This page has been archived and commenting is disabled.
Europeans Betting Millions That Facebook Will Plunge Another 30% By December
While US banks have been busy refocusing their "creative financial products"-time over the past two months, instead defending against allegations of muppetism, or explaining how hedging is really betting it all on red, and then doubling down (just because the casino supposedly has the bank's back), Europe has been busy coming up with new and creative ways of betting on the demise of FaceBook. While official shorting of the most overhyped and overvalued company in history only became a reality for most investors today, Europe's banks have a head start courtesy of "innovated" structured products created by UBS, Commerzbank and Julius Baer. As Bloomberg explains, "the most actively traded structured products tied to Facebook since its IPO have been so-called put warrants, whose buyers profit if the shares drop below a pre-defined level, in some cases as low as $22, data compiled by Bloomberg show. UBS AG (UBSN), Commerzbank AG (CBK) and Julius Baer Group Ltd. (BAER) are among lenders that listed 1,504 warrants and certificates in Europe linked to shares of the social networking site that were offered at $38....“There has been strong demand on the put side, with the ratio between puts and calls at around 70/30” with “some people expressing deep downside views,” Heiko Geiger, the head of public distribution for Germany and Austria at Bank Vontobel AG in Frankfurt, said in an interview yesterday."
The Facebook strange attractor: magic number 22. With a $ sign. From Bloomberg:
Bank Vontobel’s best-selling Facebook-linked product is a put warrant that will reward investors if the shares are below $22, the so-called strike price, in December, said Geiger. Put warrants give investors a cash payment depending on how far a stock falls below a set level.
Julius Baer sold the securities with the largest trading volumes, two put warrants with strikes of $35 and $30 on the Scoach exchange in Zurich. Investors traded 402,000 contracts yesterday valued at $335,780 of the former and 603,000 warrants for $322,620 of the latter, data compiled by Bloomberg show.
Zurich-based structured products distributor EFG Financial Products AG added Facebook shares to a basket of 10 social media companies that are tracked by a certificate that has traded on Scoach since last month, it said in an e-mailed statement.
Of course, should FB implode to the degree expected, while on one hand it will subtract meaningful points from GDP growth as retail ends up, once again, poorer, the one biggest winner will be securities law attorneys, who are sensing so much blood courtesy of FaceBook's brand new multi-billion cash hoard, that Zuckerberg will have no choice but to 'invest' almost exclusively in legal defense teams and settlement reserves, leaving him with no time, or money, to find (and fund) the next even lower IRR social-media bolt on acquisition.
- 9234 reads
- Printer-friendly version
- Send to friend
- advertisements -


Facebook is worth maybe 10 billion, not 70.
http://www.singledudetravel.com/2012/05/why-facebook-isnt-worth-100-bill...
Ahhh...those shorts shall be smoked like a salmon.
It only takes Ben Bukakke a finger stroke to flood the primary dealers with moolah to be spent on propping up FB come december.
Right after the election, FB will soar to over $100. And a Big Mac+large fries will cost 50 buckaroos.
I see a divorce in Suckerdude's future....like...before yearend.
Facebook has clearly plateaued and is in decline among users. Their bounce rate, which is the estimated percentage of visits that have a single page view, has increased dramatically from 12% in Jan. 2011 to 26.4% currently. FB's Time on Site stats have gone from 32 minutes per day (12/2011) each user to 24 minutes per day. People are spending less time on FB. Their ad click-thru rate is half the industry average at a paltry 0.051% of active users. Google Trends also shows a flattening in the curve of searches for Facebook. http://www.google.com/trends/?q=facebook
And from FB's S-1
We currently generate significant revenue as a result of our relationship with Zynga, and, if we are unable to successfully maintain this relationship, our financial results could be harmed.
In 2011, Zynga accounted for approximately 12% of our revenue, which amount was comprised of revenue derived from payments processing fees related to Zynga’s sales of virtual goods and from direct advertising purchased by Zynga. Additionally, Zynga’s apps generate a significant number of pages on which we display ads from other advertisers. If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected. (Zynga is the Pet Rock of this age and will be replaced by something else on another platform other than FB.)
We expect our rates of growth will decline in the future.
We believe that our rates of user and revenue growth will decline over time. For example, our annual revenue grew 154% from 2009 to 2010 and 88% from 2010 to 2011. Historically, our user growth has been a primary driver of growth in our revenue. Our user growth and revenue growth rates will inevitably slow as we achieve higher market penetration rates, as our revenue increases to higher levels, and as we experience increased competition. As our growth rates decline, investors’ perceptions of our business may be adversely affected and the market price of our Class A common stock could decline.
Banksters are predators. Short selling financials was banned a few years ago when it was clear all the big banks were going to zero. Now they feel entitled to rape an IPO when it suits them.
Yes, FB was overpriced from the get go, because Mogan Stanley probably had a deal with these shorts so overhyped it knowing they would profit from the downside.
Strangly, I now find myself now hoping FB goes up between now and Dec...
start clicking those ads.
Based on current performance and giving FB the benefit of a P/E comparable to Apple its value would be : 20 B not 70 b not 100 b. At 20 B the share price would be : 7.7!
Agree. I can't understand how people oversee the simpliest of the facts. If you don't have a clear image on how much a company is worth due to various input, you could roughly estimate, multiply anual gain by 7. In FB case, 3.5 billion * 7 = apx 25 billions. Are we going to see shares at $10 perhaps? :) Would go long then.
"I can't understand how people oversee the simpliest of the facts."
The usual way - via the hype-induced greed of retail idiots.
If the put/call ratio is really that extreme it creates a real risk of a squeeze somewhere down the line. Shorting into an exhausted FB squeeze sounds like a plan to me.
"Google Trends also shows a flattening in the curve of searches for Facebook. http://www.google.com/trends/?q=facebook"
Great points. And look at the top ten geographical regions listed by Google Trends for Facebook which I assume are those where the growth in useage was greatest. Not exactly what you'd call money makers.
The curve seems to be dropping already for US: http://www.google.com/trends/?q=facebook&ctab=0&geo=us&date=all&sort=0
You see what they don't understand is that when the next best thing comes as usual, FB won't gradually decline but it will one day fall of a cliff. Just like what happened to Myspace. This was the most horrible IPO done in history.
FB was overpriced and overhyped, full stop.
"I see a divorce in Suckerdude's future..."
Yes, he married a highly-eductated, now fairly self-righteous Asian woman. Its game over for him.
Asians can be nasty. Especially the women.
Well Charles Biderman figures FB is worth about $1 trillion.....lot of great white sharks being jumped in Sausalito these days.
Introducing Biderman's Market Picks: Facebook Could be $1 Trillion Stock - YouTube
If FB goes Scientology and starts to blackmail its users....it could well be worth more than 1 trillion.
FB as in federal book keeping on citizens moves is a good buy once federal bounties on feral citizens reporting programs are made available in all states.
$10 billion are you out of your mind? You could print up enough phonebooks to hand out to every single household in North America for that price (and no one would know you were using it), as long as it wasn't an exclusive government contract.
Welcome to the dark broke banking syndicates of Europe.
Your face gets no savings book here.
Love that analysis you linked to which was done prior to the IPO, the likes of which was nowhere to be seen in the Muppeteering mainstream financial media.
10 years from now when we're looking back at the highs of 2012, we'll remember that the pinnacle came the day they issued the IPO of Faceplant, the biggest public fleecing via IPO shares in history.
FB up $1 today so even these large European banks are now underwater with their shorts. Geez...the guys running the casino ponzi can't even win at their own game.
FU FB
Well, Zuckerberg did say he wanted to connect the world.
Before I say this, FB is an absolute turd that is way overvalued. And eventually that will get recognized.
But it does seem an epic short squeeze is coming.
It may grind a little lower for quite a while though
Wish I could have sold some 22 dollar puts
So Facebook joined the race
But couldn't keep up with the pace
The NASDAQ did fumble
The stock price did tumble
And the bankers have shit on their face
bom bom
O Limerick King, where art thou?
muppetism..!! LOL
I wouldnt touch this turd in either direction myself, with talks of lawsuits everywhere and even 'IPO re-do over' on NYSE this is a complete FUBAR.
You left out tax evasion. :D
What happens if you short the stock or have put options, and they call a mulligan on the IPO?
maybe appeal to isda to declare a credit event
/sarc
I think were going to see 30% in about 85 days.
Hey Americans, WE ARE YOUR FRIENDS!
(hey Sheila, call my Frankfurt broker and say to him, short this dog called FB until your ass is sore, like last Saturday).
IS this Europe's Plan C - prosperity through the downfall of others? For the life of me I can't figure out all the anger at Apple, Facebook, JPM, etc. If you don't like then then for god's sake don't buy the product. It's better than all the phony angst.
I like America like it was in the 1960, going to the Moon just for the show off but now, it is just mostly salesman bullshit. Europe caught up with you guys and we are making better cars, planes, whatever. Time for shape it up on your side of the pond...
Lol demography is economic destiny my european friend. Enjoy your success now.
Because I would not want to go where you are headed.
europe goes down, it all goes down..........genius.
Including your little sick world of gloating
Then you dont understand demography comment
I am not talking about the next ten years but the next hundred
You mean Germany caught up.
Europe without Germany = 5*Greece + 3*UAE
Ahhhh...the 1960's sheeple...who believed a faux moon landing staged in the Atacama desert.
Tim, you like us for all the wrong reasons.
And catching up was the other way round.
Tim off ! Or I missed your wicked sense of sarcasm. But your kind of Germans is said to be devoid of any sense of humor,
just like the FBI in the movies...
I'm not exactly sure what you mean by "caught up". It could mean Europe now uses all the products invented in America or Europe is now fairly well off. But if the trainwreck we watch daily (and especially the demographic disaster in the making) is "catching up" then someone needs a new pair of glasses.
Have a nice day
Why average joe would risk anything on Farcebook is beyond reason. Peeps have to wake up and see a sham for what it is.
Ya well these products are unsecured notes, and the issuer is taking the other side of the trade, so who knows if your money ever really gets invested
<- European
Here is the real ominous message of Corpocracy gone mad said by an inside man, Mark Cuban, part of that elite family :
The Facebook IPO Was A Killer, But Not For The Reasons You Think - Business Insider
Another intra-Oligarchy knife sharpening trend :
John Paulson Morgan Stanley Citibank Watch List - Business Insider
The ultimate sinister message comes from the innovators of silicon valley who think lightweight FB type ventures, passing fads, could corrupt the work ethic of innovative america; the unkindest cut of them all as it means mindset change! America is still the most innovative country in the world. But this financial cancer can even corrupt that!
So yes the Eurozone will now bite back at the US financial behemoth, as the curency war will spill over into trade war as the recession deepens. We are in tipping times.
Time to go long FB...contrarian view. I wish they were selling some options about now. IMHO
Those puts seem cheap to me.
You got it... it's a helluva bate for more muppets to get into the paper game.
Ironically I am betting Europe will plunge AT LEAST 30% by December.
No way. Central planners are sheer genius is misguiding, prolonging and altering the situation. I don't mean this in a conspiratorial way but because of their money creation and interest rate setting power. This power translates to political power, propping up regimes or even replacing them. So, Europe will slide DESPITE all the efforts of its planners.
JUST 30% ????
That's WAY too optimistic. And WAY too OVER "fair market value", based around $5 per share.
TODAY....after the DROP it trades at a PE of 70.
(Although LNKD trades at a PE of 600, so there are DEFINITELY sheep out there!)
FB is a single digit stock, and will head there tomorrow, after options are initiated.
Big "preferred" money will profit on the way up AND on the way down.
Europeans are betting a drop in FB of 30% by December?
By December, most markets should be in the tank.
SP500 Weekly says a lot: http://bullandbearmash.com/index/sp-500/weekly/
FUCK FACEBOOK AND FUCK ZUCKERBERG, the little bastard.
Gingerboy has a face that could crack a mirror. Ironic.
A little musical accompanyment to my post.
Pete Townshend - "Face The Face"
http://www.youtube.com/watch?v=zy6xDDl_DZc&feature=fvw
Facebook has to face their shareholders sometime in the not-so distant future.
LOTS of faces.
My guess?
Much RED faces - on both sides.
One side embarassed, the other, angry.
Pending the short squeeze on a terrible buy... Hype is barely green.
Guys, this is the European organization that did the appraisal of Facebook:
http://www.efsmi.org/
Betting is the key word there.
Financial markets are no longer investment markets where people buy stocks on company fundamentals like P/E ratio and dividend, with intent to hold long term.
Financial markets are gambling casinos now, and these FB put warrants are a classic example of it.
But then all derivatives are gambling bets, and derivatives have grown exponentially while underlying is more or less stagnant.
How many different ways can you bet on mortgages? MBS on mortgages? CDS on MBS? CDO on MBS?
You don't even have to have the underlying. You can do a CDS on MBS you don't even have. JPM can short silver they don't even have.
Look at silver. You can buy silver futures and sell silver futures. You can buy call options, sell call options, buy put options, and sell put options. And you can go out and create a CDS or a CDO on any of that stuff.
If A is the underlying, you can do a derivative bet B on A. Then you can do a derivative bet C on B. Then you can do a derivative bet D on C. You can get 3 steps removed from the underlying, and you don't even have to have the underlying in some cases.
Rarely does anyone make much money on all these derivatives
...except brokers, they make way more money brokering all these derivatives than people make on them
...and big players in the market, who can watch COTs, move the market against them, wiping them out ...like JPM does on silver call expiration dates.
Yes, derivatives are rigged, big players see your hand and can move against you.
This is why big players worked hard to keep CDS off exchanges. So other big players couldn't see their hand.
first smart choice by the euro's ever made.
http://covert.ias3.com/expose/