As we noted earlier this morning, some of the retail brokerages fortunate to get their hands on Facebook allocations are apparently telling clients they’re out of stock, i.e., you and Aunt Sally can forget about $38 a share and assume that whatever you wind up paying, you’re going to be lining the pockets of investors smarter and richer and better than you.
Which begs the question: What the hell are you thinking?
Seriously. We’d like to hear from you.
The financial punditry has been banging out a Facebook-will-be-overpriced beat for so long, that developments like Zuck & Co. increasing the size of the offering or upping the price range can be a little startling. Who are these people clamoring for the stock, and why aren’t they asking themselves this:
If shares allocated at the current $34-$38 price range are going to be reserved for the institutional investors (mutual funds, hedge funds, pension funds that generate fees for investment bankers);
And if the shares that do get allocated for people like you (perhaps 5 to 30 percent, depending on who you ask) typically wind up in the hands of brokerages’ most preferred (read: fee generating) customers;
Then: who do you think you’re buying the stock from?
Well. It could be the same institutional investors who were treated to first helpings and now stand to profit as you and your aunt touch grubby fingers to mouse pad and goose the People’s Company to valuations liable to make the entire Fast Money team rasp and gasp their way to a collective heart attack. Or it could be the financial collossi: Tiger Global Management, which is selling 53.8 million shares in the offering, or Goldman Sachs, which is selling 66 million. Or else the VCs: Peter Thiel is selling 44.7 million shares, Accel Partners 201.4 million.
In any case, it may behoove some introspection: If you’re buying from the smart money, does that make you…dumb?
Maybe not! Which is the great thing about this (capitalism, America, etc.): Facebook seems to add 100 million users every other month and maybe the naysayers are reading the wrong playbook. In case of which contingency we ask you, dear muppets, what do you know that the pundits don’t? Please tell.
[Photo: Ross Hawkes]