Last week, one of my Wallstreet buddies alerted me to the possibility of the Facebook IPO as being illegal stock manipulation. As the week has gone on, more and more reports have raised questions. If you are following this story like me, it is all over the place.

Forbes

Forbes has put together a good article for the laymen to understand the art of valuation. Like most things in life, it involves “math.” There is a formula that is used to predict revenue. The benchmark most are using is Google. Yet, Facebook is NOT Google. It is a Social Media site. There are more than enough examples of social media services that have come and gone. Let’s see, remember “My Space” anyone?

Business Insider

Henry Blodget at Business Insider has put together a comprehensive accounting of the questionable practices of Facebook and Morgan Stanely. In a nutshell, they helped all their buddies, but left the little investor out of the inside information. As I say to my relatives, if you don’t have the truth, how can you make informed decisions. In the case of the “Muppets” as they are called by Wallstreet insiders, they don’t count.

Reuters

While Mark Zuckerberg is getting married and becoming a billionaire, others are claiming losses of $100 million dollars. The brokers on behalf of their “Muppets” are starting to fight back. This could get messy.

More to come on this topic for sure.

There is not much that can be added to this story from a lowly blogger like myself. But I can give you some sources that provide more details into what has transpired over the past 3 days.

FACEBOOK Stock has been trading at $32.00-32.78 all day. It is up from its close of $30.00 yesterday.

If you did not see it Monday, there is a great info graphic that allows you to track the stock price.

Remember Jim Cramer from CNBC?

I hope The Daily Show picks up on this one. Here is a classic quote from a guy that should not be on television:

Any investor who can get shares of the Facebook IPO should purchase as many shares as possible, Jim Cramer said on CNBC’s “Mad Money.”

-Mad Money, CNBC

Aswath Damodaran, NYU’s legendary finance professor who has nailed other stock valuations, has his say on Facebook

In a nutshell, it is overpriced and a risky investment. He is not buying yet, unless he can get it at value.

Last but not least, there are numerous reports everywhere about lawsuits that may be pending against Facebook and Morgan Stanley. Facebook’s response to all of it, “There is no basis for the accusations.” (unless you are blind to the data).

Dealbook reports on pending litigation

Dealbook reported pretty extensively everything that has happened over the course of the past 3 days.

Atlantic Wire scolds us to say, “We Should Have Known About Facebook’s Shady IPO.”

Their article takes us through all the warning signs. Most significant, the bad data was for institutional investors. The ignored data was for the “muppets.”

Unsourced quote from Business Insider, but an insight to Wall street thinking: “The one thing we worried about most ahead of the Facebook IPO was that normal people – “Muppets” they are increasingly called on Wall Street – would gamble on a big pop and lose after getting played by the pros.”

So, why track all of this?

It’s about trust. Ironically, a former Morgan Stanley employee told me during Enron that it was the biggest event to happen outside of 9/11. Enron destroyed the investor trust. The rating agencies were giving them a thumbs up when they were always a thumbs down investment. He said Enron would have major repercussions for the market. He seems to be right. Market manipulation is obviously pretty common now.

If we are going to preach free markets and let the market decide. Facebook’s IPO should have been allowed to let the market decide. I think most people will agree that its value is far less than 28-year-old Mark Zuckerberg would like you to believe.

Now I understand the Occupy Wall Street movement a little better.

Facebook Stock closed at $31.00 today.

There are some interesting developments on the Facebook stock story I have been covering over the past few days. Wallstreet Dealbook has reported the following.

As I mentioned yesterday in my previous report on the Facebook question, both the SEC and FINRA are indeed questioning Morgan Stanly, Facebook and NASDAQ. With all the news coming out, questions about the integrity of the market are being pursued.

Image via CrunchBase

As of 2:46p today, the stock is trading down once again at $31.63 down from yesterday’s close at $34.14. It just keeps on dropping. Shares dropped 11% yesterday as investors sold off their stock and the big banks stopped propping up the share price.
Earlier today, Reuters revealed that Morgan Stanley’s, the primary underwriter of the stock, Scott Devitt adjusted his revenue forecast for the stock before the launch of the IPO. Morgan Stanley bankers ignored advice from its own people who advised that demand was being overestimated leading up to the IPO, Wallstreet Dealbook reports. Here is the questionable actions that beg the question of stock manipulation.

Once again, Facebook’s stock was down 6% in early trading and continues to fall as the day goes on.
If the market is not allowed to truly determine the value of a stock, is the value being quoted real?

Have Facebook executives created hype around value that is not there? This is very possible considering these are the folks willing to buy Instagram for $1 billion and at one time threw out a valuation for Twitter that made no sense too. It seems some investors are waking up and starting to off-load their stock.
Dealbook reports: “It’s a combination of Zuckerberg’s ego for that $100 billion market cap, and the shareholders selling who wanted an exit,” an analyst tells Bloomberg. “Somehow it just missed them that this was mispriced.”
Let’s see where this all goes. Is a social media bubble coming?

This is to follow up on my previous post on Facebook Stock Manipulation.

Will it be like Linkedin?

There is a chart that was distributed by Twitter user  @bourbon_meyer that demonstrates why Facebook’s stock stayed at $38.00.

It suggests there was some stock manipulation happening. The way to read it is see that smaller bids were run over by massive bids at the higher price. Were the underwriters of the IPO making sure their client’s stock price stayed at $38? Personally, I think Facebook is overpriced and overvalued. You have to wonder if it is not for good reason.

I wonder if the SEC will look into what has happened. It does look fishy.

Even the NY Post is reporting that the big banks bailed out the IPO.

Update:

This story is starting to get more traction. There are firm reports that show how big banks bought large amounts of stock to keep the price at $38.00. The lead bank, Morgan Stanley, who is also the underwriter, bought 64 million shares to prop up the price.

Bloomberg news reported on Morgan Stanley Saturday with details of the stock purchase.

The other question is why was there a glitch in the NASDAQ opening? NASDAQ is claiming a software glitch. There is speculation that FINRA may be opening an investigation. While there are no public reports of this, speculation from industry insiders say this is quite possible.

What prompted this question in my mind was a report by Motley Fool that posed the question after the Spirit Airlines refusal to refund a passenger who was too ill to travel. Eventually, the President of the company stepped in and agreed to refund his ticket. He then goes on to provide his excuses for having such strict refund policies. This from an airline that offers cheap fares and then charges you for everything else making Spirit Airlines – the nickels and dimes company.

Spirit Airlines N587NK (an A321-231) lifting off from Fort Lauderdale – Hollywood International Airport in November of 2009 (Photo credit: Wikipedia)

So, they decided to explore other airline social media debacles and compared it to the airline stock price. According to Molly McCluskey of Motley Fool the answer is no. Even the greatest social media response to service against United-Continental had limited impact on their stock price. There was a 10% drop when the stock was trading at $3.34 a share. Today, it is trading up to $22 a share.

In the case of airlines though, one has to question if it would. After all, capacity is down in the airline industry. Most flights are running with high load factors on most days. So, do people really have a choice in the airline industry?

What about other industries?

Well, the Nestle incident a couple of years did not hurt their stock price or company either. Then again, I am not sure the average consumer really cares that Greenpeace has a problem with Nestle using palm oil in their products. After all, they have a cute bunny selling their chocolate mix.

These incidents have created the pissed off consumer who is going to use social media to get their revenge. We have one client that gets the pissed off person who decides to open up a twitter account, a Facebook page and rants about them not getting something for free. The best advice is to not feed the troll. Take the conversation with the person offline as much as possible. In some cases, they have no impact because no one is listening to them.

Don’t get into an online argument!

Have you ever seen the circular arguments that take place online? I spend a lot of time on www.fark.com. The merry-go-round discussions are religion and politics of course. Consumers can get into merry-go-round discussions online. The challenge is don’t take the bait. As much as you want to tell that SOB what you think, don’t do it. Don’t be the bug in “A Bug’s Life” mesmerized by the bug lamp that just has to fly into it. When you take the bait, you will find yourself on the merry-go-ride.

What do you do? Address it directly and professionally. Most of all, don’t get into a heated exchange.

Is this really a Maxine cartoon? UPDATE

The answer is NO!

I wrote a letter to Hallmark’s PR Department and received a reply. They said there are many illegal uses of their copyright of the Maxine comic online. They do not want the Maxine image being used illegally.

I often get emails from friends and family with emotional appeals to support one group and hate another. Recently, I received one

Image via Wikipedia

that claims the Hallmark character Maxine espousing her views on Minorities. Everyone it was sent to thinks it is really a Maxine cartoon. Searching the web, I found the email contents on a couple of websites.

Here is my conclusion.

1. This does not conform to Hallmark standards – they illegally used Maxine copyright to make a political point.
2. Fonts are all incorrect
3. The $360 billion figure was added to the posts on the websites
4. The heading is Minorities and they talk about illegal aliens.

This email has the 3 elements of any emotive email:

1. Undocumented Sources
2. Outrage
3. Fear

I would venture to say this does not conform to anything Hallmark Cards would approve for distribution. Buyer definitely beware.

The following is an illegal use of Hallmark Cards’ Maxine comic. Maxine did not say this about Minorities/Illegal Immigrants etc.

MINORITIES

(Used without permission from Hallmark Cards)We need to show more sympathy for these people. * They travel miles in the heat. * They risk their lives crossing a border. * They don’t get paid enough wages. * They do jobs that others won’t do or are afraid to do. * They live in crowded conditions among a people who speak a different language. * They rarely see their families, and they face adversity all day ~ every day.. I’m not talking about illegal Mexicans ~  I’m talking about our troops! Doesn’t it seem strange that so many are willing to lavish all kinds of social benefits on illegals, but don’t support our troops? Wouldn’t it be great if we took the $360,000,000,000 (that’s billion) we spend on illegals every year, and spend it on our troops!!!Please pass this on; this is worth the short time it takes. A veteran is someone who, at one point in their life, wrote a blank check made payable to‘The United States of America ’ for any amount, up to and including their life.

Related articles

• Maxine, by Hallmark (greatamericanthings.net)

Why is customer service so hard for companies? Why do they hire front line people that have no business being front line people?

I have been a Comcast customer for years. We used to get OnDemand, a feature you will see them frequently tout on their commercials. Well, it does not work in my house. So, I have switched out boxes as they suggested. We have resent signals to the box. Disconnected and reconnected the cables to the box. I even did an ancient dance to the Cable Box Gods to get the damn thing to work.

Through the process, I have decided that Comcast is a PTA company. (Pain in The ASS)

Image via Wikipedia

I had upgraded my box to HD and requested it be sent to me for self-installation. (They wanted to charge me $35.00 to have a technician do it). Setting up the box was very easy. Getting Comcast to turn the service on from their offices was a royal pain. The website activation did not work. I had to call several times to get it resolved and it required a Technician to do.

While it was a pain, most of the people I dealt with on the phone were very nice and apologetic for the PTA process of getting my box running.

Ok, now we have HD, great. Let’s try OnDemand. BZZZZZZ “Please call customer service and let them know error 7 has occurred.” Damn – nothing has changed. Well, come to find out, Error 7 is a popular topic on their forum with no input from Comcast in the discussions. The offer the same solution every time and it is not working.

So, I was nice enough to drive across town to take the extra box they sent me back. I could have sent it back at their expense like the agent offered over the phone.

I bring up the Error 7 problem and ask for help.

Unthankful and unhelpful Comcast agent: “You have to pay $60 to have a technician come out to fix it.”

Me: “Why? It’s your service that is not working.”

Unthankful and unhelpful Comcast agent: “I see you don’t have line insurance, so you have to pay $60.”

Me: “The lines in my house are fine.”

Unthankful and unhelpful Comcast agent: “We don’t know that”.

Me: “Error 7 seems to be a common problem and your forums say it is “YOUR” line that is the problem.

Unthankful and unhelpful Comcast agent: “You need line insurance otherwise it is $60” (She hands me a brochure).

Me: “I don’t understand how the line on the telephone pole is my problem and I have to pay $60 for you to fix.”

Unthankful and unhelpful Comcast agent: “If you have line insurance it would not be a problem.” (At this point, I feel like I am talking to a parrot).

I started getting angry. I finally gave up. I said, “You know, it’s this kind of stuff that pisses people off about Comcast. You did not listen to a word I said.”

I went to my office and started telling my colleagues. I told them it was like talking to a parrot, “Blak, you don’t have line insurance, blak” I asked them, “Did they go out and hire former TSA agents as their counter staff?”

Comcast,

Here is the deal. You have a problem with your OnDemand Service – Fix it! Your staff in Indianapolis need to understand that talking down to customers and berating them is not how to endear them to your company. I am not mad that she did not help me. I am mad because she didn’t even listen to me. If she did not have the answer, selling me insurance I did not want was not the answer. If that agent worked for me, I would have fired her. She is a front line person and the face of your company.

The only reason I have Cable TV any more is to get my Soccer games on TV. Otherwise, I would just buy a good air antenna. The HD is just as good over the air.

UPDATE:

After all that, the answer was simply the service I have is not eligible and it would be a $34 upgrade a month to get OnDemand – $408 annually. I guess I will go for a walk instead, its healthier.

Political marketing is not something I normally spend time considering. I usually write about business bloggingand make fun of

Image via Wikipedia

commercials on TV. I have to say, I felt sorry for Herman Cain this weekend. I will admit that I was not too impressed with him as a Republican Presidential Candidate. But, he is kind of getting screwed. How did this guy get harpooned for his infidelities, while Newt Gingrich gets a free pass?

In social media and business blogging, we recommend clients address concerns customers bring up on Twitter or Facebook. You can’t hide from it because people are talking about it. So, just address the issue and be honest. Social media is relentless. People hide behind their online personas to invite their dark side to totally tell someone off. When you address it directly, people tend to back off. I digress here.

How does this apply to Newt Gingrich? If you recall, his marital infidelity was one of the first things that came up in his campaign. He was being scrutinized. His ex-wives were being interviewed. While he was supporting a family values platform, he was cheating and changing wives like underwear. (He’s a Teddy Bear after all) Yet, here we are just before the Iowa caucus and he is becoming the front-runner.

He put it out there at the beginning of his campaign. He addressed it. While he was not and still is not convincing, Herman Cain has fallen on the sword for him. The black guy in the campaign took the issue away from him. Now, Newt’s ideas are being heard and morality of his actions are no longer relevant because he is not Herman Cain. Cain is even going to endorse Newt Gingrich.

I think Newt Gingrich putting it out front helped him. Now, it does not appear to be much of an issue. If he becomes the Republican nominee, I am not sure the Democrats can use it against him. Putting out front was the right move.

Related articles

• Two Polls Confirm Newt Gingrich Leads in Iowa (elections.firedoglake.com)
• Herman Cain will reportedly endorse Newt Gingrich (thegrio.com)

Image via Wikipedia

Dear, (They forgot my name)

I am Al-abgari Amadou, Libyan.  Close knit and inner circle friend of Khamis
Gaddafi. (I guess I am too now – what’s my name again?).

I write to you with tears because since I received the news of the death of my
friend, good friend and brother Khamis Gaddafi. I am in real shock. I have been
advising him to leave the country but he refused to adhere. Now my friend is
dead. I am defecting to the opposition immediately. (Let me get my handkerchief – I can’t stop the tears)
Khamis had used me to move a total of $87 Million to a private bank in
Switzerland. (This is a big secret). I need you to assist me to move the funds
to a safe account. (Here is the secret)

Sir, I seek your consent to help me move this money to your country location.
You do not have to be afraid of anything as no one else knows about this and
everything is safe. I would be pleased and grateful to you if you could assist
me secure the funds as I will be heading soon to the rebel camp to join them.

This is the only way I can be safe because I see it that Khamis’s father Gaddafi
has lost hold of this country. We are not safe anymore. I shall compensate you
with an attractive percent of the total funds for your role/efforts. We have
limited time now. kindly get back to me immediately.

Moving the funds out of the offshore Switzerland bank is not going to be much of
a problem. All I want from you is your trust, Please get back to me with your
full name and Contact address, phone number Preferable without delay and let’s
negotiate terms. Your response will determine our subsequent correspondence. (This kind of reminds of the scene out of Batman Forever after Edward Nigma kills his boss. He is crying and then hands a suicide note. “Notice the handwriting perfectly matches to his.”)

You can read through on this website and see that my best friend is dead. I am
in tears:
http://www.allvoices.com/contributed-news/8537783-khamis-gaddafi-one-of-muammar-gaddafis-sons-dies

May Allah bless and reward you bountifully and please reply quickly.

Al-abgari Amadou.

Great entertainment for a Friday afternoon.