It was a beautiful spring morning in Menlo Park. Blue sky, puffy clouds, and hooded hackers as far as the eye could see. Messr. Zuckeburg chose not travel to NYC, instead the Nasdaq came to his highness and from his headquarters - the kingdom that Mark built - he rang the opening bell.
Keep in mind there is no physical "NASDAQ bell". It's just a term borrowed from the old days. The NYSE once upon a time actually used a metal bell to alert those on the floor that trading had begun. Instead, Zuckerberg pressed a Like button and signed a screen to symbolically open NASDAQ trading for the day and thus began a historically tragic day on Wall Street.
The IPO price of $38 sounds reasonable enough right? Well there's a crazy little thing called share count. The number of shares issued multiplied by $38 gives the company a P/E ratio of 125. Let's put that into perspective, Apple (AAPL) trades at 15 times earnings. In other words, based on the revenue from all the very fine physical products they sell from iPods to iPads, Apple could actually buy themselves in 15 short years. Facebook on the other hand would require 125 years to purchase themselves, and they have no physical product.
The early warning sign was the 30 minute delay of the first print. The clear writing on the wall appeared when the Underwiters themselves were forced to stand on the bid all day to keep the share price from dipping below $38.00. The final print was $38.23 on volume of 580,587,742 shares. That's a lot of traffic to climb 23 copper pennies. The high of the day was $45.00 (ouch). In other words, the smart money made .23 while some retail traders lost as much as $6.77 per share.
Based on today's closing price, Facebook will need to secure $1 out of very $10 advertising dollars spent worldwide over the next year to justify its valuation. In case you haven't heard General Motors (GM) has pulled their advertising from Facebook because, in their own words "it didn't work".
Over the next few weeks the market itself, (not Hedge Funds, Rock Stars or Sovereign States) will properly price the value of this stock. Unless there is an uber secret revenue stream yet to be revealed this is a $12 stock on a sunny day with blue sky and puffy clouds.
As much as you Like It, use it, or live on it, if you have the opportunity to short this puppy @ $38 off the open on Monday... Godspeed.
Of course always consult with a licensed investment professional before making any investment decision.
S&P 500 Emini Futures
Here's the S&P Emini Futures on this historic Facebook day -
S&P500 Emini Futures (ES) Facebook (FB) IPO
Does this mean the day was a loss and there were no good trading opportunities? Far from it. That's exactly why we trade Emini Futures. You see above what happened to the market overall, below I will show you just a few of the opportunities our system offered.
ES Emini Long - 7.5 Points Max Potential
ES Emini Long - 5 Point Max Potential
Do these trades look to good to be true? Did our system really issue the direction and entry price beforehand exactly as I've shown it?
If it did, can you afford to trade without it?
Let me show you a little more of what happend -
The Day Facebook Killed The Market And CFRN Partners Had A Chance To Get Fat
ES Emini Futures 05/18/12
ES Emini Futures - 9.5 Point Drop
5 Point Rally on FB Folly
ES Emini 9.75 Point Drop 05/18/12
Now let's be perfectly clear. I'm telling you that our system handed us every trade above with a "to the tick" entry. If you don't know me and yet you believe me, you must be barking mad. What I've just shown you is to good to be true. It really is. But it really is what happened today.
Did we have a few that got stopped out for 2 points each? Yes we did!
Here's my suggestion, come to our Live Emini Trading Room on Monday and I will apply the indicators to these charts right before your eyes and show you exactly how each entry gave us an exact price to be long or short and I'll even show you the ones that got stopped out. Got Game? Apply!
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