Mark Cuban Blames Himself For Losing Money On Facebook IPO 186
McGruber writes "In a blog entry, American business magnate Mark Cuban explained who he blames for his losing money in Facebook stock: 'I bought and sold FB shares as a TRADE, not an investment. I lost money. When the stock didn't bounce as I thought/hoped it would, I realized I was wrong and got out. It wasn't the fault of the FB CFO that I lost money. It was my fault. I know that no one sells me shares of stock because they expect the price of the stock to go up. So someone saw me coming and they sold me the stock. That is the way the stock market works. When you sit at the trading terminal you look for the sucker. When you don't see one, it's you. In this case it was me.'"
We serious investors did. (Score:5, Informative)
Many of us did stay away - far away. Facebook and GroupOn were a no brainer for me NOT to invest. I'm mostly a "value and growth investor" and those two companies had neither of those. It seemed to me that those IPOs were to cash out the VCs and original investors; not to get more capital to expand or invest.
The folks who bought the stock after the IPO were folks who either didn't look at the financials or folks who were hoping for the Greater Fool Theory [wikipedia.org] to work for them. In either case, if they paid attention to the late 1990s, they would have been a bit more careful.
Although, I don't want to seem too cocky/arrogant/know-it-all because I thought the same of Apple a few years ago and I think it's too late to get in on the APPL gravy train. Investing can be real humbling .....
And a great truth is revealed (Score:2, Informative)
When you sit at the trading terminal you look for the sucker. When you don't see one, it's you. In this case it was me.
And there is the great truth of the stock market, revealed by someone who knows how the system works.
Re:Facebook could charge $1 a month (Score:5, Informative)
Think about that. All those facebook addicts out there. I bet that most of them would be willing to pay $1 a month to use it. That's about $800,000,000 a MONTH in revenue. Even if only half of them sign up that's still $400,000,000. If you pay the dollar you get an add free version and maybe a little more control on how your data is used and shared. People pay to use Dropbox why not facebook?
Half of them won't sign up, i'd be surprised if 1% would sign up. Facebook needs critical mass. It they take a dollar to let you post stuff on your wall, there will be a huge outcry among all the users, even or especially the fans. Facebook will lose a lot of its fans and the mass will go to the next free social media platform: Google+
Re:Reminds me of "Rounders" (Score:3, Informative)
Yes, it's an old, old saying he was paraphrasing. Believe it or not, not everything in Rounders is original.
Re:The bounce is the problem (Score:4, Informative)
Which is really fairly naive. If you're Facebook and your IPO is set to rake in ridiculous sums of money, why should you care about the post Facebook IPO IPO market? You won't need the money from those later IPOs. Facebook priced this one perfectly. They weren't selling shares to make you money. They were selling shares to make THEM money. And they did.
It's not supposed to be just Facebook's call on what the initial price is. If Facebook were able to just run their own IPO without any underwriters, that's what they would want to do: maximize quantity sold times price.
The underwriters perform multiple roles in the IPO, but one of the biggest ones is that they're supposed to be signing their name on the deal saying that everything has been adequately vetted. As it happens, they can sign their name by an IPO price that's implausibly optimistic that their client pushed for, but doing so caused a lot of damage to public perception of IPOs, and especially tech IPOs. So now they've done a great job raising capital for Facebook, but are they going to be able to do a great job raising capital for the companies going public in the next few years?
Re:FB shares (Score:3, Informative)
Every small time investor trading a stock that doesn't pay dividends is basically a speculator. The stock has no value to you until you find someone willing to buy the stock for more money than you paid. You can't use it (as commodities), derive income from it (as in dividend-paying stock), or directly influence the behavior of the company (as with large institutional investors). Whether you wait 3 months or 10 years to unload it is simply a matter of speculation strategy.