The culmination of greed in America
Tomorrow the boys of
Facebook become billionaires as they cash out just before millions of new
stockholders are left holding another Internet stock that lost half it's value.
Make no mistake, the
billions to be made over a 48 hour period will be the last profits from the
Internet for years to come because there is no business model for pure and
simple greed. This IPO and every other
Internet company surviving on revenue from Internet advertising will crash
because the truth slipped out of the bag too early.
Yes, the speculators who
control the IPO and have purchased all the offering before the public even had
access to it, will simply let the value increase since the IPO was over
subscribed and that means fewer shares are available for purchase. In a day or two they will sell into the
market, take their billions of cash and walk away.
GM created a huge
potential problem for the IPO when it announced just a couple of days before
the IPO release that it was stopping all Internet advertising on Facebook and
everyone else because after spending billions of dollars on Internet ads over
the past few years because the ads have no impact on consumers.
For years the Coltons
Point Times has warned of the foundation of quicksand when it comes to valuing
Internet stocks and advertising revenues.
In fact a year before the last Dot.com bust in 2000 we published a column
outlining why the market was about to collapse.
For those who don't
remember, it has now been twelve years since the dot com bubble began to seriously
deflate. The financial climax had its
high water mark on March 10, 2000 when the NASDAQ peaked at 5132.52.
The subsequent stock market crash caused the loss of $5 trillion in the
market value of companies from March 2000 to October 2002, and those parts of
the world which were the epicenters of the dot com boom, such as the San
Francisco Bay Area, were plunged into a financial nuclear winter.
More than a decade later we still haven't learned. Facebook is going public with over 97% of
their revenue from Internet ads, ads General Motors, the largest car company in
the world, says are worthless.
American's and foreigners driven by greed will purchase the stock, not
from Facebook but from the financial institutions who already bought stock before the people had a chance.
Now that's fair President Obama, our first president to embrace the
Internet speculators as economic wonders not to mention huge financial
contributors to the President's reelection campaign. You don't suppose Obama has some of that
Facebook stock do you?
There is no financial basis to say Facebook is bigger than Exxon, Proctor
& Gamble or GM when the sole basis for revenue is advertising which recent
polls indicate 83% of Facebook users never click on. The other 17% say they occasionally click on
one if it is of interest.
Don't be surprised if another five trillion dollars is lost and that most
of it comes from Internet stocks, or should I say stockholders. Of course the Internet executives will cash
out starting tomorrow leaving you holding the bag.
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