U2 frontman Bono has laughed off claims he will become a billionaire on the back of the Facebook flotation.
The rock star's investment group Elevation put money into the social networking site, taking 2.3 per cent of the company in late 2009.
But while the flotation means Elevation is worth way in excess of £1 billion ($2.01b), Bono is joined by nine other directors who stand to profit.
Reacting to the launch of Facebook on the stock market, he said: "Contrary to reports, I'm not a billionaire or going to be richer than any Beatle - and not just in the sense of money, by the way; the Beatles are untouchable - those billionaire reports are a joke."
There had been suggestions that the canny investment could make his wealth outstrip that of Sir Paul McCartney, said to be valued at £665 million.
Bono told MSNBC's Andrew Mitchell in the US: "In Elevation, we invest other people's money - endowments, pension funds. We do get paid, of course."
But one of the most anticipated IPOs in Wall Street history ended on a flat note, with Facebook's stock closing at $38.23, up 23 cents from the previous day's pricing.
...i find it amusing, that the "saviour" of the third world would take time off to invest in such a gamble.. especially since he's EXTREMELY wealth.. i hope he shares the profits with the poor and unfortunates of the world..
I would have my doubts about that, it looks like it will face an SEC investigation and the stock has already lost about 15% of it's value since it went public...
Facebook IPO Furor: Feds Probing Deal Over Insider Bank Warnings
By Sam Gustin, May 23, 2012
Facebook’s Wall Street investment banks warned top clients of new doubts about the social network’s financial prospects just days before the company’s IPO, according to a series of reports that emerged Tuesday. After receiving briefings from Facebook executives, analysts at the banks lowered their financial forecasts for big institutional clients, some of whom scaled back plans to buy Facebook stock, even as the banks raised the IPO price and number of shares amid a frenzy of hype.
Although Facebook had publicly disclosed mobile advertising challenges, the new revelations raised questions about whether Facebook’s underwriters selectively disclosed information that gave favored clients an unfair advantage over other investors. The revelations, which came as Facebook shares plunged nearly 9% Tuesday, drew immediate scrutiny from federal regulators as well as a subpoena from Massachusetts officials. Meanwhile, the Nasdaq stock exchange faced a growing chorus of anger — and a class action lawsuit — over its botched handling of the IPO, which has already become the worst-performing three-day start for an offering over $1 billion in the last five years.
Facebook’s highly-vaunted IPO — which was supposed to be a shining moment for the social network, as well as its lead banker Morgan Stanley and the Nasdaq exchange — has morphed into a debacle that’s reinforced some of the worst stereotypes about Wall Street: that corporate executives and their bankers engineer IPOs to maximize profits at the public’s expense; that Wall Street’s own systems have become too complex for its personnel to handle; and that the entire game is a hype-fueled casino, rigged for the house with a sucker played by the average investor.
“The FB IPO selective disclosure stories just keep getting worse,” Sallie Krawcheck, former head of wealth management at Bank of America, wrote in a Twitter message. “If true, an absolute outrage. Come on, Wall St!!”
Just what did Facebook executives tell the stock analysts at the investment banks in the days before the offering? On May 9, Facebook issued an updated prospectus with the Securities and Exchange Commission. In dense securities-legalese, Facebook said that the number of daily users was increasing faster than the number of ads the company was serving, a change it attributed to its fast-growing mobile user base. Such an updated “risk factor” may have served to satisfy regulatory requirements prior to the IPO.
But Facebook executives apparently went further, according to The New York Times, personally calling stock analysts at the company’s top IPO underwriters to update them on the company’s business challenges. “Facebook changed the numbers–they didn’t forecast their business right and they changed their numbers and told analysts,” a person at one of Facebook’s banks told Reuters. “The analyst’s underwriters then all changed their numbers based on what management was telling them.”
As a result, analysts at four of Facebook’s top underwriters, Morgan Stanley, Goldman Sachs, JPMorgan Chase and Bank of America, lowered their financial forecasts for Facebook just days before the IPO, according to Reuters. The banks then relayed the lowered financial forecasts to certain large clients, one of whom was warned that second-quarter revenue could be “5 percent lower” than earlier estimates, according to The Times.
None of this may be illegal, but here’s the crucial point: While the investing public should have taken heed of Facebook’s (very opaque) prospectus update, the overall market was not the beneficiary of personal calls from company executives or revised financial projections apparently based on more detailed information than was available to the general public. Indeed, that information seems to have been quickly funneled to favored clients. Meanwhile, the investment bankers, led by Morgan Stanley, raised the IPO offering price in the face of supposedly white-hot investor demand that, days later, proved to have been significantly overstated. Facebook shares have plunged 20% since the IPO, wiping out $17 billion from the company’s valuation.
The new allegations prompted concern from federal and state officials on Tuesday, as well as a defense of its actions by Morgan Stanley:
William Galvin, Massachusetts’ secretary of state, issued a subpoena to Morgan Stanley seeking information about discussions the bank’s analysts may have had with favored investors about Facebook’s revenue prospects.
Financial Industry Regulatory Authority chairman Richard Ketchum told Reuters: “That’s a matter of regulatory concern to us and I’m sure to the SEC.”
Securities and Exchange Commission Chairman Mary Schapiro told reporters: “I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook.”
In a statement cited by Reuters, Morgan Stanley said the procedures it followed for the Facebook IPO “are in compliance with all applicable regulations.”
Meanwhile, Nasdaq, still reeling Tuesday over its botched handling of the IPO, was hit with a lawsuit seeking class-action status for those who lost money in the offering. Trading was delayed for 30 minutes on Friday, and trades for millions of shares were never confirmed, leading one trading executive to brand the debacle “arguably the worst performance by an exchange on an IPO ever.” Nasdaq CEO Robert Greifeld blamed “poor design” in the exchange’s trading software — ironic given the exchange’s reputation as the preferred home of tech companies. On Tuesday, another Nasdaq official claimed the exchange would have halted the offering altogether had it fully understood the extent of its technical problems. But hours later, still another exchange official seemed to contradict that statement, telling Reuters that it would have gone forward with the “right solution” to the trading snafu.
Taken together, the latest developments in Facebook’s IPO have dealt a serious blow to what should have been a triumphant public debut for the social networking giant, as well as a moment of glory for Morgan Stanley and Nasdaq. Instead, the botched IPO has turned into a debacle for just about everyone — except Facebook’s early investors and insiders, who sold $9 billion worth of shares that they had acquired at lower prices. “It’s dreadful for the markets,” former SEC Chairman Arthur Levitt told Reuters of the IPO and its handling by Wall Street banks and Nasdaq. “It’s an event with long-lasting negative implications for an industry that can ill afford this kind of blemish, and the last chapter hasn’t been written. Nobody looks good here.”
...good read.. but I'm not surprised.. especially if it has anything to do with Mark Zuckerberg..
But that's the problem with Internet IPO's.. the share values almost NEVER corresponds with real revenue forecasts.. a case of 'buyer beware'.. You'd think after the Dot/com boom and bust that people would learn..
Well there's the rub Coalde.. people use it to chat.. the value from a business perspective comes from the advertising.. people might chat all day on it.. BUT do they buy from it?
Yes Hope.. the advertising industry's greatest friend..
Based upon my own behavior, I would say that the answer to your question is no. But I am probably not indicative of your average Facebook user. Quite frankly I struggle to see any value in any social media site beyond LinkedIn.
...it's another Dot Com ripoff.. no doubt about it.. they should have waited, before milking the dumb saps that invested in the "digital age" until better times.. i guess greed waits for no man..
...it's another Dot Com ripoff.. no doubt about it.. they should have waited, before milking the dumb saps that invested in the "digital age" until better times.. i guess greed waits for no man..
A long time ago someone whose intelligence I respect greatly told me, "When people start telling why the normal rules of the marketplace do not apply to whatever they are selling...run for the exits." You look at their last "upgrade", to "timeline"...people are equating that to herpes, now that just can't bode well for Facebook's future...
Interesting article regarding whether people buy from Facebook or not...
Facebook battles criticism over its ad power
By Susan Krashinsky, Marketing Reporter, The Globe and Mail, Published Tuesday, Jun. 12 2012, 8:33 AM EDT, Last updated Tuesday, Jun. 12 2012, 8:33 AM EDT
More and more companies are asking their customers to “like us on Facebook” – but now the social media giant is making the case to its advertisers that it still deserves their friendship too.
Since Facebook’s initial public offering just over three weeks ago, it has faced intensified criticism that the ads it sells – which are its main source of revenue – are ineffective. Now the company is battling that message.
On Tuesday, comScore and Facebook will release a joint research paper entitled “The Power of Like 2: How Social Marketing Works,” (http://blog.comscore.com/) which they are presenting at the Advertising Research Foundation conference in New York. (http://www.thearf.org/) The first study conducted last July found that a brand’s “fans” on Facebook, and the friends of fans, both spent more money on that company’s products. The new study takes this further and tracks online and offline buying behaviour as it links directly to exposure to ads and brand pages on Facebook. The idea is to give a more direct measure of the return on investment for marketers in being on the social network.
For example, the study analyzed buying behaviour during the holiday season of November-December 2011 at leading retailers in the U.S. It found that fans of brands on Facebook spent more both online and in-store than the general population: more than twice as much in the case of Amazon and Best buy. But even friends of fans, who were exposed to the brands because of their friends’ behaviour on Facebook (seeing that a friend had “liked” a product, for example) spent more; twice as much as the general population in Best Buy’s case. Amazon had much more modest results with friends of fans, but they still spent 8 per cent more than the average.
“You’re seeing great results because they have committed to creating content that is social in nature ... but have also used Facebook paid advertising to amplify that message,” said Facebook spokesperson Elisabeth Dianna. “The paid advertising really does grease the wheels to get that message out to not only fans, not only their friends but everyone.”
The loudest voice in criticizing Facebook has been General Motors, which just before the initial public offering pulled $10-million (U.S.) in ad spending out of the social network. Chief marketing officer Joel Ewanick has since said that the company had heard from fans that they did not like Facebook ads and did not click on them. Ms. Dianna would not comment on the GM announcement but said it was important for the company to demonstrate its value to advertisers.
The value of this social “friendship,” known as earned media for brands, is rarely disputed. Even General Motors curates branded pages and has said it will continue to do so – Mr. Ewanick called the site a giant “car club”.
Advertisers are courting fans on social media more than ever before. Their ads are pointing to their Facebook pages more and more often as a primary representation of their brand; taking as much or more prominence than their own websites. According to the research, last November less than 1 in 10 banner ads online in the U.S. pointed to the company’s social media presence (with a call-out such as “like us on Facebook”). Just four months later, in March, that number rose to nearly 1 in 6 display ads.
But Facebook argues that the ads it sells go hand in hand with all this free socializing for marketers.
Facebook tracked the return on investment for more than 60 of its biggest advertisers, who are major spenders on the network (including companies such as Starbucks and Wal-Mart). It found that 70 per cent of the campaigns earned at least three times what they spent on their Facebook ads, in purchases linked to exposure to those ads. Just under half had a return-on-investment of five times or greater.
The study notes that Facebook has been criticized for below-average click-through rates (the amount that users actually click on one of those ads for belly slimming tricks or work-from-home opportunities in the right-hand panel of the screen.) It argues that ad effectiveness can also be measured through “view-through” rates, or the buying behaviour that occurs after someone sees an ad, even if they don’t click. For Starbucks, for example, Facebook users who had been exposed to the brand on the social network bought something at the cafes 38 per cent more frequently than those who hadn’t, according to comScore.
“These are some interesting results that begin to prove the value of the medium, and that Facebook can be a valuable marketing channel from both an earned and a paid media standpoint,” said Andrew Lipsman, comScore’s vice-president of marketing.
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