Kass: Egg on Your Facebook
NEW YORK (Real Money) --
"Surprise No. 18: Facebook's IPO fizzles. The new offering is priced at a $70 billion equity capitalization but opens flat and breaks issue price in the first day of trading."
-- Doug Kass (Dec. 30, 2011)
Back in late-December 2011, I cautioned in my 2012 surprise list that Facebook's (FB) IPO would quickly head for a fall. I again cautioned about the company's share price outlook in an appearance on "Fast Money" two months ago, during the week of the IPO.
Last night Facebook reported disappointing metrics in its first earnings release since becoming a public entity -- its shares dropped by another 10%.
There has been a lot of discussion over the past few months regarding who is to blame for the awful IPO.
Was it the investment bankers (who reduced their sales and profit estimates a few days before the offering) or the Nasdaq (software glitch)?
How about blaming the buyers?
Frankly, the buyers (both institutional and retail) were greedy, as they thought this was a freebie (a chance for instant profits).
How many buyers actually read the company's prospectus? I did, and that reading confirmed that my surprise would shortly be realized.
I also blame the business media, including CNBC and Bloomberg; they fueled the fire with nonstop hype over the past year.
Shame on all of them.
Revisiting my view on Facebook on "Fast Money" -- on May 22, I spoke about Facebook with Melissa Lee and the gang,