Is Facebook's IPO an exit strategy?

Is Facebook's IPO an exit strategy?

Summary: There's money to be made on Facebook's IPO but is it a long-term investment? I don't think so but there's much to consider.

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It's no secret that I'm not a huge Facebook fan. All you have to do is read some of my other posts on the topic. I think Facebook's IPO comes at a time when Facebook is on its way out--out of our lives and out of our gadgetry--for good. I believe that a lot of people have discovered that it's a waste of time and computing resources. It was cute for a while but now, they're trying to rekindle interest in this juvenile phenomenon by issuing this IPO. It's silly but it will make megamillionaires and billionaires out of people who aren't qualified to deliver pizza. Crazy stuff, that.

I think the IPO is a last ditch effort to breathe life into a failing concern. But, it won't work. Not for long anyway. I think people will wake up and say to themselves, "OMG, I have invested in something that doesn't really exist except in Cyberspace. I've...I've...invested in AIR!"

They'll wisely pull their money out and Facebook will fall to the wayside.

Goodbye and good riddance.

Although I hate Facebook and I think that the IPO is really just a money grab for those who own stock, let me add this: If I had stock in Facebook, I'd sell it as soon as possible and retire comfortably on my ridiculously gotten gain. Yes, I'd be on the phone to the broker and say, "Show me the money, baby, I am outta here."

I don't trust the stock market. I've seen fortunes lost in it. It's the same logic that keeps me out of the casinos. Sure, some people win but the losers far outnumber the winners. I don't like to lose so I don't play and I never bet unless it's a sure thing--and it never is. But, if I were the guy who painted that mural at Facebook and today he might be worth $200 million dollars, I'd take the money and run.

However, there will be people who ride it all the way to the bottom.

I can't wait to hear the "analysts" discuss Facebook's meteoric rise and fall. Everyone will give their roundtable spins as to the whys and hows and no one will remember this humble prediction. Except for me, that is.

Years ago Zuckerberg had an offer on the table for a couple billion dollars for Facebook. He didn't sell it. I would have. He held on. People don't know when to let go. Of course, he stands to make billions more now but my guess is that either he'll ride it to the bottom and end up with almost nothing or he'll wisely bail on it. The smart people involved will use this IPO bubble as an exit strategy out of a dying animal's carcass.

My advice is that if you have Facebook stock that you should cash it in because it will never be worth more than it is right now.

Why? Because it's a silly social network thing. It's false, people. There's no value in it. It's a bunch of blips on a computer screen. It's a false way to be "social." It's the latest MySpace.

Be smart, don't gamble your underfunded retirement on it. If you get the twinge to do it, think about Enron, WorldCom and so many others. Also, think about MySpace. MySpace was "all the rage" a few years ago. Now, you couldn't sell it for the electricity it burns up. A few years ago, everyone had a MySpace page. You had to have one or you didn't really exist. That's Facebook.

Facebook and the rest of "social" media is basically a scrolling wall onto which you "spray" your graffiti. It's now an acceptable form of communication. By acceptable, I mean accepted but pointless.

If you don't think Facebook is ridiculous, perform the following test.

Sit someone down across from you and pretend that they fell into a coma in 1993 and woke up a few days ago. Now, explain Facebook to that person. Hopefully, less than three minutes into the conversation, you will feel embarrassed and silly by talking about it, when you say things like, "You can post to their wall" or "I can update my status."

You must feel extremely important, if you truly believe that anyone cares what you're doing or where you're doing it.

Status update: I'm at a Lady Gaga concert. Woohoo!

Here's an idea, turn off your damn phone and enjoy the concert by being there. Unless you think your Facebook pals are at home saying, "OMG, Jenny's at the Lady Gaga concert, Jenny is soooo cool." I know it's crazy to ponder this but you could just call Jenny later and tell her about the concert or perhaps you and Jenny could actually go and hang out at the mall and tell her about it...OK, wait for this one...face to face. GASP! Is it like really possible to like talk to someone like when you're actually like looking right at them?

Whew, sorry, I digressed. I haven't had my pills yet today. I'll update my Facebook status after I'm done with this post and my wife will read it and then she'll like bring me my meds.

Just so that we're clear here. Facebook is bad. The IPO is a money grab. Don't fall for it. If you have fallen for it, snag your profits and update your status that you just made a million dollars. You're welcome.

What do you think of Facebook's IPO? Is it doom and gloom or renewed awesomeness? Talk back and let me know.

[I originally posted this commentary on February 2, 2012.]

Topic: Social Enterprise

About

Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with 20 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments.

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69 comments
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  • long trolling post

    imho...
    tgolembiewski
    • RE: Is Facebook's IPO an exit strategy?

      @tgolembiewski

      Trolling?
      khess
    • Not trolling

      @tgolembiewski
      I wouldn't say it was a troll, it's just that some people fear which they don't understand, and just hate for hate's sake.

      (Oh, and don't take any stock advice from a tech writer. Why do you think they're tech writers?)
      William Farrel
      • RE: Is Facebook's IPO an exit strategy?

        @William Farrel <br><br>"Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with over 15 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments."

        I am not implying that you can take stock advice from sysadmins
        mKind
      • Not sure how he's "hating for hate's sake"

        @William Farrel

        Is that the new, let's say Facebook gen [?], way one sizes up things when there's a disagreement with your point of view?

        Very cute. Covers a plethora of abstract ground too.
        klumper
      • RE: Is Facebook's IPO an exit strategy?

        @William Farrel
        (Oh, and don't take any stock advice from a tech writer. Why do you think they're tech writers?)
        Because we want to be tech writers. Don't take stock advice from stock brokers. I have a better predictive history than they do.
        khess
      • LOL!

        @khess

        "Because we want to be tech writers. Don't take stock advice from stock brokers. I have a better predictive history than they do."

        Ken, you're full of sh*t. Stockbrokers don't predict the future or the stock market. Stock analysts do that, and analysts are a dime a dozen. Secondly, the number of losers in the stock market does not outweigh the number of winners. The vast majority of people in the stock market are long term investors looking to build a retirement, and the vast majority do make money. How much is dependent on their own research or the quality of their account manager or financial adviser. Your ignorance of the stock market is astounding.

        As for your predictive history, it's not very good based on what I've seen. Nobody cares that you hate Facebook.
        jhammackHTH
      • @jhammackHTH

        Really not so true!

        As a former student of a business school and business history, I can vouch for the fact that the stock market evaporated wealth to the extent of atleast $3 trillion from the pockets of its investors starting with the tech bust of 2000-2002 and then the financial/economic crisis of 2007-2010. Please do not spout s**t yourself. None of that wealth is coming back. Millions of American pension fund investors lost their money and it is not coming back. I myself know of so many people in San Francisco area that are smart engineers but lost their pension, lost their stock wealth, lost their house and ultimately their marriages. Please do not put a bright shining light on the Wall Street investment companies. They do not deserve accolades. In fact, what they deserve is a generational lawsuit for deceiving investors over fictitious stock recommendations that only suit them and none but them.
        calahan
      • @William Farrel

        If social networking is innovation (I still cannot see the technological advantages of social messaging alone compared to internet portal or search based product advertising), then only God can help America.

        If you really want to talk about innovation, please invest in Tesla. It is a great concept and a great company and I do not own shares in it. The Energy department supports them too. That is renewable energy innovation and real too. Or so many other solar energy companies that want to reduce our dependence on mid-east Oil (with a big Oh).

        When Microsoft grew, we could see how a PC device software company can grow into daily business, industrial and consumer technology. Sort of like IBM. When Google grew, we could see how it could change digital advertising with new matching techniques. But when Facebook shows up, there is no way it shows anything new to attract deep mindshare and so moneyshare except by replacing internet search with social search and so building huge data bases themselves. A social graph is irrelevant to engaging audiences to show advertising initiatives except with display advertising that does not make much margins.

        So it does appear that Ken Hess is right in a way! The stock has limitations!

        But if Facebook is aggressive at replacing Google's products, then it is possible! But that is to be seen!
        calahan
      • FB will be the next myspace

        FB success goes as long as the narcissists can put up with the increasing facebook spam coming from the advertisers. That's the REAL limit of how much $$$ FB can generate.
        The Linux Geek
      • RE: @jhammackHTH

        @calahan 1

        WRT to those `Watt Street types`, when you said:

        [q]Please do not put a bright shining light on the Wall Street investment companies. They do not deserve accolades. In fact, what they deserve is a generational lawsuit for deceiving investors over fictitious stock recommendations that only suit them and none but them. [/q]

        I could not agree more. In my considered opinion, what they [u]deserve[/u] is to have the volume of excrement that flows into the NY city sewer system [i]hit the fan[/i] (proverbially, that is) and go [b]splat[/b] all over their Wall Street offices. And they, can clean up the mess!
        fatman65536
      • @fatman65536

        They actually deserve something much worse than what you wrote. I am sure our human excrement smells better than their stock pick stink.

        I actually think it is sad that the whole stock market and tech market destruction that has taken place since the end of 1999 is all put into place by so called observers and profiting participants as 'creative destruction'. The loss of $3 trillion or even more in numbers is astounding and remarkably, no soul in power in America appears to even care about doing an investigation in what really happened. And history looks set to repeat.

        I can only say that we should stick to Warren Buffett like recommendations. Invest miserly and very conservative. Enough with the IPO doubling nonsense.
        calahan
    • RE: Is Facebook's IPO an exit strategy?

      Sorry Ken- but I think you are off on this one.
      While I agree that most users of FB use it for infantile comments and it is a complete waste of time, it does not negate its commercial value. Advertising access to millions of users who spend more time in front of FB than in front of TV is worth a boat load of money.

      BTW: I find it rather ironic that there is a "FB like" button at the bottom of the article :)
      renetheberge
      • RE: Is Facebook's IPO an exit strategy?

        @renetheberge And it's still not proven that being in front of the ads on FB drives any sort of action or behavior from the viewer. The same thing could be argued about TV, but the expectations around TV ads are different because watching TV is a passive experience whereas using a computer is a more interactive one. TV ads are about bringing attention to the product or brand and associating some sort of connotations or emotional response with the brand. The whole premise, originally, with internet ads was that people could click them to learn more or even be taken to a shopping cart and make a purchase. Who do you know that does that? Obviously people must at least click ads or I guess Google wouldn't rake it in like they do, but I just find that internet ads don't leave a lasting impression and are easier to tune out.

        The other issue is that part of what helped FB succeed is that, while people do like some personalization, My Space was a free-for-all with people using all sorts of handles and littering their pages with all sorts of crap. FB offered a consistently clean interface that forced the use of real identities and connected people based on some sort of common denominator. If FB's attempts to monetize its traffic become more transparent to users, there could be a backlash, much like there is around the privacy issues or redesigns they do...
        bxp24
      • Advertising is ok.

        Conversions are the end game.

        More people use facebook mobile, with NO adverts.

        Care to explain...
        Bozzer
  • RE: Is Facebook's IPO an exit strategy?

    "Is it like really possible to like talk to someone like when youre actually like looking right at them?"<br><br>I LIKE that question !

    If you post if on your facebook wall, I will "like" it.
    mKind
  • Hey, narcissism will continue to be around....

    ...so that should keep FB going for a while at least.
    But a big AMEN to your sage investment advice, Ken. I'd avoid this one like the plague.
    Userama
  • Not one word about Facebook being a data mining company.

    It's not a social networking company. The software isn't their product. Your personal information is. They are a data mining company that has a monopoly on the largest pool of consumer marketing data in the entire world. Seriously what the f--k are you talking about?
    rwhitake
    • RE: Is Facebook's IPO an exit strategy?

      @rwhitake

      So, what are all those people doing updating their statuses, uploading pictures, playing games and chatting with each other?
      khess
      • RE: Is Facebook's IPO an exit strategy?

        @khess They're making up a portfolio of marketing data with their profiles' interests, likes, etc that Facebook uses to sell direct advertising. There's just no reason for your argument aside from you not liking Facebook. People are addicted to this crap. Facebook isn't going anywhere. Google+ isn't gaining momentum, and no other real competition. My main issue with this article is still that you're not analyzing the actual product, just voicing your annoyance with social networking as a trend in general. But social networking has nothing to do with this IPO aside from the membership numbers.
        rwhitake