In March 2000 lastminute.com was the last big IPO in the UK before the stock market crashed. Its share price over the next year went like this:
Facebook has now gone from $38 to $29 in a week or so after its IPO.
Is it the portent of a crash to come? It seems these things have to be preceded by one last final puff of the balloon before it bursts.
I remain convinced that the stock market is heavily overvalued on the basis of, in this case not hysteria but cash that has nothing productive to do.
Let's wait and see.
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Frankly anyone with a shred of common sense suspected that Facebook was a disaster waiting to happen. I understand that some people were already becoming bored with the concept and as many now access the internet through mobile phones its format is difficult to shrink to smaller screens( although I admit I am not a tech expert but I must have read this somewhere).
Facebook was significantly overvalued, but the market at a whole is not unless we are about to see the entire world go into a long recession. It is the risk averse sentiment that has depressed valuations and it is this reason that many companies are not spending their cash (however that is not universally true as it depends on sector, look at SAP in Gerrnany, it has recently done two very large acquisitions and will actually have to borrow to pay for them)
Apple trades on under 10x earnings adjusting for its cash balance, I wouldn’t call that expensive (Facebook was 65x)
My young friends moved on last year.
Why don’t we celebrate by LOL’ing everytime the shares drop in value by another 10%.