Well before we reach the day when Twitter goes public, the Wall Street hype machine will be running at full tilt.That's going to make it hard for some to resist jumping on the Twitter bandwagon. But before things start to get too crazy, there''s something you need to know...
Facebook Inc Nasdaq: FB
Facebook stock is one of the most controversial stocks in existence today.
With one billion users, investors have been waiting to see if Facebook's business model can pay off, especially after its IPO tanked.
Today, Money Morning's own e-commerce director, Bret Holmes, is going to give you the inside scoop on Facebook stock. Not some theoretical financial analysis, but what the future looks like for Facebook, from a guy who understands e-commerce and can explain how Facebook stock could be the "buy of the decade" for investors.
Facebook Inc. (Nasdaq: FB) is starting to get a taste of what it means to be the king of the social media hill.
Small and more nimble competitors with novel ideas have sprung up and begun to entice young users away from the No. 1 social media platform - a bad omen for Facebook stock, which 11 months after its IPO still trades 29% below its offer price.
According to Piper Jaffray's annual "Taking Stock of Teens" survey, teens are spending less time with Facebook and more with a vast array of alternatives.
How about paying a dividend?
It marked the fourth time a torrent of the social networking giant's shares were let loose for trading since the company's hugely hyped initial public offering (IPO) on May 18 at $38 a share.
The reaction to the sizable release of shares has been mixed.
That's because on Dec. 12, shares of the world's largest social networking company will be added to the Nasdaq 100 Index.
Facebook will have some very good company in the index, joining tech behemoths Apple Inc. (Nasdaq: AAPL), Google Inc. (Nasdaq: GOOG), and Microsoft Corp. (Nasdaq: MSFT). It'll rank 13th by market value ($60 billion).
Snagging a spot in the coveted index, a compilation of the 100 most valuable non-financial stocks traded on the Nasdaq, is the latest in a string of welcome news for Facebook shareholders, especially those bruised in its initial public offering fiasco on May 18.
And the news couldn't have come at a better time for shareholders.
In a stark about-face, the stock has advanced more than 24% in November, after falling 50% from its IPO price over the previous five months.
The FB rally was pronounced Monday, with shares of the social networking giant closing up 8.09%.
In addition, it has logged better returns than the S&P 500 by 24 percentage points over the last 60 trading sessions.
That's why, for the third time in nearly as many months, Facebook Inc. (Nasdaq: FB) on Wednesday braced for what could have been the largest selling spree yet to hit the social networking giant.
Scores of early investors and employees were at liberty to sell 778 million shares. Another 31 million in restricted stock, awarded to employees who joined the Menlo Park, CA-based company prior to 2011, were also unbound, along with 48 million shares held by former employees.
The staggering number is almost equal to Facebook's existing 921 million share float, according to data from the company's most current filing with the U.S. Securities and Exchange Commission.
But, a strange thing happened.
No, we're not talking about Facebook's IPO fiasco earlier this year and the subsequent stock price meltdown. It's bigger than that.
Facebook is worst offender among the many Internet distractions keeping workers from getting things done in the office.
Most workers stop what they are doing several times an hour to respond to messages from friends and co-workers on social media like Facebook and Twitter, browse the Internet, and check and respond to e-mail.
And once distracted, it takes time for a worker to get back to the task at hand - one study put the average disruption at 23 minutes.
All those interruptions add up to a massive expense for businesses and the U.S. economy.
The sales were part of 230 million shares awarded to top executives and employees prior to the IPO that were subject to lockup until last week.
According to Forbes, another 777 million shares awarded to Facebook employees will come off of lockup next week. It is expected that Facebook employees will continue to sell shares for the rest of the year.
Releasing earnings after market close, the social network leader posted earnings per share of 12 cents, on revenue of $1.26 billion, or 32% higher than the year-ago quarter.
While Facebook did not provide an outlook following its uninspiring second quarter release, analysts were looking for 11 cents per share on revenue of $1.2 billion, according to data from Thomas Reuters.
But this positive vibe doesn't mean Facebook's earnings problems are solved.
Despite a recent milestone (one billion users), a new "want" button feature and a "pay-to-promote post" option, the company has failed to drum up investor and analyst fanfare.
Wall Street shrugged off all of the recent news and Facebook (Nasdaq: FB) stock barely budged, except to move a little lower.
Even CEO Mark Zuckerberg's mid-September interview, which appeared to put some spark back into Facebook's fading shares, now seems like a very distant memory.
But, what Facebook will get from the "want" button is unclear.
Still in the testing mode, the new feature allows Facebook members to create "wish lists" of desired items ranging from home furnishings to clothing to books to a bevy of other retail products. It's kind of like a Christmas list or bridal registry.
While the company celebrated the landmark number, many analysts simply shrugged it off. So did Facebook stock, which was down about 0.4% by 2 p.m.
As MarketWatch pointed out, "it's great to have one-seventh of the world's population in your network, but Facebook will have to translate that to the bottom line to sustain its upward momentum of late."
Or, as Money Morning wrote a few weeks back, "Congrats on one billion Facebook users... who buy nothing."
Facebook, in order to change that flaw, released a new plan this week to make money off its enormous subscriber base.
But here's why Zuckerberg and team should go back to the drawing board.