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Wedbush Securities Managing Director Michael Pachter, Greencrest Capital Senior Analyst Max Wolff and FBN’s Shibani Joshi on Facebook’s first day ...
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Right there let's bring -- Max wolf Max wolf has been looking at this very closely needless to say.
You see how it traded today but overall tell me what you make of what it can be calm as far as.
What investors can get out of it and what it can do for this country as far as hiring and as far as growth.
Certainly we love the story it's a great American dream story of the success story born in a dorm room.
Grows an incredible rate this is one of the most wrong rambunctious eight year old you've ever encountered the 105 billion dollar eight year old to be exact and there aren't that many year old thought there that are worth a 105 billion dollars they're probably lot of people wondering if there's a year old is worth a 105.
Billion dollars to we saw that market today.
But we do think it's a compelling story thousands of employees bringing people together changing the way we basically consume each other's presence our social interaction.
Probably gonna be a driver for entertainment consumption definitely driver for video games are ready so planting text messages -- planting email.
What already game changer in many ways but also a story -- got a little bit ahead of itself is IPO went viral little before it went public.
And it was incredible expanding IPO with tens of millions more shares -- -- -- and higher and higher prices and we saw the market pushed back a little bit today.
And that's a give and take of evolution.
OK so Michael blockers joining us now he's from what bush securities Michael.
You heard what Max as Max thinks it's a great company thinks that eventually he's gonna get -- but this was not the price point.
You're sort of you know at any price -- -- hide his stock for almost any price of your much more bullish.
On the stock are you disappointed.
That it didn't perform better today.
I you know disappoint as a tough word I think that what we learned today is that.
There has to be a balance between supply of shares and demand for those shares.
And you know if you look at this and say wow it closed at the IPO price of Morgan Stanley did a phenomenal job.
That's fine but on -- site called on all other similar Michael and it's it's not necessarily Morgan Stanley it's it's the underwriters making sure that every time it hit 38.
They were by a lot more the stock to prevent it from dropping further is not what was going on here.
I'm not so sure that that's right I think it actually might be the other way around every time orders came in they were selling stock because they don't want to get stuck holding too much -- that over allotment.
They essentially guarantee that over allotment they bias on like I got to press you on this are you suggesting that were it not for underwriters Heidi a lot of people say were -- not for underwriters we would have seen the stock.
Drop down into the 35 maybe even -- 3433.
Level you're saying not so at all.
I guess what you're saying then is if they hadn't gotten gotten your daughter pregnant than they wouldn't be paying -- hello don't talk about my -- here and back at not not this anyway what we're saying is that they're gonna say suggesting that underwriters played a big part.
In keeping the price out at 38 without talking about anybody my -- under -- -- I think the underwriters offered more stock.
Then then the public had demand for and I think that it's unprecedented have a sixteen billion dollar float the first day.
They -- the market to absorb too much stock I think the big mistake was at fifty million that they freed up on Wednesday and I think that's what kept the price down I think that they have lined up demand for 384 million shares.
They suddenly flooded with -- and 34 million shares.
They thought -- be such a feeding frenzy and they misjudged.
From retail that people would pay any price and they were wrong.
I think the retail investor got a little spooked by the stock propping -- you know essentially right after the open and cancel their orders and they're sitting back and waiting how many shares that's really -- happen.
Max although you know air Bolling who was a trader for a long long time knows how these things -- feels it was pretty obviously it perfectly priced here.
I mean perfectly priced in the sense of the cooperation trying to get as much money off the table as they cut cap and let's keep it -- -- 60% of the selling today was by insiders previous investors.
Who'd like to these numbers and thought to themselves of I can get out of 38 dollars.
My train has arrived on stepping aboard I'm gonna have myself active look at that in -- what if we look get.
What happens in the next couple of weeks there were so many people who walk up to me walk up to David.
How can I get FaceBook shares -- -- want them or -- this tamp down a little bit the excitement.
I think they're definitely gonna still want them the question is that when you get real on an asset what stops being a fantasy and starts being up.
Financial calculation -- definitely real money on the line you start caring about price it's one -- to by the dream.
But if you only want access to the story you can spend twenty bucks get the biography take it home.
And if you your worst comes to worst -- -- twenty bucks -- and I think when you start betting.
Your pension your 401K your real hard earned money at that point any price starts looking like a pre.
Particularly in a risk off market selling down the way this one has been lately and was through today.
OK well Michael weather was a disappointment or not the good though the point is -- FaceBook has a lot more capital that they're looking at right now what -- they do it addicts or capital how does that how does a company -- now.
You know I actually don't think they need -- I mean they certainly had plenty of cash going into the IPO.
I don't think there's they're gonna make many multi billion dollar acquisitions I think the truth is.
They're gonna grow by getting Smart about delivering -- -- charging at you know higher at rates for targeted ads.
I don't see them quadrupling their user base but I do see them quadrupling their revenues in the next three or four years.
And the only way they're really gonna get to get there is increase of frequency of ads and increase the monetization and and the only way they can convince advertisers.
That it's worth paying more is to show results and they're gonna have to really be Smart about using the data they have and targeting ads and I think advertisers will pay -- really dip.
-- -- obviously the party has been big it will go in to tonight in certain little pockets of Silicon Valley but come Monday.
They've got to monetize they've got to take that treasure trove of data that they have from their 80900 million users.
Put it to work do you think that they have that my -- I I I absolutely do list actually spoke to somebody in employee inside hearing he was preparing for a 4 PM not -- inside the company.
I think they actually have their eye on the ball I think Mark Zuckerberg -- seven that this notwithstanding a day -- you may nineteen billion dollars.
But everybody inside this firm knows that mobile is the next -- that China isn't next horizon that they need to really be able to what I explained -- -- -- add value proposition especially in light of that news that we got from General Motors this week as well.
I mean the fact that they're running board meetings last night get a hack Exxon which is created seven.
-- -- innovative products the company has ever made timeline chat and the list goes on nine shows.
That they're not taking a vacation here are not taking a break just to go cult like it really is that you know just one step -- -- -- step process is -- So finally about the management of the company -- locate with the fact that Zuckerberg is gonna have 55% of the voting shares.
Nobody likes an imperial CEO and I think we've seen that not work all that while -- a bunch different names we did see his control go from 57.
To a little over 550 that's largely cosmetic shift.
I think we will see that come down when his special class of voting right shares are sold they don't retain their special voting rights so we expect that the come down.
Over the coming years we do think that -- average -- It are an excellent excellent team and that he's a very important visionary for the -- we expect him to stick around.
But as all investors we -- generally like to see a slight discount on price when you have -- kind of imperial concentration on voting rights.
