Last week leading upto Facebook’s IPO, I received call after call from friends and family asking if they should buy in. In every case I gave a resounding NO explaining that they need to look past the hype. A $100 billion valuation for this company was simply ridiculous.
In fact, Morgan Stanley is now being sued because it lowered revenue estimates and released those estimates to a select few, privileged individuals just prior to the initial public offering. Was the average investor privy to this information, heck no.
So while major players were heading for the exits:
- Tiger Global Management sold 23.4 million shares, a 596% increase from the 3.4 million it anticipated selling as of the May 3 filing. The firm was the most aggressive seller. It still holds 30.4 million shares.
- Goldman Sachs sold 28.7 million shares, a 117% increase from the 13.2 million it expected to sell as of May 3. Goldman still holds 37.3 million shares.
- Thiel and his Founders Fund sold 16.8 million shares, a 117% increase above the 7.7 million they expected to sell as of May 3. They hold 27.9 million shares.
- Yuri Milner’s DST Global sold 45.7 million shares, a 74% increase from the 26 million it expected to sell as of May 3. Milner’s Mail.ru also sold 19.6 million, also an increase of almost 74%. DST holds 85.6 million shares and Mail.ru, 36.8 million.
- Accel sold 49 million, an increase of 28%. It holds 152.3 million shares.
- Greylock’s increase in shares sold was 8.7%. It sold 7.6 million shares and holds 29 million.
Average investors were left holding the bag. Since it’s debut at $42, Facebook has dropped nearly 25% in the first few days to $32. There are certainly a lot of angry people out there who “drank the cool aid.” Fortunately readers of this blog are not part of that group!
There is a much better way to make money. We practice it everyday here at Ropay Asset Investors.
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