Facebook stock draws record short interest
Sentiment is downright morose as investors bet shares have further to fall. If you're itching to buy, just lie down until the feeling goes away.
According to data from Bloomberg News and Data Explorers, short interest in the company is about 6% of shares outstanding. No other S&P 500 company with at least $50 billion in market capitalization has a short interest higher than 3%.
As of June 4, about 37.5 million Facebook shares were sold short, compared with an average daily volume of 72.6 million shares, excluding the first day of trading, the news service said.
Sentiment regarding Facebook isn't bearish, it's downright morose. Shares of the social networking company have slumped nearly 30% since its IPO as investors wonder whether the reality matches the hype. For now, the answer appears to be a resounding "no." This is not simply Schadenfreude, a German word meaning rejoicing in the misery of others.
Earlier this week, analysts at Bernstein slapped a $25 price target on the stock, below where it trades now, arguing that there was a "material risk" to the stock because investors will question Facebook's ability to meet 2013 forecasts. Indeed, many investors, who recently believed Facebook could do no wrong, now seem to think the company can do no right. It's easy to understand why.
The IPO raised more questions than it answered. Some companies such as General Motors (GM) are questioning the social network's usefulness as an advertising platform. Many parents are concerned about Facebook's plans to allow children younger than 12 to access its site. Though Facebook is phenomenally profitable, the company's growth is slowing -- news that apparently was disclosed to some investors ahead of others. Net income in the first quarter slumped 12% amid growth in the developing world, where average revenue per user is lower than it is in the U.S. or elsewhere in the developed world.
At some point, Facebook will get too cheap to ignore. That point has not arrived yet. The company is trading at a multiple of 82.26, exceeding Apple's (AAPL) 14.04 and Google's (GOOG) 17.66. Facebook's shares are priced for perfection, meaning that even the tiniest hint that growth is slowing will cause the shares to collapse even further.
A clear buying signal for Facebook may not arrive for months, if it arrives at all. Investors itching to buy the stock should lie down for a few minutes until the feeling goes away. Meanwhile, the short interest in the stock is only going to get higher.
Jonathan Berr does not own shares of the listed companies. Follow him on Twitter@jdberr
THe saddest part is that Mr. Zuck will ride into the tax free sunset with his Singapoore bound sweetheart and all the thousands of shareholders will be stuck holding the bag....
The rape and pillage of USA continues by the system that allows it without punishment...
Who would have guessed, no real intrinsic value, just never any thing tangible there! The same for the whole market, they just live from bubble to bubble, ponzi scheme to shell game. They just made congress quit trading on insider information "yea right". The so called smartest man on Wall Street just had one of his own products blow up in his face. When the CEO of JPMorgan don't know what the hell he is doing and you people are going to second guess the market?
Until some real reform is brought to Wall Street it would take a fool to play this game!
I am not tooting my horn, in my mind but this company has always been a joke, they are a fad, I predict that within 2 years, you will have to go to page 50 of the NYT's to get any news about fabebook.
Use it as a day trade it's junk.
Who cares about the stock, when is the website going to be shut down for good?
FB is going to die with its a$$ in the air. This is why i say this. Suckerberg will wait until he falls to 10 or 12 billion. Then Mrs Suckerberg is going to say "i want to go home now". To look at her what country do you think her motherland is? He will take the money and prop up his new country because he renounced his U.S. citizenship (like his partner). Now to all you FB share holders: you are part owners of a supposed company that produces 0, owns 0 and has 0 inventory. Add all this up it equals 0. Suckerberg will turn off his Commodore 64 and announce: Sorry everybody but the company went broke and is "offline". This is the best part I think. To all you shareholders now you get to liquidate 0.
Remember how FB dies? Remember jokingly saying with your friends "when I die I hope they bury me face down so everybody can kiss my a$$". hahaha
Check my early comments on other threads the same IPO,
I told ya so!
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These hot movers could rise by double digits in coming months.
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