Experts predicted facebook's IPO would go sky high.......but it fell flat. What happened?

[John W]

They underestimated the market that would buy and or that market wasn't knowledgeable enough to actually place orders. They actually increased the number of shares that they issued which will just deplete the supply of investors faster and make a high price harder to sustain.

Investors that were knowledgeable knew that their last year's earnings did not justify their price so the price would have to be based on future earnings growth but they have been showing a decrease in income and GM just pulled their adverts. Also, Zuckerberg maintains control of the company and although he's the visionary behind the company, there's no confidence that he can make the appropriate management decisions. Most of their activities are now on mobile and their adverts do not reach their mobile users. To a large extent, the mobile market is because they tend to be banned in the corporate environment, they have not been able to come up with a method of incorporating the corporate culture and or monetizing the mobile market.

I suppose it will depend on whether or not the venture capitalists will pull out. If Facebook can survive will depend on their resources and ability to grow their earnings.

The Social Media concept is a very powerful concept and will certainly drive something in the future, whether or not it'll be Facebook is another matter.

The next step is to see what happens next week when the underwriter support is pulled, futures start and shorting becomes available to more investors. It's still on training wheels right now, it's leaning on the training wheels real hard right now and the training wheels disappear next week.