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As Facebook's (FB +2.8%) IPO-day trading volume rushes towards 500M, reports pile in (I, II,...
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Friday, May 18, 2012, 3:01 PM ETAs Facebook's (FB +2.8%) IPO-day trading volume rushes towards 500M, reports pile in (I, II, III) of trade confirmation problems. Expect Morgan Stanley (MS) and the NASDAQ to engage in some finger-pointing over the matter. An NYSE spokesman laughed and said he had no comment. Meanwhile, Facebook shares have fallen back to $39.06.
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This news story has 36 comments:
I have requested Schwab to honor the cancellation. I am now looking for a lawyer, are there any reading this? If so let make some money on the law suit! :)
I was commenting on that.
Ah, I see, you got $36 in profits.
Buying at the IPO and selling afterwards tends to make money, and once again it did - getting out at $0 or making money is pretty attractive. This was one of the zeros.
They simply tried to place too much stock.
I will be avoiding FB some time,
but possibly not forever.
There may be a valuation that makes sense at some time in the future.
is that as much as 20% went to the public. Probably some of the big institutions wiggled out of taking their indications of interest and the public wound up with a slug of stock which could have accounted for the trading delay this morning and the lack of confirms.
Good Luck!
I wonder if that's being managed as well, much like FB right now.
He has demonstrated his ability to innovate while Zuckerberg stumbled into somebody elses' idea of a social network while at Harvard and was told by others to expand it to all universities across the country. He has not shown the ability to manage or innovate but appears to be more of an opportunist. Amazon, despite the high P/E, it has developed multiple businesses under the Amazon name and has great software that is consumer friendly. Then there is Kindle that delivers books to the consumer instantly at a tremendous savings. Now, the Kindle Fire a low cost alternative to the i-Pad and is available at a much lower cost. IMO, Jeff Bezos is right up there with Steve Jobs and hasn't had the growing up pains that Jobs encountered early in his career. I don't t
hink you can compare Amazon to Facebook except to say that they have high P/E ratios. At this stage of the game I believe it is easy for me to buy Puts on FB and stay long on AMZN.
Add to that the changing paradigm in digital sales - with AMZN failing to control any of the leading OSs. And the fact that AMZN is not a cost leader. And the ending of the unfair sales tax advantage.
Add all that together and AMZN is a lot worse than FB. Jeff Bezos? I see as many blunders in AMZN as I see anywhere else. I see AMZN being the victim of adverse selection in several businesses (which is bad management), I see AMZN creating costs with no offsetting revenues (again, bad management). Sure he built a large low-margin retailer. But it hardly seems worth even half what it trades for.
You say: " This on a large cap that trades at a huge premium to the market. Keep in mind that any other company doing the same would have been slaughtered". This statement in your first paragraph says that Amazon is big cap which also means it is in the most efficient area of the market which says to me that there is some reason why the large institutions continue to hold onto this stock and they buy the dips when they occur. If the buy side analysts were concerned about this stock's bottom line they would have reduced their positions and that is not the case and the stock is up about 175% in the past two years where you claim a horrible decline in the earnings metric.
Paulo, your philosophy of deep value analysis does not work for Amazon, but it does for Walmart. Two years ago Walmart was at the 50-51 level which means using your fundamental analysis would have made you about 25% which isn't bad at all. A pure Graham & Dodd analyst like yourself should be talking about the wonderful 25% gain in Walmart over the past two years and not trouble youself about the real and unimaginable long term benefits of an AMZN. You are just beating your old, curmudgeon head against a wall over this issue. I am an old curmudgeon also, with over 40 years in this business both on the sell and buy side. My longevity in this business has taught me if I want exceptional returns
I have to abandon Graham and Dodd in certain situations and start asking questions about sustainability of stocks that don't conform to Ben Graham's model. In the mid 1970's Walmart would have never fit in to Ben Grahams model, nor would have Home Depot in the early 1990's. Walmart for example never went down to a market multiple and I learned to buy the thing when it would contract to a low 20's multiple and I did that for 25 years. I call what I do rational analysis. So when AMZN gets down to the 200 day M A, I buy it. Let's face it, the company is an innovator and people in the USA go there to shop for books, computers, cameras, clothing, smart phones, e-books, and appliances. It is revolutionising the way we shop and they open their platform to other small and mid-size companies to sell on their platform for a fee. Comparing a fad like the over-hyped Facebook to AMZN, Google or Apple is ridiculous.
1) The market is a complex beast and AMZN can trade at irrational valuations for quite a while before imploding. It wouldn't be the first to do it, and it won't be the last. Analysts defending it mean little, they can defend anything, and have, in the past.
2) Wal-Mart while growing was never anywhere close to AMZN's overvaluation, it had a multiple of about 1/5th or so of AMZN's. It also never had 8 year periods with no growth in earnings, and never did its earnings implode.
3) AMZN sells on price, while not leading on cost. That's not a good position to be in;
4) In the past giant mail order catalog houses existed, and ended up losing to traditional retail. The bet on AMZN is a bet that the substitution of the huge paper catalog for an electronic catalog would have deeply transformed that industry's economics. It's a dubious bet.
I don't think we're communicating. I think Amazon went public in the mid-1990s and never sold at a low PE ratio during its existence as a public company because nobody values its stock by the standard fundamental metrics that you are using. Yes, they destroyed the catalogue business, closed most of the bookstore chains in the US, decimated the brick and mortar electronic discounters and are taking away the clients (writers) from the publishers. If they continue to do these and other disruptive strategies they will carve out large profitable niches in the retail space since they will own those niches. In October of 2009 I bought AMZN on a breakout and it has been a great trading vehicle for me. I can't imagine being short this stock, but buying the dips and selling the rips has worked. I know it has an outlandish PE, but it always has since it went public. During the massive downturn from late 2007 to and lasted into 2009 the stocks relative strength was unbelievably positive. When a stock with virtually no earnings holds up when the indices fell 50% and then breaks out when the market improves is a stock that I want to own. Sure, it participated in the Oct. '08 sell off but never went to a 52 week low during the period when the markets stopped functioning. It was a beautiful technical set up when it broke out and went above its October of 2007 high.
You don't understand this? I know being long has been much more profitable than being short. When will I sell to protect myself?
I think the stock should be sold at 170. My target on this trade is 240-250 level since the stock has a tendency to double top and the last new high was at 246.71. Another thing, never use options to protect a position since I do not like to truncate my upside. Enough said!
AMZN did not kill the giant generic mail order houses - the point is that they died all by themselves, Sears Catalog was closed back in 1993.
You cannot hold a stock on technical grounds and then sing its non-existent fundamental praises. You yourself say this is a sell at $170.
You do know that there are analysts out there, even a buy side analyst, that have a price target of 270 by year end? I don't know if you use stops, but I hope you do! I use stops and will raise my stop loss up as the stock moves up. At the moment I am up 11% and have not moved my stop up since entry. So, if I don't suffer from a big, down gap opening I feel like I am reasonably protected. Incidently, catelogs are not dead, my wife gets 3 to 4 catalogs in the mail weekly from numerous companies. As for Sears catalog, they did close it 10 years late. The company has become a white anachronism because its retail philosophy has not kept pace. K Mart, Walmart, and Target took over Sears customers in the 1970s and 1980. By the time Eddy lampert bought them in 2005 he ended up with a failed company and some real estate.
Reviewing my past trades since 1997 in AMZN I've had gains of 39%, 34% and 24%. So I am well ahead of the game and my current position is up 11% but it's unrealized. I doubt I could have made this on the short side since I am a nervous short seller and would be paying interest on the short sale for borrowing cost. I trade in a cash only. As we say in the US: "There are old traders and bold traders, but there are no old, bold traders!" And speaking of old bold traders, I'm in 30% cash at the moment worrying that we may be seeing the re-emergence of drachmas, pesetas, escudos, liras and punts. If you are living in Portugal what are you doing to protect yourself and your business. I hope that the euro will survive but hope is not a good investment strategy.
There are always analysts pumping the bubbles, no matter how obvious. Corvis (and many others) had only buys and strong buys back in 2000 even though they had no revenues and a $30 billion market cap. It didn't get any more obvious. AMZN is not much different (though not as bad).
I have a few basis points in AMZN and believe a fair price for Facebook is in the low teens or maybe single digits. There is much to be proven here.
The razor thin margins at AMZN are of concern but Bezos is why I am there. While everyone makes mistakes, if the bet was just on management, i would certainly go with AMZN.
The only thing in the social network space (concentrated plays only) is linked in but at this valuatoin, i am standing on the sidelines.
Regards to All.
SWD
Sometimes the strategy "making it up on the volume" does not work. In the case of AMZN, it will be a long run for investors. But as we are playing a game of A versus B (amazon versus FB) then we need to evaluate FB. You tell me Paulo, what are the margins at FB?
I would tend to agree with DJ that we are not communicating. Communication would involve fair basis analysis of both options - a and b, rather than railing one and derailing the other. When we refuse to do this, we are inviting confirmation bias. And in my experience confirmation bias is a dangerous bedfellow who makes us feel oh, so warm and comfortable and the next day sleeps with the enemy.
SWD