Jim Cramer's Best Blogs
NEW YORK (TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- key questions about Facebook's IPO; and
- how to profit from market assumptions gone wrong
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10 Facebook Questions That Need Answering
Posted at 3:12 p.m. EDT on Friday, May 25
And still no one is talking about the number cut. I am getting incensed by this lack of discussion about the numbers being sliced for Facebook(FB) right before it came public.
Humor me. Why is it not possible that what happened here is that each time the bankers checked with Facebook, the earnings estimates had deteriorated?
You want to talk business as usual? Here's what happens. Facebook's looking for, say, $1 a share in 2013. The company tells the brokers it is going to do 80 cents. What's the point of disappointing in the first quarter that you come public? That makes no sense. So you lowball, usually lowball big.
So, I have to believe that the 88 cent number that everyone allegedly had was the low-ball number.
Now, with just days to go the number switches to 83? That's stupefying, but no one is talking about how bad things must be for that to happen. If anything, the idea is that perhaps the numbers are so strong that the deal has to be upsized and the price raised simply because it is too cheap on earnings.
Instead the insiders got the same word we didn't, the buyers got the same word we didn't and the bankers made the cool and cynical decision that the public would not care about the earnings and it would just want to be part of the 900-million-strong soldiers of Facebook.