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Did Facebook lie to its shareholders? Lawsuits filed after 3 days of trading

What's Hawt: After just 3 days on the market, multiple shareholders have filed lawsuits against Facebook and its associated investors after they found out that information about new forecasts were released on a limited scale just before the IPO went public.

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Speed-Racer1659d ago

Terrible. Mark is really a sneaky guy... and I believe he also dumped some of his shares before things got bad.

NBT911657d ago

My business studies teacher was telling me about this the other day. The shareholders, when FaceBook entered the public domain have essentially bought a dead company that is worth nothing, so she was saying.

But I don't get it, how is it worth so little? Surely the most popular social networking site in the world (I assume it is any way) is surely worth more than a few £$? Or is it a mistake due to so many people buying shares?
Can you or somebody who understands it, explain this to me? I want to be able to reference to it in future essays / tasks =)

MRHARDON1657d ago

You don't have to pay to use the site.
Only maybe .1% of the user base pays Facebook by buying credits to use on Farm ville and other apps.

That is how the site is worth so little, the users are not paying to get on the site. Only profits that are coming in are from advertising.

Facebook, if I can value it, probably only worth a couple dollars since they are not a business and just a social website that makes its profits by advertising and some other means.

Speed-Racer1657d ago (Edited 1657d ago )

@MRHARDON - A lot of their value comes from the massive amounts of demographic, sociographic, and psychographic obtained via the millions of users setting personal interests, age, gender, work and school info, etc. As the saying goes, if you don't pay for a product, you are the product. I don't know the terms of use though but I am pretty sure FB somehow finds a way to sell that kind of information to 3rd parties that then try and push stuff to us. The data is also used for generating customized ad demographics (for those paying customers).

I do think the said value was too high though.

Winkle921657d ago (Edited 1657d ago )

Forgive me if I misinterpreted your question, but Facebook is by no means only worth a few dollars. Currently each share is worth $31.91 and there are an estimated 2.5 billion shares on the market. That means the worth of the company is equal to 31.91 * 2,500,000,000 = around 80 billion. The whole problem with these stocks is that FB started off at a value of 100 billion... far overpriced. Now it's price is falling, people wondering wtf happened. I think.

SKUD1659d ago

Quiet the blunder it was. This is one SEC report worth following and reading.

crazytechfanatic1659d ago

I think FB IPO is the blunder of the year

KingPin1658d ago

if u buy facebook stocks you are an idiot and should kick yourself.

stocks only go up if u invest in something people NEED more than what people WANT.

google stocks started at $64/share and today are now $604/share give or take. but google is something people needed to get around the internet quicker.

what has facebook offer that people need? bottom line, nothing!!!

Jihaad_cpt1657d ago

um people dont need Google you should go read up what a need is.

KingPin1657d ago

@jihaad

not everyone in this world is as computer savvy as you think they are. google makes it way more simpler to get around the internet. thats why google is the most used search engine on the entire internet.

@silent
as said by people below me, facebook doesnt offer much in terms of revenue. if it doesnt do that, people wont want it. would you want something that does nothing or would u rather buy something that people need that has more than one way of generating income.

SilentNegotiator1657d ago

'Want' can make for plenty of successful stocks, actually. Facebook just doesn't make a lot of sense as a publicly traded company because there is only so much revenue sources of a social website. Unless they branch, they'll never be a successful corporation.

The IPO was INCREDIBLY overvalued. Even I could have told you that they would drop greatly in a few days.

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