Kerri Shannon
Facebook Stock Ready to Roll – But Where Will it Go?
The Facebook IPO price was set and the stock is ready to start trading – but will it live up to its hype or sharply sell-off?
The social media giant priced at $38 a share, the company announced after market close yesterday (Thursday).
That makes Facebook the largest tech IPO in history, valued at $16 billion.
It's the third largest U.S. IPO ever, behind first place Visa at $19.7 billion and then General Motors, which raised $18.1 billion.
While the stock has created unrivaled investor frenzy, there is a wide range of predictions for how Facebook will do in its first trading day – and who the real winners will be.
"The ones who make out on IPOs are the early investors, venture capitalists, founders, and underwriters," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "The public almost always goes along for the ride…whether or not they get taken for a ride remains to be seen." The Facebook stock price will be determined when it starts trading today at 11 a.m.
Where the cutoff is for considering the IPO a success varies – with many thinking anything below 50% would be a disappointment.
"I think anything over 50 percent will be considered a successful offering – anything under that would be underwhelming, Jim Krapfel, an analyst at Morningstar, told Reuters. "A lot of retail investors are not concerned about valuation. That's what is going to drive the first day pop."
Profit Falls Ahead of Facebook IPO – Will Investor Interest Follow?
Is this the first sign of trouble for the Facebook IPO?
The social media giant, now in the final weeks before its long awaited IPO filing, announced Monday that first-quarter profit and revenue has slipped since the end of 2011.
Facebook (Nasdaq: FB) disclosed in a regulatory filing that profit fell 32% from the previous quarter to $205 million. Revenue dropped 6% to $1.06 billion. Sales were up 45% — slower than the 55% sales growth in the last quarter.
Expenses surged on costs related to data center building and workforce growth as the company manages its increasing subscriber base that's climbed to 901 million users worldwide. Expenses soared to $677 million – nearly double what they were a year ago.
Facebook also blamed the drop on "seasonal trends" in advertising and user growth in regions that bring in less revenue per subscriber.
Could Goldman Sachs (NYSE: GS) Earnings Slip Send Investors Bailing on Stock?
Goldman Sachs Group Inc. (NYSE: GS) earnings reported today (Tuesday) beat expectations, but still showed a 23% profit drop from a year ago – will investors dump it for banks with better earnings?
Goldman Sachs Stock Price History
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Goldman said revenue from trading bonds, currencies and commodities was not as robust as counterparts JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC). The decline pushed first-quarter net income to $2.11 billion, from $2.74 billion the year before.
The bank still beat analysts' forecast of $3.55 earnings per share (according to 24 analysts polled by Bloomberg News), coming in at $3.92 – although expectations were set fairly low.
The earnings news pushed shares down more than 2% in premarket trading.
"Although earnings actually beat consensus, I think that the results look somewhat disappointing in comparison with the strong numbers we've seen out of JPMorgan and Citigroup," Richard Staite, an analyst at Atlantic Equities LLC in London, said in an interview with Bloomberg. "The market had perhaps hoped for a real blow-out quarter from Goldman Sachs."
This isn't the first weak earnings announcement from the big bank. It recorded a quarterly loss last fall, only its second since going public in 1999. In 2010 and 2011, its net income fell year-over-year in six of the eight quarters.
While mixed earnings aren't shocking from an industry still adjusting to a post-financial crisis landscape, Goldman's lackluster numbers could drive investors toward better-performing and less controversial firms.
Goldman Sachs (NYSE: GS) Mixed Earnings
Goldman Sachs, the fifth-largest U.S. bank by assets, lost 20% in fixed-income trading last quarter.
That's more than JPMorgan, the biggest U.S. bank by assets, which saw an 11% slip in fixed-income trading, and No. 3 Citigroup (NYSE: C), which lost 4%.
Goldman's revenue fell 16% to $9.95 billion, beating analysts' expectations of $9.41 billion.
While most results fell short of 2011's first quarter, they did show gains from the previous quarter. Total trading revenue soared 87% from the fourth quarter on due to gains in stock and corporate debt markets.
Goldman CEO Lloyd Blankfein hopes market gains and business expansion will drive profits the rest of the year.
"Our mix of businesses gives the firm significant room for revenue growth as economic and market conditions continue to improve," Blankfein said Tuesday in a statement.
Goldman also announced a 31% dividend increase to 46 cents a share, for a 1.6% yield.
Possible Dates Released for Facebook Stock to Hit Markets
Possible dates have been released for the highly anticipated Facebook stock (NASDAQ: FB) to start trading, and if they're right the company could start its road show in less than a month.
CNBC reported that investors could see the Facebook IPO priced by May 16 or 17, and start trading the next morning, according to an anonymous source familiar with the matter. The social media giant filed for its IPO Feb. 1.
If this timeline comes true, Facebook will start marketing the deal May 7.
A possible IPO delay could stem from Facebook's new $1 billion purchase of photo-sharing network Instagram. The U.S. Securities and Exchange Commission has to review the deal and could approve as early as the end of April.
If the Instagram deal takes longer than expected to approve, Facebook could hold off pricing until May 23 or 24, CNBC reported.
The Facebook road show is expected to last about 10 days, focusing on potential investors in New York, Silicon Valley and Boston, according to the source.
Tech News: Facebook (NASDAQ: FB) Scores Big with Both AOL Patent Sale and Instagram Deal
Facebook Inc. (NASDAQ: FB) topped the tech news today (Monday), benefitting from both a record-making deal with photo-sharing network Instagram, and an AOL Inc. (NYSE: AOL) patent sale.
Facebook announced Monday it would pay $1 billion in cash and stock for photo-sharing app maker Instagram.
The Instagram deal is Facebook's biggest ever in both price and reach. Instagram has more than 30 million active users – which it accumulated in just 18 months – the most of any startup that Facebook has bought.
"We don't plan on doing many more of these, if any at all," Facebook CEO Mark Zuckerberg wrote in a blog post Monday, speaking to the size and scope of the deal. "But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."
Instagram, the most popular way for iPhone users to take and share photos, was named iPhone app of the year in 2011. Its features allow picture takers to alter the size, color and style of photographs.
The Android Instagram app debuted last week to a frenzied audience, with millions downloading the app immediately.
What the JOBS Act Means for Investors – and Why It's "One Giant Leap for Fraudsters"
U.S. President Barack Obama signed the JOBS Act (Jumpstart Our Business Startups Act) into law yesterday (Thursday) – and just put more money in Wall Street's overflowing pockets.
The JOBS Act intends to help small businesses and startups raise money and ease the IPO process for "emerging growth companies." These are companies with less than $1 billion in annual revenue, issued no more than $1 billion in debt, floated no more than $700 million in stock, and have gone public within the past five years.
While the law is designed to create jobs and help business growth, the JOBS Act actually is giving Wall Street a new way to soak money out of investors looking for the next huge money-maker. It lightens regulation that was established to prevent firms from encouraging ill-suited investments for their own financial gain.
"This law is a perfect example of how corrupt our lawmakers are," said former hedge fund manager and Money Morning Capital Waves Strategist Shah Gilani. "They're blatant about making laws to benefit paying constituents who will use and abuse the public to line their pockets and those of Congress. The public should be outraged. This is one small step for entrepreneurs and one giant leap for fraudsters."
Sorry, NYSE: Facebook (NASDAQ: FB) Will Trade on Nasdaq
Investors finally have the answer to where Facebook Inc. will choose to list shares when the social media powerhouse starts trading this year.
Say hello to NASDAQ: FB.
Facebook had no comment as to why it chose Nasdaq. The news was reported in The New York Times citing a source speaking on anonymity.
Facebook plans to raise up to $5 billion in its initial public offering (IPO), which it filed for Feb. 1. It's expected to start trading in May.
Stock Market Today: Why Avon Products (NYSE: AVP) Should Consider Coty Inc. Offer
Cosmetics company Avon Products Inc. (NYSE: AVP) rejected a $10 billion cash takeover offer from fragrance maker Coty Inc. – in what could be one of the first moves in a drawn out acquisition.
Privately held Coty offered $23.25 a share for struggling Avon. That's a 20% premium to Avon's closing price Friday.
Avon turned down the bid, saying it "significantly undervalued" the company. It also said the non-binding offer was "opportunistic," and Coty was simply trying to get a "free look" at Avon's financials without a solid commitment to buy.
But industry analysts said with all Avon's problems, the company should not be so quick to dismiss a purchase offer at a premium.
"It's an opportunity that the board should seriously consider," Sanford C. Bernstein & Co analyst Ali Dibadj told Reuters.
The news that Avon could be bought out soon pushed its stock up as much as 21% to $23.34 in early morning trading.
Retail Stocks: Best Buy (NYSE: BBY) Not a Good "Buy" At All
After years of slipping sales and struggling performance among retail stocks, Best Buy Co Inc. (NYSE: BBY) has decided to revamp — a long overdue move to hold on to customers and investors.
Best Buy announced today (Thursday) that it would close 50 stores and redesign its big box business model to compete with online retailers.
Best Buy, the world's largest consumer electronics retailer, has suffered six straight quarterly sales declines at stores open at least 14 months. It also reported Thursday a fourth-quarter loss of $1.7 billion.
The news triggered Best Buy shares to slide almost 10% in early morning trading.
Best Buy's initiative to finally update its business model and adapt to a changed retailing landscape could be too late to salvage sinking investor confidence, signaled by today's selloff.
"We are concerned that a turnaround of this magnitude will further weaken Best Buy and increasingly distance it from its vendor partners and core customers in an already very precarious environment," Oppenheimer analyst Brian Nagel told MarketWatch.
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