We’re catching up on some DVR viewing. Tonight’s episode was Lewis Black’s In God We Rust, which was released on St. Patrick’s Day but taped back when people could still believe Michelle Bachmann was a contender for the 2012 Republican nomination. It was filmed not earlier—and probably not later—than 7 May 2011. Why do I need to specify the date? Because he discusses my favorite subject of recent times, the coming Facebook IPO. So what was the consensus a year ago about a Facebook IPO, as now immortalized in a Lewis Black routine? Paraphrasing:
Facebook is worth $50 billion dollars. Goldman Sachs tells us so. And if they can get into China, Goldman says they’re worth $200 billion
Which means, in the past year, the stock market’s best estimate of the value of Facebook doubled. In that time, the Dow, S&P500, and NASDAQ Composite Index are all basically flat.
|Source: Yahoo! Finance|
So the gains were all due to investor appetite, some of which may have been—what’s the word—irrational. So if you look at page 24 of today’s (Wednesday’s) FT, you’ll see a piece by “Telis Demos in New York that opens
Shares in Facebook fell below $30 for the first time yesterday, a 23 per cent fall on its $38 issue price, with options trading indicating that the stock’s extreme volatility was expected to continue.
So even now, the valuation of Facebook is more than 50% higher than it was a year ago. If this be failure, let’s have more “creative destruction.”