FB - A weak start

Facebook (FB) had its IPO today, the gap open was much lower than the much touted 50/55 level - with the official IPO price being $38. The close was weak..and the FB underwriters had their own PPT in full force all the way across the day, to protect the 38.00 level. Heaven forbid there be real price discovery for this stock, at least not until the big institutional holders have offloaded everything they wish to the retail trader.


FB, 1min intra-day action

FB, daily

Summary

FB got the big black candle that I had expected, although the peak was indeed much lower than I had thought likely. The action of the FB PPT today was of course to be expected, but it remains a lousy way for what is supposed to be a 'free market'. Clearly there will be no free market in FB trading for some weeks, even months to come.

With a PE of around 100, this valuation is a joke. Even the very best stocks in these economic times are not worth more than a PE of 25/30...so Fair Value 'best case' $12, at worse $4.

FB will remain a fascinating stock to watch this summer. At some point the novelty value will completely wear off, and even the clown channel cheerleaders will come to realise that its just another company. In this case...an extremely over-priced and over-hyped one.