John Crudele
Something odd happened a few weeks ago.
The love affair that small investors had with Apple Inc. finally started to cool.
This, of course, was long overdue especially since Wall Street professionals had been having a torrid dalliance with the tech giant for years and had run up Apple’s stock price to orgasmic levels.
Always the last to know, small investors needed another stock to obsess about. And, says one Wall Street executive, they picked Facebook.
It didn’t matter, this executive said, that shares of Facebook weren’t going to be available to the public until tomorrow at the earliest. Or that small investors would have to hand over considerably more to get a piece of the social networking company than the anticipated $34-to-$38 initial public offering price that the well-connected will pay.
“We were getting a lot of calls about Facebook,” said the executive mentioned above, even as the number of trades on Apple’s stock handled by his firm was declining from about 30,000 a day to one-third that amount.
What does this prove? It proves that small investors, like the love-struck fools all of us once were, are thinking these days with something other than their brains.
Facebook’s IPO is expected tomorrow. But it is possible that the offering could be delayed, especially since General Motors announced earlier this week that it was pulling its considerable amount of advertising from the site.
Kids who like to chat with their friends and keep them up on their latest dating adventures apparently don’t buy Chevrolets. (Really, who would have ever guessed that?)
There hasn’t been a domino effect yet among other advertisers, but that certainly has to be on the minds of Wall Street underwriters — who stand to get huge fees from this IPO — and Facebook officials who could cash out $16 billion worth of their stock. (They won’t be buying Chevys either.)
Only a small part of Facebook will be sold to the public. At its IPO price range, Facebook would be valued in total at around $100 billion. One. Hundred. Billion. Dollars.
And that price for a company that didn’t cure cancer or find an alternate to carbon-based fuel or make a nifty new computer or even figure out how to keep nachos from getting soggy when adorned by toppings.
“To put Facebook’s valuation in perspective, if Apple — which manufactures tangible products — was valued at a multiple comparable to Facebook, Apple’s market value today would be over $3 trillion,” says Brian Hamilton, the chief executive of Sageworks, a leading expert in privately-held companies.
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Apple Inc., Facebook, Facebook, Apple, Wall Street professionals, initial public offering, Wall Street executive, Wall Street
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