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Kaltbaum Capital Management President Gary Kaltbaum on the fallout from the Facebook IPO.
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Well the first week is over and Facebook's debut is a flop.
But Gary -- bomb president of call on capital management is seeing this as a great lesson for investors he joins me now.
Hey Gary I what do you make of this first week we've got some interesting numbers now the stock's down 16%.
We've got at least two investigations going on.
-- this way anybody expected.
I don't think anybody expected it but I have to tell you that that I saw a few other people -- I have to tell you greed is not good.
And valuation and prices do matter and I think the investing public got caught up.
And a lot of hype and not excuse up a lot of BS Al they are and -- are paid to step.
Price right now.
Well I could tell -- NN viewers that.
Fox Business Network stayed far far away from this as we've been telling people all week.
Don't fall for that's.
What do you think though because Morgan Stanley is saying they're gonna make some investors whole retail investors -- here.
Are you expecting at the end today that people who gotten tried to get and it had a horrible experience will see themselves.
Reimbursed at some level are you really expecting that.
What we're hearing a little bit of that look if somebody.
Put in order and four days later still doesn't know what the order is.
I think they owe it to that up person -- Does that knock out the the water at that point in time because it the way they held us I cannot believe how bad is the in the -- amazing part about the says.
They had months to prepare for it and they still couldn't get it right it's just -- this -- if this is little lesson -- Wall Street going forward I don't know what is.
Well apparently the NASDAQ tested the technology and it didn't work and they still did it anyway I mean what what does that tell you.
About that what's going on ahead for the people who run these.
Exchanges.
I think a few people gonna be out of jobs I mean how do you test a new technology which -- with arguably.
The biggest IPO and the most important IP over the last five to ten years.
Just a colossal blunder a colossal mistake and dot you know the but the big problem for FaceBook and Wall Street right now.
This is gonna last a while there's not just not gonna be two investigations.
There's a spot -- be a couple of lawsuits you're gonna see states involved you can see the SEC involved right all kinds of regulators involved this one's gonna have some -- How legs but will have legs for individual investors do you think individual investors who might have been thinking.
OK -- -- now maybe I'll get back into the market that they're gonna look take one look at what happened here and say.
Terrible I'm not I'm never gonna invest again.
Let me tell you what I think happened here a lot of investors that up speed out of the market because how fed up they have been.
What with await the S&P doing nothing since 99.
Now they finally say.
Enough is enough I think some people came walk but the couch and got into FaceBook and now they're saying what the heck happened -- -- They are buried at this point in time down 60% if they of the IPO and and more they bought in the -- the market so.
Nothing good comes of it we already see tons of investors leaving the market via the mutual fund numbers -- Tom Watson.
So why I think it's it's gonna continue.
Bye -- to the market.
I it FaceBook -- the shares.
I have lost twenty billion in market cap.
Going from a 104 billion to 87 billion.
What what's the future for FaceBook stock you said it'll be difficult for them to recover my -- is is that Zuckerberg sees this whole event as.
Extraneous to his company.
GN I mean he probably I this is outside.
Anything that really matters to him but that's not true now as it.
Well they now have to deliver to Wall Street no longer -- but can they just sit in their offices and do their thing.
They have to guide Wall Street they have to -- Wall Street.
They cannot bury their head in the sand at this point in time and unfortunately I think Wall Street did them wrong.
And they're gonna happen gonna come through that I think the stocks worth maybe forty to fifty billion dollars.
At most and the stock price goes they -- -- I gotta tell you there's gonna be a world apart going -- only remember I don't.
Just just remember a couple things they have less than four billion in revenues number one and number till something although most people are not talking about.
They spent the billion dollars on its program that does not have one sale if you went down for the street right now and open up a hot dog stand it's sold one hot dog.
You don't more sales than in the -- yet -- -- -- billion dollars from me.
That reminds me of 1999.
When people buying anything for any price just because it was involved in the Internet now what's the social networking thing.
-- by the -- FaceBook just open their own photo sharing business this week.
It's almost competitive to instruments I don't know what -- spending a billion dollars for and I think a lot of people that are watching this saying maybe this company is not so Smart.
-- you -- at FaceBook is worth half of what where it's tree or in the market -- play.
-- right now you compare it to any other Internet company it should trade -- 3540 billion.
In market cap out and and here's the other problem they're our earnings have been decelerating latest quarter's earnings would down.
9%.
Year old -- if that continues and also -- -- -- bear market you know I don't know what price you can put the sonic and gilt -- go much lower than that and.
Hopefully I'm wrong.
Well -- I think I have this feeling that we're going to be talking about the story all summer lot so thanks for coming on -- holiday weekend really appreciate your time have a great holiday.
Bone up -- his next we've already retired about the same thing thank you have a great holiday to thank you thank --
