Tag Archive for Market Capitalization

Is Fecebook a buy? Because sure as hell a short squeeze is coming.

The question is, from where? Facebook is Top Short-Seller Target Among Large Stocks – Bloomberg No large U.S. company is attracting more attention from short sellers than Facebook Inc. (FB), amid bets the world’s biggest social-networking company will keep falling after losing $27 billion since its initial public offering. Short interest on the Menlo Park,…

Is Facebook (Nasdaq: FB) a Replay of the AOL/Time Warner Deal?

I hope you didn’t buy shares of Facebook (Nasdaq: FB). The valuation was always too aggressive.

And increasing both the price and amount of Facebook stock at the last moment ensured that both underwriters and retail investors ended up with far more shares than they bargained for.

In fact, the Facebook fiasco reminds me of another deal that marked the peak of the dot-com boom.

No, not the ineffable and rather sweet Pets.com- their IPO was far too small a deal to have genuine market significance.

Instead I’m talking about the AOL and Time Warner merger announced on January 10, 2000.

Like Facebook, the deal was sold as a big success. It was only later that it quickly became clear that AOL had sold itself at the absolute peak of the market.

From there on out it was all downhill as the storied merger practically top-ticked the market.

Before Facebook There Was AOL

AOL had built up a nice business from “dial-up” Internet access, but it was already obvious by January 2000 that the arrival of broadband Internet would make for a difficult transition.

As such, AOL’s market capitalization of around $200 billion was purely the result of the frothy market of 1999.

Nevertheless, that rich valuation enabled AOL to become the senior partner in an acquisition of the Time Warner media conglomerate, getting 55% of the merged company in a deal valued at $350 billion. It was the largest merger in U.S. history.

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Facebook’s IPO Already Happened – Several Months Ago on Secondmarket | Daniel Gross – Yahoo! Finance

Back in the day, when a hot company with scale and a lot of interest came along, there was nowhere for investors to express their enthusiasm about a company until the IPO officially happened. SecondMarket has changed that. The company manages periodic share-sale programs for privately held companies, and has emerged as an exchange where…