Unlike the Google IPO which used its considerable
popularity to reward individual investors and boost their stock value, Facebook
used the same dynamic against their users, the retail investors. So, is
this the end of Social Media - from the Entrepreneur's perspective?
In this version of the Wall Street Spring, the
pinstripe set got to show how Social Media can be used against the
crowd.
While it isn't exactly a revelation that Wall
Street is rigged in favor of insiders, it wasn't supposed to happen with our
friendly FaceBook.
The market expected the typical "popping tech
IPO" based on the idea that you sell a tiny sliver of stock, limit
availability to insiders who ride the pop as they dump it on willing outsiders
(a/k/a fans of the company) in a way that keeps the prices up.
Facebook did the opposite.
They let the considerable number of willing
outsiders (a/k/a fans of the company) get their hands on the stock at just
about the highest valuation of the stock as insiders lined up at the bell to
blithely sell into the market - knowing that the pop had already happened
before the opening. Instead of spreading the wealth, they knew just how many
suckers there were out there to milk. Remember when they unleashed more stock
just a few days before the IPO? That's when they know just how many fools there
were.
All they had to do was make sure to put out as much
stock as they could to all of these willing buyer. There was so much that they
jammed NASDAQ. Not that they care, they had already run for the hills.
Let's just say they un-occupied Wall Street.
This head fake by insiders took away scarcity and
an underlying faith in the stock that had the effect of lowering prices. The
old sell-a-sliver-and-let-it-pop technique usually meant the value stayed high
as the insiders waited for the secondary offering. But not here.
As the price slides, the air goes out of the Social
Media bubble - at least in the short term. In the long term? Let's just say
that without trust, you really don't have a Social Media. You have Media that
is used Socially.
Bottom Line - if you haven't already figured that
the low hanging fruit has already been picked in the Social Media space, this
should serve as notice.
What I would invest in though, is a Facebook
porting utility - a website that lets you back up your Facebook data assets and
lets you move them as you see fit while making it easy for you to get the word
out to your Friends.
Let's call it SavingFace Book.com
by Alan Brody
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