Facebook’s IPO has been an incredible windfall for its founders, and a huge flop for investors. Since the massive IPO late last week, the stock price has collapsed. There are concerns over ad sales, revenues in general, and now, there are allegations of insider trading after people have alleged that Morgan Stanley warned favored investors that they were cutting earnings estimates for Facebook before the stock even hit the market. The stock is only a few days old and already there’s allegations of insider trading!
“I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook,” said Securities and Exchange Commission chairwoman Mary Schapiro.
Here’s the thing very few people are getting. Yes, Facebook’s not making as much money off their ads as they could be given their massive user base, but consider this. The company just made tens of billions of dollars by selling itself to the public. Why do they need advertising revenue when they can simply buy companies that are profitable and fold them under the Facebook umbrella? If you want revenue streams, go out and buy them! Buy some ad sales companies, buy some content providers, buy some patents! It takes money to make money, and now you HAVE MONEY. Yes, the stock was overpriced, but that’s because everyone wanted a piece of the company.
Tags: facebook, facebook ipo, securities and exchange commission, nasdaq, facebook ipo legal trouble, morgan stanley, facebook ipo getting sec investigation, mary schapiro, mark zuckerberg, morgan stanley insider trading, insider trading of facebook stock