Friday, May 18, 2012

FB is the new Lehman Bros

facebook © us govt

News comments:
The last 20 years has spawned some incredible once-in-a-life-time events. The collapse of Lehman Bros and the ramifications we are still feeling today is one. The other is this colossal Facebook IPO.

After the dotcom blow ups around 2000, we all tutted and said "what were we thinking? Hot air being valued at silly prices?". Well as a small chunk of the ultimate dotcom is sold off, we can all say "we got that one wrong. Hot air is much more valuable than companies who make and sell things.".

Well here we are again. Facebook has amazingly come in to be valued at USD100bn+ which is what Goldman Sachs told its investors it would be valued at and the likes of DST Global, Bono and Accel Partners will soon be offloading their hot stock and capitalising on the fantasy that is Facebook.

Hats off to this incredible feat. Facebook will probably double in price and then when the hype wears off start falling like Bear Grylls jumping off a Groupon cliff.

Facebook is a free members club. The club puts up a few ads in the VIP rooms and gets paid. Advertising revenue. Yep, that old fashioned and soon to disappear business model.

Whereas the real world is turning to real physical assets like commodities and real estate in London, the mad world is turning to hot air. Facebook will be old news in 10 years time as the Harry Potter generation turn away from their privacy-is-cheap lifestyles and the new generation hide away in a new glossary start-up.

However this is good news for in London. With all these FB sellers, this means more money pouring into the tech sector. Whilst the real world burns as the Euro collapses at least a few geeks with speedy programming skills get to become uber rich.

And as for Sean Parker, you make Warren Buffet look like a casino Whale and I kiss your feet.

Today's shorts:
JP Morgan and Enron (bloomberg)

Greece runs dry of Euros (reuters)

Today's longs:
The Facebook rich list (telegraph)

Santander UK is ringfenced in the UK. Meanwhile the queues get bigger ....