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Today's selloff in Facebook (FB -9.8%) is happening even though CLSA's James Lee is starting...

  • Tuesday, May 29, 2012, 2:15 PM ET
    Today's selloff in Facebook (FB -9.8%) is happening even though CLSA's James Lee is starting coverage with a Buy and $40 PT. Lee notes Facebook's ad click rates, a major concern for many, are much higher when an ad targets a "fan" of a product or service, and expects this trend and others to drive online ad share gains at Google's (GOOG) expense. On the flip side, Paul R. La Monica's talks with money managers find little interest in buying Facebook shares, mostly due to valuation concerns.
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This news story has 23 comments:

  •  
    His ad-hit analysis is wrong. I don't log into FB much (only to play Scrabble), but when I do 95% of the ads are totally off target, or for products that I have long ago made my purchasing decision for.
    29 May 2012, 02:23 PM Reply Like
  •  
    I think it's pretty clear people have stopped caring what analyst targets are with respect to FB. Do any rational valuation and maybe you can get to 15 bucks a share. Assume irrational growth and you can make the price target whatever you want.
    29 May 2012, 02:25 PM Reply Like
  •  
    James Lee initiates coverage with 40 price target yet it continues to decline. Since dramatically violating its IPO price within hours of of its birth it does look like FB will be on life support for a while. Nobody can say how low it can go because its bottom was it IPO price and since violated there is no way to predict where serious support will be
    29 May 2012, 02:26 PM Reply Like
  •  
    I can't find any FB users that will admit to clicking ad links, much less purchasing something related to an ad link.

    All i know is Cramer said buy, buy, buy!!
    29 May 2012, 02:33 PM Reply Like
  •  
    Neither can I. I havent been able to determine a single thing I do on the site that could generate any revenue for the company, aside from my presence as a user.
    29 May 2012, 02:47 PM Reply Like
  •  
    Would you have paid a 10$ lifetime user fee when you signed up initially? if i were a FB user i would have without thinking about it.
    Say the only difference would be no ads all over the pages.
    29 May 2012, 02:56 PM Reply Like
  •  
    Why pay for FB when Google + is free? I don't pay for access to anything online, so I couldnt imagine I would for FB. Also a one time fee isnt a long term business model. They need money coming in month to month.
    29 May 2012, 04:11 PM Reply Like
  •  
    I have seen my wife click on a few of the clothing ads before.. but never bought anything from them.
    29 May 2012, 04:34 PM Reply Like
  •  
    Neither is an ad click model. The point is they bring nothing to the game, with no future plan in sight.

    But it's a 40$ stock because the banks said so.

    Im sure there is another rock headed up the hill to be rolled off the cliff any week now
    29 May 2012, 04:43 PM Reply Like
  •  
    Stoploss I just wish I could short FB. I was advised margin trading wouldnt be open till 30 days after the IPO. :-(
    29 May 2012, 04:46 PM Reply Like
  •  
    I agree that the ad click model doesnt work long term either. Buyers could have stepped away, and not bought the hype. The underwriters job is to raise the most money they can for the company selling shares. I think by the market reaction, they did a pretty good job. I never understood why a company whose stock doubles on the first day is considered a successful IPO. When that happens that means the company left a lot of money on the table. Just my 2 cents.
    29 May 2012, 04:47 PM Reply Like
  •  
    Good luck, i think there is a line, though.

    It's got a lot more room to get a lot more uglier.
    29 May 2012, 04:56 PM Reply Like
  •  
    My wife does from time to time.
    29 May 2012, 07:06 PM Reply Like
  •  
    No, I would not pay $10, even for a lifetime sub. FB really has nothing I need.

    Some things I pay for, such as NetFlix, because they provide content I can use. FB provides nothing that I would miss if it went away.
    30 May 2012, 12:06 PM Reply Like
  •  
    Strong support showing at zero...
    29 May 2012, 02:34 PM Reply Like
  •  
    ^ hahahaha
    29 May 2012, 03:40 PM Reply Like
  •  
    If I find my 401k mutual funds bought FB at anything above $5 then I am suing...
    29 May 2012, 04:47 PM Reply Like
  •  
    The only ads I see on FB are for products I recently purchased...
    29 May 2012, 04:48 PM Reply Like
  •  
    Same here. That and hyper-flashing ads like "you are the 999,999th visitor.." I click on those occasionally just to run the cost up for the advertiser.
    30 May 2012, 12:10 PM Reply Like
  •  
    Here is the thing with Search versus Social Media. With Social Media they aren't looking for your product so why would they click on your ad. They don't even know what they clicked on when they click on the ad. With Search Engines they are looking for your product. They still might have forgotten what they clicked on lol but to a lesser extent. The internet marketing world is a very secretive place. All the industry insiders who manage internet marketing budgets know your conversion rate from web visitor to lead or even sale is higher with search versus social. I can personally validate that across 12 different countries where we are managing internet marketing. Also, you can't get customer service on the phone at FB. You can with Google and Yahoo.
    30 May 2012, 01:59 PM Reply Like
  •  
    I`m curious why so many people started to talk about poor FB metrics after its misfortunate IPO...Poor FB conversion rates were obvious two or even three years ago, they were published in wikipedia as well and so were concerns regarding this model, but almost nobody spoke about it before the IPO launch.
    And now almost all are focused to find the killer in the story while we don`t have any idea who`s the victim.
    31 May 2012, 09:12 AM Reply Like
  •  
    Many people here on SA were talking about it weeks and months before the IPO. You would be hard pressed to find anyone here that bought into the hype or into the stock.
    31 May 2012, 10:08 AM Reply Like
  •  
    Agree up to a some extent - well, there were exceptions, and indeed I`ve heard many investors that FB will be overpriced, but they didn`t know the price in that time. There were just suggestions based on the secondary market and media rumours...Regarding the topic of FB poor metrics I have found few members to discuss them in such depth as it happens now...
    Well, it`s not bad!
    31 May 2012, 02:27 PM Reply Like
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