Despite the screaming Jim Cramer begging you to buy it, despite CNBC urging you to get some shares in the market the first day, this stock has been a real dog. Having begun life at $38 and some people getting in the low $40's, Facebook is trading today just under $29. The only person to make out big on this security was Mark Zuckerburg, who sold about $1 billion dollars worth in the IPO and immediately got married and went on a honeymoon with his new wife.
Say what you will about old Mark being an absentee owner and CEO, but he was smart. Obviously knowing the deal he had got his money and honey and got out of town before anyone could find him and ask what the hell was going on. Frankly many saw this coming and as always those were overshadowed by a fawning press and Mark being a liberal no one in the press has even questioned him about all the mess he left behind.
If you got in on the first day you have our condolences, if you got in since then you have our worry if you really need to buying any stock or security without full adult supervision. In any case you have lost your behind and more. So what is a trader or investor to do here?
Facebook, looking more like Faceberg now, does have some value. Just no one knows where the value is right now. Honestly we thought that Morgan Stanley and other underwriters would step in and hold this stock up around $32 or so, but even they know when to let this dog find his bottom. If what we have read is correct FB is going to earn about 95 cents per share this year and maybe a bit more next year. So a high teens or $20 handle might seem appropriate right now with some anticipation of some upside if the company figures out a way to make some money and sell some advertising on their site. But GM put a dent in that idea one day before the IPO, so who knows, maybe $15 is where the real price should be with a 15 PE.
Frankly we are not convinced that Mr. Z has any idea about making money, only being a cutie for the press and hosting Obama when needed. You know the press just fawns and drools over a CEO who wears hoodies to press conferences. Normally with the spotlight on you after an IPO the CEO tends to be shown working hard and finding ways to make the stock worth it's lofty IPO price. But Mr. Z is not your normal CEO, he is in our opinion a full blown metrosexual liberal hippie wanna be who thinks he is Steve Jobs lite. You heard it first here he is not Steve Jobs. For the record since Mr. Jobs died we have learned though not registered as such Mr. Jobs was full bore conservative in operating Apple and his own life. Maybe Mr. Z should take some lessons.
Anyway for those so inclined today FB finally started trading with options, both puts and calls. The Sept. $20 puts at 80 cents look interesting here for selling. However we are keeping out powder dry until some Dec. or Jan. 13 $20 or below puts begin trading and taking a stand there. Somewhere in the middle teens to $20 if forced to buy you get the stock at a fair price with the opportunity to participate in some upside if there ever is any, if not you get some serious change to put in your account and know you were smarter than Cramer and CNBC.
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