEY AND NOT LOSE HIS SHIRT, like all his investors did, LOSE. INSIDER TRADING, the whole game plan since the beginning.

    So for all you champagne taste wanna be high rollers with beer bank rolls:

    Lesson #1: dont hate on someone when that person may be right. wait till the hand is played before you call anyones bluff.

    Chances are Zuckerberg is going to be another Martha Stewart with a longer jail time.

    Remember you heard it here first.

    And Mark Cuban, hope all is well brother, hopefully you pulled out before the crash lol

    Comment by Gjon (@gjonkalaj) -

  14. Personal experience. Our site has lost traffic and ad revenue but has not lost traffic for the content, that is now more and more going over mobile.

    The interesting thing is we blame FB for the fall off of traffic as you could get more and more content within FB peopel spent less and less time on other sites. Similar sites to our are all experiencing a decline in traffic over the last two years. Yet our revenue has stayed the same, and the number of file streams leaving the site has continued to climb.

    So our observation is that FB is sucking down more online time, and mobile is sucking down more usage of content.

    Our trick is to monetize those streams. Those are massive, and climbing.

    So your comment on all websites are going to have a mobile issue is true. But the problem is one of how to monetize the change in traffic and how to better serve those mobile users.

    Comment by Rantling -

  15. Mark, first time Blog reader from Pittsburgh too. Just read the intro for HOW TO WIN and bought the book/ also sent to wife’s Kindle. My early career days with 84 Lumber parallel your story but I put all the effort into somebody else’s company. Needless to say, HUGE mistake. Very solid Facebook article. Cant wait to read more. CS

    Comment by Craig Stowell (@floridabizguy) -

  16. Pingback: Facebook: Fatal Blow to Retail Investors or Were Equities Already ‘Dead’? - Breaking news regarding all financial and economic headlines! - Monetarily Speaking

  17. Pingback: Mark Cuban: Mobile will crush Facebook

  18. Dude, I HATE to be a grammar Nazi but PLEASE at least run your stuff by someone before you rush to post it . . . there’s at least one error per paragraph, most of the its/it’s variety. It would so much more enhance your credibility.

    Comment by tonbo0422 (@tonbo0422) -

  19. Agree with Nick’s comment completely. In addition, malware is becoming a huge issue for it as well, Android now being particularly targeted. For browsing sites now, my DSi’s Opera browser seems about the only pretty safe bet. On both my home and work computers, it has reached the point where I mostly only visit a group of sites that have so far been safe. Even major news sources’ pages have resulted in infections; certainly can’t trust random search results and no way I’m actually clicking on any ads. Webmasters respond with a cyber shrug of the shoulders and place the blame on the 3rd party ads, taking no responsibility for the fact that they get the revenue from it. Malware developers seem to be a step ahead right now and some of it is next to impossible to clean up.

    Unlike what another post said too, we gamers are quite a target for advertising, as anybody who has spent any time on the 360’s dash can tell you. However, MS seems to be doing it right when it comes to advertising. While some on various boards are complaining, I don’t find their ads bothersome, and some I’ve actually bit at. And now, after much demanding by users, they are finally in the process of developing a custom version of IE 9 for it.

    I am sort of surprised that rewarding referrals from individuals hasn’t caught on more, especially in this age of social networking and the move to mobile browsing. Use of a simple code to reward both the one who refers (in the form of discounts, contest entries, cash, whatever), and the buyer (discount or bonus). No secret that word of mouth is still the best form of advertising. In addition to that, I know I personally would be FAR more likely to buy something when it will also benefit a friend or group I like. As an example, if a particular gaming site I like were to give a plug for a game, and if I knew I could help them by following their referral, I’d likely buy from them, whereas as I said, I’d never click on a banner ad on my computer. Not to mention, using Facebook as an example, that their so-called targets ads are often laughably badly targeted. I certainly know my friends better, and even though I have no incentive to do so I occasionally praise great products on my page. Some sort of centralized referral code system that online retailers could use in common would have the advantage of being able to be easily utilized even in tweets, and the limitations of mobile browsers would be no issue. A pricer option perhaps, but I can’t imagine that the yield wouldn’t offset that.

    Comment by bucfanpaka -

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  23. The individual investor will never go away! There are too many gullible Americans who believe the hype by TV pundits et al, about the benefits of an “ownership society”, and the better returns that can be made there will continue ad infinitum.

    If the interview between Jim Cramer, and Jon Stewart of the Daily Show didn’t persuade people how the stock market is rigged and manipulated by the 1% for their benefit, a botched IPO by Facebook sure isn’t going to change anything.

    Comment by Marc Kashinsky (@mkashinsky) -

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  32. good

    Comment by jiandanzuoren -

  33. Pingback: Facebook o cómo hacer dinero con un negocio que no hace dinero : | El Peso Nuestro de Cada Día

  34. Pingback: Mobile is going to crush Facebook – NOT | Sekiur My Thoughts

  35. Pingback: Facebook was just a PARTIAL Scam, Venture Capital is ALIVE, and Equities are NOT Dead! | Howard Lindzon

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  38. Hey Mark, could you explain to us what’s the rationale for buying facebook stock at the price you bought. How did you decide to trade facebook stock at that price level?

    Comment by Yasir Jamal -

  39. TV and Radio run those emergency tests… you know… when you hear the high pitched tones… “If this was an emergency, etc etc. The gov. requires this. FB, like the internet as a whole, has largely not been regulated yet… Too many unknowns out there for FB. As for mobile… It will grow… but they have to do something about people doing it while they are driving. It is out of control.

    Comment by Phil Thomas -

  40. Mark – regarding valuations of stocks, I think there’s a classic mistake made about short term vs. long term, the price of a stock can be anything at any given point in time but over a sufficient period of time it will tend towards a valuation reflected roughly by fundamentals, or at least it will if its stable.

    Regarding problems with limited data plans, good point but there’s also an increasing availability of free wi-fi, I was just traveling internationally where data roaming costs are ridiculous and continued to use my phone for internet extensively by taking advantage of free wi-fi, which is only likely to grow, for example Shaw (major internet provider) in Canada recently launched their Exo service in an attempt to cover major cities in wifi hotspots free to all their subscribers. Again, short vs. long term, short term data costs are high and bandwidth is limited, long term large amounts of bandwidth will be relatively inexpensive and available almost anywhere.

    Facebook isn’t going anywhere and neither is online advertising, there’s just a huge opportunity for innovation in mobile advertising.

    Comment by Michael Bruce Rosmer -

  41. Pingback: Facebook IPO Post Mortem – Killer – but not for the reasons you think ! « blog maverick « Ye Olde Soapbox

  42. I am sure there are no fundamentals in the online social industry. Its a complete monopoly which has a firm place only near the mountain cliff. Tomorrow some other Mark will bring his “new fancy FB” and the FB and its investors may find themselves at the bottom of the mountain. However, that doesn’t mean I hate or I am in anyway against FB; it just doesn’t make sense to me, why a social networking company needs billions of dollars to remain competitive? (This event clearly shows that the people who have money are acting very unreal and eventually join the 99%)

    Comment by Engg Bush -

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  47. I don’t get why these companies like Facebook are scared to introduce a decent amount of advertising on their mobile devices when the pro’s most likely outweigh the cons. We live in a society where people throw their arms up at something that pisses them off, threaten to “take action”, the minority do, the rest stay put and complain when the next “bad thing comes along, and the rest who left end up returning when they find another option.

    There is no legitimate replacement for Facebook right now. There isn’t, and their won’t be for a long time. As long as they continue to innovate, and stop overly complicating their website – nobody is even close.

    Throw a few ads in between my newsfeed when I’m on my mobile device. Is taking .01 of a second to scroll past a Ford ad really going to make me deactivate my account, lose my connection with people i’d never keep in touch with outside of Facebook, and start fresh on an alternative?

    Banks recognize their power, that’s why they nickle and dime us. Telecoms do so, so they nickle and dime us. When Facebook realizes this, they’ll start making money.

    Comment by T◄ (@BlkKidCityLife) -

  48. Why you may be wrong (notice I said “may”) on mobile crushing Facebook. I am a mobile web application developer. The biggest problem in mobile development period is the number of native platforms. Instead of choosing Apple or Android native development platforms, I chose “mobile web application development” (granted, I write LOB apps, not games)

    What is a “mobile web application”? Basically, it’s a javascript application that runs in a browser and is ideally hosted by one single web page (index.html). There are several platforms to choose from (I use Sencha Touch). But HTML5 canvas is here to stay. HTML canvas will work for these fly-by-night little crappy games people play while sitting on the toilet.

    You are CURRENTLY correct that native mobile apps are much better. But I would hazard a guess that at some point, ARM-based native apps (mobile), existing x86 apps (PC), AND “web apps” (mobile AND PC) will converge, NOT diverge. Many of these “mobile” apps are rinkydink anyway. Who the hell would want to play Xbox/Playstation/PC games on a tablet anyway? The touch interface is abysmal for game-play.

    Nah, I don’t think mobile is the problem for Facebook…but everything else you said is.

    Comment by icurmudgeon -

  49. Pingback: How Facebook’s Zucked-up IPO just killed the tech bubble | Partners In Sublime

  50. Mobile is clearly displacing PC usage. It’s not just standing in line at the airport or at a bank. It’s sitting on the couch watching TV and trying to remember the movie that actor was in – you don’t get up and go to your PC or laptop to look it up, you pull it up on your phone. You check your email while you’re at it, and your sports scores as well. There are hundreds of these use cases, and they add up to tons of hours of non-pc usage and the beginnings of a paradigm shift in internet advertising. Or a classic Black Swan case. In terms of Facebook, you’ve got a dozen legit companies from DeNA to Zynga vying for dominance in mobile gaming and Facebook is completely absent from those initiatives. As a matter of fact, in mobile gaming, Facebook is getting slaughtered. Don’t believe me? What’s a game you are playing on mobile right now through Facebook? Ok now how about through a PC? Exactly my point. Break a bone in Facebook’s leg in gaming, and what do you have? Certainly not an increase in valuation. The other companies that suffer are wi-fi hot spot companies. Why the hell would I connect to an airport or hotel hot spot when I can connect through my phone and get ridiculously better speeds? I’m most fascinated to see how the companies that have disrupted adapt to avoid BEING disrupted.

    Comment by hobbs9 -

  51. I love that to Cuban $1M in facebook stock is equivalent to a Mickey Mantel card… Regardless – he is right about the video transition to mobile stall. It is drastically slowing compared to the previous growth rate due to data restrictions placed by Service Providers… the real question is whether your ISP is willing to shell out to Cisco the billions of dollars required to build the right infrastructure in a down economy to bolster your Mobile Data Usage (e.g. video usage) and compete to give you less-pricey unlimited data coverage OR that you dip into your own wallet and pay hostage-like unlimited data monthly prices to pay for and make a profit on those upgrades. Either way its a ‘Share of Wallet’ issue more than a ‘desire’ issue to use video and mobile devices. The even bigger issue is the competitive one – Service Providers ARE IN THE TV BUSINESS, so they are asking themselves “why would I give ad revenue to my COMPETITION in mobile and web apps (e.g. YouTube, Netflix, & Facebook) at cheap prices only to disrupt that big steady flow of income, while I pay for all the technology infrastructure” (search the issues between Comcast and Netflix). Also they are fighting to create comparable mobile apps while not losing their partnerships with the major content creators and distributors (e.g. Hulu, Xfinity, Uverse, licensing through Turner Web). Right now the tentacles of the Service Provider is the lynch pin.

    Comment by Ken Carpenter (@kenlcarp) -

  52. Pingback: Mark Cuban Informs You About Facebook | WebProNews

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  56. Mobile hotspot as a prime access point is becoming the norm in our house. When we moved in, Time Warner couldn’t come for over a week so I ran out and picked up a Verizon 4G hotspot. A few months later, that hotspot gets more speed in our North Dallas location than our Time Warner cable broadband. Plus it’s convenient as hell for travel, versus lousy hotel wi-fi. It may replace cable internet in the end. And even with my large amount of browsing and downloads I only came in at about 60% of my data plan and I’m only on the $50 option, not the $80 (yet).

    Comment by fjrllc -

  57. The share price didn’t fall because the “The logic for Facebook’s price decline is that they have a problem in mobile. They can’t offer all the games they can in a browser. They can’t offer the same ads or branding opportunities. All true.”

    The share price fell because it was priced at a P/E of 100x. If it was priced at 20x, it would not have fallen. It is as simple as that.

    Comment by laplage123 -

  58. Pingback: Because the Facebook IPO bombed we’re going to go watch TV? | postmktg

  59. PS facebook actually makes money, a lot of money. can’t say the same for groupon and 95% of the startups i see hyped on techcrunch

    Comment by alent1234 -

  60. i don’t think mobile is that much of a problem for facebook as the pundits say. most of the games are already stand alone apps and support facebook. farmville, dream heights, my town 2 and lots of others use facebook. zynga was an early leader and for a long time the games worked only in a browser. but there are so many other games now and none need a browser. and zynga doesn’t make that much $$$ anyway.

    with almost every new service supporting facebook i don’t think that FB has to even think about ads. they need to find a way to monetize the API.

    Comment by alent1234 -

  61. I don’t know anyone who is on the internet to NOT view movies and download things. As all as mobile is capped, broadband isn’t going anywhere.

    Comment by Ray Hunter (@HunterVanguard) -

  62. digital has converted analog dollars into pennies and at times nothing, eg britanica to encarta to wikipedia. mobile internet might do the same to online advertising, just evaporate it.

    Comment by Krishna Kumar -

  63. Love you, Mark, but if you paid more than $30 for the stock, then maybe I can interest you in a backup power forward… has a wife whose dad is famous for getting OJ Simpson off… Name is Odom…

    Comment by Eric Peterson (@Eric_Pete) -

  64. Pingback: Who’s buying Facebook now? | In Digest Biz

  65. Me thinks the death of human greed as predicted by Mark Cuban – “1. Say goodbye to the individual investor on Wall Street.” – is greatly exaggerated.

    Comment by Lindsay A. (@laspegren) -

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  67. The only issue I have is if I pay extra $$ per month to use my phone as a hotspot (its about $20-30 more) then it should be unlimited data usage. THEN people might “cut the broadband cord”.

    Comment by Sebastien (@SEBillionair) -

  68. Pingback: Facebook IPO Post-Mortem: Killer — But Not for the Reasons You Think | New Bullhorn

  69. Pingback: Mark Cuban bought Facebook because he likes baseball cards. Or something like that. | The Scoop Blog

  70. Netflix is in the best position out of any of the content companies. No ads. Can watch on mobile device or on your TV. Just pay $8/mo. Who can beat that? Nobody.

    Comment by hyde -

  71. Traders on the floor to seem to sync their trades to benefit insiders. This applies to any stock. Once a trend is determined, the traders seem to coordinate to move the stock in the opposite direction and take out the “stops,” of smaller traders, before the stockallowing to trend its natural course. The glitches seem related to that coordination effort, from observation! Just MHO.
    Kudos to your nice and positive response to the hose fastener pitched by the fireman from Arkansas on SharkTank the other day. Glad someone still has ideals! Hope it goes well for you.
    Sincerely,
    Louise Timmons

    Comment by Emerging Domains (@EmergingDomains) -

  72. Facebook is surely facing with threats and its IPO valuation is the highest ever, but few opportunities let think it could reinforce its success. Mobile is the key opportunity that might sustain its growth: http://www.ideas4tomorrow.com/2012/05/facebook-investment-for-future.html

    Comment by Tendances Fy -

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  74. The only people that come out on top in an IPO are company insiders and the underwriters. IPO means it’s probably overpriced.

    WTF? Why is there even a private secondary market in a computer trading age? So insiders can get there’s and the Muppets can get screwed.

    As the late George Carlin said, “It’s a big club and YOU (the retail investor) aren’t part of it.

    Madoff could run a Ponzi scheme for decades showing profits from trading volume that exceeded actual daily market volume in a stock and those Muppets at the SEC couldn’t find there collective asses even after Harry Markopolos had duct taped there hands to the collective ass of the SEC. Why do you suppose that was?? The fix was in.

    So, Madoff goes to jail. NO trial. Why? ‘Can’t have facts come out. Madoff takes one for the team. He was probably let out the back door of the prison and is now working for Corzine with a new identity.

    Corzine steals a Billion in change and he’s still walking around.

    Jamie Diamond pisses away $2,3 maybe $30+ Billion of free money from the FED on the same crap that was one of the matches that led to the 2008 market meltdown and everybody yawns.

    Why should they crap their pants. It’s socialism for the insiders and capitalism for the rest of us.

    And yet, some kids wage-earning life is destroyed by virtue of a court judgement of close to a million dollars for downloading 30 songs and sharing them with is friends.

    I don’t condone that kids behavior but where is the “Justice For All” in his restitution and that of Wall Street kleptomaniacs?

    The FED is still populated by former Goldman Sachs suckholes who were in the Bush Administration and are now in the Barry Soreto Administration.

    They live by the motto, “On my Honor I’ll do my best to ingratiate GS and fuck the rest.” Then, they go on to merrily gang rape the U.S. Financial Markets.

    Maverick can afford the luxury of buying Facebook (and that’s what stock investing is) because he’s essentially playing with the copious amount of money derived from the working man from Basketball ticket sales, etc.

    I don’t begrudge him that. I am a true capitalist. Not a crony-capitalist.

    But facts are facts. Maverick is gambling with hard earned dollars derived from working people taxed at 45-50% ordinary income and paying Social Security and Medicare Tax on up to roughly $100K. Where Mavericks club pays 15% tax or less with good tax lawyers. The working guy is getting hosed as Maverick is being coddled by politicians. I know are biggest problem with national solvenvey is a spending problem but making millions and being taxed what they are taxed is wrong. That being said, with the people we have in government now, I rather have Maverick pissing away money then the people in D.C. who have created this clusterfuck.

    The Market is rigged and the little retail investor doesn’t have a chance. He has more of a chance of coming out ahead in Vegas. Any middle-income person making $50-100K who is in this Market is out of there mind.

    Comment by ColtLending ✋(ツ) (@ColtLending) -

  75. @vinoservant — Mark: Great points, but I think there were some other issues that you did not highlight.

    1) The FB IPO was more of a secondary offering. When was the last time insiders / existing shareholders sold more shares in an IPO than the Company? That use to never happen. Also, with the private secondary markets all the early investors and insiders cash out. That use to never be the case. Just do the math on the number of shares in Facebook’s publicly traded float? It is huge. How long did it take Google and MSFT to have that number of shares in their float?

    2) I am not rich by any means, but when people I know, put in allocations for IPO shares and get them, then you know there is a problem.

    3) I know LinkedIn has traded well above its IPO price, but people forget that MSFT went below its IPO price, and you could have bought Google all day long in the $90’s (I believe Google IPO Price was $85). My point is that a lot of these stocks come back.

    4) Isn’t Facebook really just a dressed up version of The Globe and Geocities? 2.0 Social Media vs. 1.0 Social Media. Is Facebook going to be Yahoo in 15 years?

    5) I view the Facebook site on multiple devices (iMac, iPhone, iPad, Dell Laptop) and it takes forever to load. They have added too many bells and whistles. Also, to post a status update now takes forever.

    6) To your point about the valuation bubble, at the end of the day, companies such as Pinterest and Twitter have no choice but to go public b/c of their valuations. Does it make sense for a public company to pay $10B for a private company? Look how long it has taken Google to figure out how to make YouTube work.

    7) Facebook has 900M users and they only generated $4.04B in revenue for the trailing twelve months? Doesn’t that seem a little light? I know they have not turned on the mobile revenue hose, and (according to them) when they do the numbers will explode. We shall see.

    Josh Moser

    Comment by Josh Moser -

  76. Pingback: The seeds of a new secular bull market are being sown | Abnormal Returns

  77. Mark, this is a good take on how mobile app are a huge threat to FB:
    4 Companies Poised To Control The New Mobile App Economy
    http://seekingalpha.com/article/615151-4-companies-poised-to-control-the-new-mobile-app-economy

    Comment by Boom Folio -

  78. Pingback: Updates For You[Tech] | angResulta Blog

  79. I agree with your analysis. You are spot-on when it comes to the rationalization of FB market cap. However, your position on mobile video usage is way off the mark and is not consistant with global usage patterns. You need to take a look at matured mobile phone markets like Japan (4G), South Korea(3G), Finland and compare data usage costs. The data costs will also rationalise as the demand and new video compression technologies kick into action. As television viewing becomes more and more social, only internet enabled …non-linear programming will survive. Even developing online/mobile entertainment markets like India is moving in this direction.

    Comment by venkat - bala (@venkatg) -

  80. Pingback: Mark Cuban Buys 150K Facebook Shares For 'Trade,' 'Not An Investment' - Forbes

  81. Glad to see you mention that consumers may switch from paying two internet access bills (home and mobile) to just one. I did that more than a year ago. I no longer have internet access at home. I have a MI-FI hotspot that I pay for in my mobile phone bill. One bill, one access. Now, not only do I have that access at home, I have it anywhere I go, as long as I have cell coverage. True, as you point out, my bandwidth is a little tighter – I don’t watch Netflix or long videos on it – but it does everything I need to do. And yes, I believe more people will demand this option and it WILL affect how content it monetized, because I access far more through my mobile device, and watch less video. Therefore, less banner ads and internet TV commercials.

    Comment by Nikki Ferris -

  82. Pingback: "Mobile Is Going To Crush Facebook" - Forbes

  83. Mark, agree with you on a lot, minus mobile. Why do you think they paid $1 Billion for Pinterest? That is more mobile eyeballs and as you may have seen from CTIA, the big 4 execs love Facebook. That is because the traffic is small, uploads don’t throttle the network like downloads do and people are voyeuristic by nature. You added the largest photo sharing company (facebook) with the fastest growing photo sharing company (pinterest) with a solid shopping avenue (pinterest). That was the smartest thing facebook has done in a while.

    Comment by BGRuns -

  84. Pingback: Mark Cuban: Facebook IPO Post-Mortem: Killer — But Not for the Reasons You Think

  85. Pingback: Mark Cuban: Facebook IPO Post-Mortem: Killer — But Not for the Reasons You Think | Rumors & News | Information Without Filters!

  86. Pingback: Mark Cuban Bought 150,000 Facebook Shares « Market Squeeze – Stock Market Madness

  87. I’m buying 10 share of FB…lol…It’s all I can afford!

    Comment by Shawn Hamilton (@ShawnHamilton1) -

  88. “Not even in a Richie Rich cartoon does that happen.”

    Another brilliant post with insights into reality rather than conventional (i.e., delusional) wisdom.

    Comment by Damien Hoffman -

  89. I agree that Facebook’s IPO could scare more individual investors away from stocks, especially the younger generation of FB users. It could have been different. A Modest Proposal: Facebook should have been a mutual company.

    Like most insurance companies used to be, Facebook could have been mutually owned by its users/members. With a mutual Facebook, each year’s profits that aren’t reinvested could be credited to users’ accounts, just like a mutual life insurance company pays dividends to policyholders’ accounts.

    Then, at some point, Zuckerberg could lead a demutualization of the company, distributing shares of ownership to its users. Many insurance companies did this in the early 2000s including now Fortune 100 companies like MetLife and Prudential Financial. MetLife became that most widely held stock in North America.

    If a mutual Facebook were successful, a new generation of investors would understand the concept of owning a small share of a big company. After a demutualization, many of Facebook’s owners would gain a first experience owning shares. Perhaps a new generation of stock investors would help fuel another century of American enterprise.

    As it is, Facebook faces the quandary of how to both exploit and “respect” its users.

    http://www.iramarket.com/post/show/facebook-should-be-a-mutual-company

    Comment by IRAmarket (@IRAmarket) -

  90. LOL one day we will grab a steak at bobby vans, old homestead, or jacks and talk business.

    the mobile carriers already see mobile as the new internet of the 90s in 2011+…all carriers you have a contract with clipped the broadband unlimited plans except for customers who have contracts…except sprint (they are hoping they get more customers this way, surely they did).

    you have several mobile sites who are profitable, and they did a good job. some company will come out with either sites, some type of mobile web browser or something along those lines which will streamline the whole internet experience full of ads, videos etc but all mobile…..streamlined, easier, less complicated as a regular PC with less kill your eyes everywhere to capture all that is going on a webpage.

    FB is a joke, and I cancelled my account almost 2 years ago. They are milking it, that was the whole goal. They never wanted to be bought out by some big media firm or google, they wanted the IPO….hoping they could muster up a huge train of sales that will hit a 40-70 billion dollar point and then liquidate. Watch when you start hearing some of the execs at FB selling their shares, and if you hear Zuckerberg selling, then you know this chicken is cooked….they “audi 5000″ kidddddddddd! Sad, all these people on the train, including you Mark LOL, but you did what I call a move like me…”what if FB makes me double my money for a few weeks or a month, maybe 25% more my money, and then what happens if FB really pulls a huge win, and I just bought 150,000 for roughly under 5 mill and just made $50 mill LOL” When you have the paper to play, you play like a high roller or don’t play at all, regardless the slots pay 98%, and they do in the 90 something percentile….but how many play the maximum bet at the dollar, 5 dollar, or 10 dollar slots Mark? LOL not many……because if they did, there would be a lot more winners…..instead you have people playing the penny, nickel, and quarter slots and losing their shirts thinking its small money. But when thousands or even hundreds go and they are broke…they say “omg wtf happened?!” LOL as my dad says…”slots are a suckers game unless you play right”….much like the stock market……he made some good money back in the day with TYCO LOL

    Anyway I gotta get back to work and run my company LOL its been a pleasure reading your blog, I crack up.

    Toodles.

    Gjon

    Comment by Gjon (@gjonkalaj) -

  91. I’m grateful this happened and look forward to it continually happening. Mark Cuban got it right when stating that investing today is like trading baseball cards. Many of these organizations, Groupon, Facebook, instagram, Pinterest have questionable business models and are hype. Great job taking money and putting it in your pockets though. Facebook said they weren’t doing this for the investors, do you think they care what you think now either?
    People falling behind these stocks gives me a good idea for a book/movie. Let’s write a story about all the producers of the word sick and tired of carrying the rest of whiners and non producers, and have the producers leave society. Let’s make the zenith be a point where many investors, who know nothing of what they are doing, lose a lot of money investing in companies they know nothing about. Wait, that sounds familiar… Atlas Shrugged anyone?

    Does bookFace pass your underwear test? Why would you invest in a company where its users aren’t willing to pay for it? Here’s an interesting question, “How many of the 800 billion bookFace users would exist if they had to pay $5/month for it?”

    Oh, and for giggles… users are more apt to get struck by lighting than click on a banner ad. Try investing in a product where its users would buy it and step back into the real world.

    Comment by rkurhajetz -

  92. Pingback: Facebook IPO Post Mortem – Killer – but not for the reasons you think ! « National-Express2011

  93. People/users are the ads now. Banners, pop-ups, and 20 sec commercials on the web are obsolete. With mobile, you can’t have any ads due to the lack of space and time. Brands only need to know when and where the users are spending their time online. Find that segment, and increase visibility. For example, my company, Wufasta, helps brands access areas/communities that are untouched by advertising, Video Games. We don’t piss off the gamers with annoying shit; we pay them money to wear the brand’s logo, similar to the sponsorship of NASCAR racers. Starcraft II is a sport; Korea’s version of UFC. Mark (or anyone else interested), if you want more details, see our page at angel.co/wufasta .

    Comment by Nolan Clemmons (@Lord_Nolan) -

  94. Tell them Mark tell them. 99.9…% of the time i agree with you because i know that you know where the future of the businesses you invest in is going.

    Comment by Moses Mpofu -

  95. Why short Google, search exists on mobile devices as well? Google also owns Admob which is one of the largest ad networks used in app advertising. Admob also can serve Google’s mobile ads.

    One problem with mobile though is advertisers aren’t paying big money for clicks nor banner displays yet. There is a lot of cheap inventory on mobile.

    Also, mobile data use can exist in parallel with desktop as mentioned by another commenter, mobile is more convenient and readily available for the minutes between other tasks and waiting in line.

    Comment by bestfreemobileapps -

  96. Facebook’s IPO was extremely successful, especially for the company. The CFO did an amazing job getting the highest dollar price and selling the most shares possible. That is his job and he hire Morgan Stanley and other banks to conduct a sales and marketing pitch. They did their job very well too. The fact that investors who purchased the shares screwed up has nothing to do w/the success of Morgan Stanley and the success of Facebook… this IPO was a HUGE SUCCESS.

    http://stegermeister.blogspot.com/2012/0 5/facebooks-ipo-was-extremely-succesful. html

    Comment by Benjamin Steger (@stegermeister) -

  97. Seriously? When’s the last time you compared the speed in your house with your phone? All bandwidth is overpriced (20-150x) due to the remonopolization of the sector over last 15 years. Also, when’s the last time you thought about context and what one does when mobile vs fixed?

    Comment by Michael Elling (@Infostack) -

  98. Pingback: Marc Cuban: The Facebook IPO Post Mortem- $FB | iBC_FN | iBankCoin Financial News

  99. What is your take in the stock SMT? Really cool and extremely stable technology, but they opened at like $11 and not are at $1.50ish. What do you think about it?

    Comment by ForSalebyOwner (@7406NavajoPass) -

  100. Mobile is growing, but so are tablets, and those are a lot friendlier for ads. And even though Facebook hasn’t quite nailed the mobile experience (or monetization) yet, they still have the most popular mobile app on iOS and over 900 million users.

    Look for them to start ramping up Facebook credits and incorporate some of the mobile expertise they gained from Instagram.

    Comment by Takeshi Young -

  101. This is what you get when you go to a Cable Show and don’t pay attention :)

    Yes, I’m going to dump one of my broadband plans, but it’s the cell company’s plan that I’m dumping. I’m keeping my cable broadband because they’re giving me free broadband WiFi everywhere I go. I even get a phone number that follows me regardless of device. I will use my cable broadband to watch TV, surf the Internet, and voice talk to people on any device that makes sense at the time. No extra cost.

    Cable WiFi networks work for me because like most people I don’t travel abroad a lot. And if I do, I’ll use free or paid WiFi or get a rental phone. This is happening right now where I live, from the soccer field to the bank to the train, to the ferry, to my TV room, to my garden, no more cell phone contracts for me.

    But when I watch TV, it’s mostly going to be on a television set or a tablet. When I read blogs, it’s mostly going to be on a computer or tablet. When I communicate, it’s mostly going to be on a WiFi enabled mobile phone (advertisers be damned). Only difference now is that all the data is coming over the public internet via my cable company, and it’s cheap.

    Comment by Dominic Jones -

  102. Reblogged this on Ode To Capitalism.

    Comment by Ode To Capitalism -

  103. Supply – you’re right valuation doesn’t matter here, but isn’t Demand created by the value (or perceived value) of a company? I demand 0 shares of FB at 38 but I demand 100 shares at 30, 200 shares at 25, and so on. (btw I perceive value at closer to 24 fwiw)

    Of course there were some investors who demanded shares of FB at any price… so if you keep an incredibly small supply FB (probably) pops on the first day.

    Comment by Joshua Heller -

  104. PC / Online ads aren’t going anywhere as long as the vast majority of white collar workers do that work from a desk nestled in a warren of cubicles and luckily connected to a browser and broadband.

    Comment by Matthew Stotts (@mlstotts) -

  105. I would be interested to hear more about the thought process behind your current Facebook trade. I’d also love to know how often you make (seemingly) short term bets on public companies and if there are some specific things you look for in these trades.

    Great blog posts lately.

    Comment by Taylor Caby (@taylorcaby) -

    • the thought process is easy. I think the stock was oversold and it will go up because there will be more buyers than sellers.

      Comment by markcuban -

  106. What a mess greed creates. My thoughts are with all the investigations heading straight at the underwritters way, they will move mountains to support PPS of FB. Cause the higher the stock goes the happier everyone is. The lower it goes, the more scrutiny they must go through.

    Comment by Gabe Rodriguez -

  107. Well I’m reading this on an iPhone, using Siri speech-to-text to respond, reclining in an easy chair. Works for me!

    Comment by charlesgreen -

  108. I’ll buy TV stations and networks as soon as they figure out how to show ads on my DVR.

    Comment by Brian Black (@Brian81ack) -

  109. Can I read this blog on a mobile phone as well as on the PC or tablet? No. The world will not go all Mobile usage. Using the mobile as an internet hot spot is a different question. That does not impact ad revenues.

    Comment by Krishnan Gopalan (@KrishG) -

  110. not only Facebook struggles on mobile, but they are also losing advertisers on the web. In addition, revenues from social games are going to shrink now that Zynga launched their own platform.
    Facebook really need to think about their future strategy because Google+ is right there…waiting for FB to mess up.

    Comment by Marco Trivellato (@m_trive) -

  111. Valid points!

    Regarding FB, however, I think the price will go below $30 on the short run to settle around $25 – $28. I personally do not even think it is worth more than $1.50. What does FB manufacture or produce? What kind of services do they offer? It simply is not worth more, unless they come up with a way to keep advertisers from slipping away (GM most recently), or to stop the lawsuits regarding misuse of personal information (one was just filed on IPO’s first day). FB’s stock pricing; the available supply; and, the way it was handled, are all signs of greater disappointment. Can you imagine what would happen to FB’s price if Zynga and the like decide to leave FB?

    Regarding the mobile advertising experience, I think a lot of advertisers are betting on the PC’s latest competition – tablet devices like the iPad. Lighter, bigger screen than smartphones, and wireless. It would never replace a pc/laptop in my opinion unless it becomes a computing device, but it’s an attractive device and is capable of showing more content over the smartphone. Time will show.

    Comment by dealindealoutdotcom -

  112. All the concern over late reports on trades etc is a great case to resurrect the ancient floor trader. :)

    I agree 100% that there were too many Reg D offerings before the pubic IPO. But if it had been under priced, then we’d me chastising the underwriters for giving their best clients free money. If anything, this is proof there is a new preferential class of investors, and not even the best clients of the larger wire-houses are included anymore. Instead they are cannon fodder like the rest of us now.

    Comment by jimgoose -

  113. Been tethering via mobile for quite a while, but still keep broadband mostly because not everyone in the house is keen on tethering technology in general. I’m actually glad sites like Facebook will have to figure out new ways of making money, aside from traditional display ads. Newer revenue models like social currency (facebook credits) and reputational marketing (facebook’s social sponsored ads) although currently ad-supported, will eventually pave the way for additional revenue streams. Suddenly, $1B for the Instagram mobile network of users looks like a well-calculated move by Zuck.

    Comment by Warren Paul Anderson (@warpaul) -

  114. I feel sorry for those who are now holding FB thinking it might pop up in a few years like Google.

    Interesting how you pooled about $5million into FB. I wonder how much you have in say AAPL or GOOG (or NFLX).

    Comment by omgsorrythatsiteexists -

  115. it’s all about hte macro game, mark. US equities are going higher and folks will come rushing in when they dollar crunch starts. by 2015, probably sooner.

    mobile is important but it’s still too early to say the titans are going to die and that TV is where it’s at. how pervasive are computers in offices and the work world? are all jobs suddenly not going to need to type or be concerned with input? is there really no difference between consuming media on mobile than on bigger screens? bubble 2.0 has distorted how mobile will grow.

    also, no need to worry so much about google and android. two words: google wallet.

    Comment by kidmercury -

  116. Great post and great analysis, it’s the end of the Web 2.0 bubble. (Last Friday I was saying to a friend that has some Twitter shares, you should have hit Secondmarket yesterday because that was the top…)

    Comment by JFinDallas (@JFinDallas) -

  117. I would make the switch to mobile only if unlimited data plans were reasonable and if the speed increases significantly. It’s kind of like dumping the land line for the phone- it makes sense when it makes sense to do it.

    As for Facebook, the company hasn’t figured out how to make money, so why would the stock be valuable? Unlike Google, which quadrupled in price after its IPO, Facebook has never made money. Back in the internet bubble days of the late 1990’s, VCs were giving money out to anyone who had a cool idea regardless of whether the business model earned money. We all know how that went- the bubble burst.

    Facebook, while it has changed the social landscape, is still just a cool idea at this stage. If they don’t figure out how to make money, they will be gone after the advent of “the next big thing.” Anyone remember MySpace?

    Comment by hotdogman -

  118. Great post Mark. Im a big time fan after being a hater for the last 5 years or so. I enjoy now your wisdom on your blog and on shark tank. true inspiration to strive and work harder each day and make informed smart decisions.

    Comment by Andrew DeBellis (@itsDeBo) -

  119. Unlimited data plans are only part of a bigger issue Maverick. People will lose patience with advertising on their mobile devices. As with all other markets advertisers saturate every medium they find and people migrate away from them. Why did Netflix do so well in the earlier years? Other internet streaming sources? They were ad free or very limited as to advertising! We are sick of advertisers trying to shove everything under the sun down our throats. Personally I cannot stand 90% of all advertising. Not because I don’t want products but because I want to be approached a bit less intrusion on my valuable time ( ok a lot less ) and I want to evaluate a product on my own. Over advertising makes any site of any kind less desirable.

    Comment by Nick Mitsakos -

  120. Hacked Mobile Data. Yes, We have enjoyed low cost high speed internet for over a year now. We found the best mobile unlimited data plan and in our homes, cars, during travel we only rely on mobile data tethering for all our internet needs. It feels really good to know we’re only paying a fraction of what others pay out there.

    Comment by Tower Droid (@TowerDroid) -

  121. Killing it Mark. Killing it.
    Would love to have your lazer insight on what we’re doing….
    A guy can dream right?

    Comment by Shoply (@shoply) -

  122. It will be interesting to see how it shakes out long-term. It just seemed that they had too many shares, but I did think it was a crapshoot as to whether it would rise or tank on opening day. Thanks for sharing your thoughts! I hope it’s a good investment for you.

    Comment by Lucy Boyd -

  123. Facebook showed it’s hand to make a play for mobile with it’s instagram offer. TV companies provide internet and also cable, so they will lose 1 and gain the other, I don’t think that would be a good move. However, I think that phone companies will be as they raise the price of mobile for convenience and portability.

    Facebook has a very good mobile user base, will be interesting to see how mobile plays out with advertising. I’ve lost a good bit of money testing admob when it was in the wild west, but I do direct response not branding.

    My guess is we’ll see a lot more branding on our mobile phones, a huge push for mobile apps (which I’m involved with), and new competitors with mobile plans or new movement on the old trusty providers we use now.

    Great post.

    Christopher

    Comment by Christopher Lee -

  124. The PC/MAC online market is not going any where. Mobile access will sky rocket because when I am in line at the bank of course I will surf the web. Bottom line = mobile offers MORE time on the internet rather than DISPLACING the time I already spend on there from my computer.

    Comment by Kyle Bazzy -

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