As IF Times

link The Facebook IPO – US Business News — Facebook Weighs Possible Listing With NYSE: Sources – CNBC.

It’s a heaping double helping of schadenfreude for most people as we witness the colossal cluster eff that the Facebook IPO has become.  What was hyped to be the most spectacular public offering in history has devolved into a bad Greek wedding-like fiasco of lies, deceit, finger pointing and likely lawsuits.   You can’t make this stuff up.

The game was stacked with star players from the outset.  Harvard grad creates world changing software platform.  Top echelon investment bank Morgan Stanley advising and underwriting along with the rest of the Wall Street elite.  Rock stars and hedge funds allocated founder shares.  And of course, a namebrand that virtually everyone knows.  Finally, the popular media frothing up the ordinary folk with projections of outlandish valuations.  What could go wrong?

Well except for the newly enriched insiders,  it all went wrong.  The common link connecting  all of the participants was plain old simple greed.  As Gordon Gekko so elegantly stated in the 1987 film “Wall Street”, “greed is good”.  I won’t deny the basic tenet of this argument, since what it really means is that without a desire to achieve more, there exists only a stagnant complacency.  This complacency leads to rot and groupthink.

But pairing up greed with complacency, now you’ve got problems.  It’s a fair bet that very few people actually read the offering document except the lawyers who were paid to write it.  Anyone who has ever seen one of those monstrosities knows that all the caveats and warnings enclosed are about as useful as the warnings on cigarette packages.  People buy stocks because they are told to.  They rely on the advice of financial advisers, consultants, friends and of course, cab drivers in really bullish markets.  As in many aspects of our lives, we rely less on our own common sense  and judgement and depend more on ‘experts’ to make decisions for us.

The free market works.  It rewards well calculated risk taking but it also punishes ill thought out schemes.  All of the current talk about lawsuits about the ‘failed’ offering are ludicrous.  As if someone should reimburse you for losing money on an investment.   This implies that there should have been a profit and that it should have been guaranteed.  Next thing you know, people will be rioting in the streets thinking  they have a right to a job making 100k a year.   Ivory tower types take note; there are many learned theories of how things work and many of  these theories can be made to sound convincing.  But the crucible of the  real world is where  theories are tested.   Unfortunately in real life, we can’t just reset the theory by starting over, we live with our mistakes.

link Facebook shares jump, then fade as trading opens – USATODAY.com.

Obviously we can’t let one of the biggest events of the year pass without some observation.  In the preceding weeks leading up the much hyped initial public offering of Facebook stock, much of what has been posted in the blogsphere has been somewhat skeptical.  Although Wall Street Banks will place a value of over $100 billion on the enterprise value of the company, most media comments have been leery of such lofty pricing.

It’s easy to point out that in some ways, Facebook is a stock about nothing, since they really do not manufacture any tangible product.  The entire basis for the existence of the wildly popular platform is the catering to the natural narcissism and voyeurism that exists in most humans, especially young people.  That a company which creates nothing tangible but can be the most valuable company in history is intuitively puzzling at first.   In fact, perhaps the true value of the company is that in essence, it is the world’s largest billboard.  On that basis, corporations that DO make actual products  want to have that exposure to their products.  Who wouldn’t want their ads for cars or make-up seen by hundreds of millions of users?

Imagine if the celebrity of the day decides that they like a particular brand of shoe and posts it on their Facebook page.  Instantly, sales for that shoe will skyrocket.  Ask anyone with a teenager.

Ironically, this should rub against the occupy crowd who had used Facebook and other social media conduits to organize their protests against….corporations and greed.  If you think about it, Facebook may be responsible for a renaissance in the fortunes of many consumer companies of America….or China.  We can make the case that Facebook is now considered to be THE avenue for marketing by corporations.

But it’s not just that.  If one looks into the business plans of the company, they include creating their own currency, or credits, to be used to purchase items both virtual and real.  In addition, the realm of on-line payments will be another potentially huge revenue area for the burgeoning firm.  In this pursuit, they will run up against Google, no slouch as a company either, who are also pursing such initiatives.  For the next while, learned arguments justifying or dismissing the market value of Facebook will rage on and only the market will be the final arbiter of this.   The point is that Facebook has tapped into the holy grail of marketing, by catering to people’s need to be included socially.  How do you put a value on that?