Don’t get ‘zuckered’ by Mark Zuckerberg and Facebook

Hype, hype, hooray! I guess that’s what the founding shareholders of Facebook and their investment bankers will be shouting as they crack open the champagne after unloading their largely worthless shares on all the usual suckers who think they’re going to make money by jumping on the latest bandwagon just as the bubble’s about to burst (sorry about the mixed metaphors). At the IPO valuation, Facebook is supposedly worth about $104bn! Ha, ha, ha and Santa Claus is my uncle. Well, certainly he’s Mark Zuckerberg’s uncle, as Zuckerberg will pocket about $19bn. If you translated Zuckerberg’s name into English, I guess you’d get “sugar mountain”. But more accurate would be “mountain of suckers”. Because that’s what he and his investment bankers are making of the fools stupid enough to buy Facebook shares. The average IPO is usually heavily hyped, overpriced and extremely disappointing. The average share sold in an IPO underperforms the market by over 20%. As for Facebook – most shares trade at a P/E (Price/Earnings) ratio of about 13 in the UK and 15 in the US. Facebook’s shares are on a P/E ratio of about 100. Basically, compared to its share price, the company hardly makes any money. It may have hundreds of millions of self-obsessed, celebrity-fixated users, but it doesn’t know how to transform these into hard cash earnings. I predict that within a year, Mr Sugar Mountain’s shares will have lost at least a third, and more probably half, of their value. Many companies do IPOs when they know that their shares are at the absolute top end of their valuations and can only go down. But, while the zuckers scratch their heads and wonder why their money has gone up in smoke, Mr Zuckerberg and his mates will be laughing all the way to their many many banks.

So please, please don’t get caught up in the media-generated hysteria, don’t buy Mr Zuckerberg’s crap shares and don’t get ‘zuckered’ by the master of ‘zuckering’ Mr Zuckerberg. If you want to throw your money away, give some to me. I need it because I’ve been blacklisted from working as a consultant since I started writing my books. As for Mr Zuckerberg, he doesn’t need your money quite as much as I do.