As we wrote under the headline, “Look Past The Overhyped Facebook Effect” in February:

Forget the overhyped Facebook effect (a.k.a. “buy now or be priced out forever 2.0”) and simply turn your attention to the S&P 500 which closed the day at 1,363.05, just below its April 2011 high of 1,363.61 (its highest close since June 2008) and the Dow’s 12,986.81, its highest close since May 2008.

The S&P 500 closed today at 1,278.04, down 2.46% for the day, down 6.24% from our post in February. The Dow closed the day at 12,118.60, down 2.22% for the day and into the red for 2012. The S&P 500 remains up 1.6% for the year.
Having priced at $38 and closed its first day of trading at $38.23, Facebook (FB) closed today at $27.72, down 6.35% for the day, down 27.49% over the past two weeks.
A little closer to home, Zynga (ZNGA) closed the week at $6.01, down 3.99% for the day, down 40% from its December IPO price of $10 per share.
Look Past The Overhyped Facebook Effect [SocketSite]
What’s The Point? [SocketSite]
Facebook On The Home Front [SocketSite]

43 thoughts on “A Tough Week On The Street And Close To Home”
  1. I don’t think several of these “social media” outfits are real businesses. Groupon, I think, is ultimately dead. Zynga’s best hope is to be bought by one of the big game-makers like Electronic Arts. Of them all, the most likely survivors IMHO are Twitter and Facebook if Zuckerberg grows up in time to run it like an adult or can be induced (he can’t be forced) to hire someone who actually knows how to run a business for profit.

  2. Perfect Timing Bang & Olufsen!
    Sending me back to back e-mail spam adds right after the markets closed today. Move those $10K flatscreens!

  3. I agree with the sentiment about social networking companies…but…not quite an analogous situation…but the last time I heard someone say that a company founder should step aside and “hire someone who actually knows how to run a business for profit”, that person was saying it about Apple Computer. The founder in question had to convince a sugar water salesman named John Sculley to come to work for him as CEO.
    We all remember who the founder in question was and how that story turned out, now don’t we?

  4. I find myself disagreeing with a lot here. SS always talks about ignoring the fluctuations and focus on the trends, and I can’t help but feel:
    – are we below 11,000 on the DOW like we were in 2010?
    – where were these companies a 3-5 years ago as to where they are today (in terms of employees, sales, etc.)?
    – is the market that these companies play in (mobile, social, etc.) decreasing or increasing?
    Going to be ups and downs, and the stocks may already be overvalued, but jeez,”bad days” for these companies would be not going public or losing / decreasing revenue I think.

  5. Daily deal from your friends at Groupon:
    Buy our company shares at 70% off!
    GRPN is a spam aggregator, and a greedy one at that. Think where would PCLN be if they charges 50% on transactions. Or if AMZN raises all prices by 100%. That’s what GRPN is doing. No merchants want to repeat with GRPN, since they charge 50% on the already discounted groupons.
    As for real estate, I’m hoping this .com bust 2.0 can come fast. Condo owners are getting greedy.

  6. BT: EA already has a Zynga in the form of Pogo, which they bought about 5 years ago. Frankly their closest match for an acquisition is probably an ad network or affiliate marketing scammer company.

  7. Re: buy now or be priced out forever 2.0.
    It is at least version 4.0 (late 70s, mid 80s. late 90s, now, etc.).
    And I am sure there are others that can provide more details.
    Better phrase is “Lord, give me one more boom, I promise not to XXck it up this time.”

  8. It’s going to get worse.
    Europe coupled with this morning’s depressing jobs report triggered the decline. As bad as Europe is, the US is still the focus as the safest investment option potentially in descendance. If (when) the US starts to look bad, we’ve got a double dip. (my 2012 investing thesis)
    Greece will vote themselves into economic oblivion on the 17th. Germany will be conflicted, but relieved. Portugal is 50 50.
    This will be used by rest of the EU as a firewall with which to prevent a domino effect, which will happen with the issuance of central Eurobonds to recapitalize spain, and ultimately italy and other members.
    Or not, in which case the whole eu goes to pot.
    Tech companies are generally always overvalued. No news there. Vcs can’t fund a company indefinitely, and ultimately the best pigs will get ribbons put on them and be sent to market.
    Not enough momentum there to cause a housing uptick in SF, that lesson was learned in the 90s.
    What’s interesting is that capital is so cheap, qualified buyers are actually moving upper end homes.
    Case Schiller isn’t specifically representative, but a local index, unaltered by agent mls shenanigans, would probably support a modest increase in sales activity.
    At the end of the day, if you can afford a ten plus year commitment, sf real estate is a good bet.

  9. I am looking forward to these web 2.0 stocks to go to the crapola with regards to share price. Last thing we need is another generation of dot-com era newbie millionaires outbidding all of the hardworking savers who did it the right why. Let them work hard and sacrifice just like everyone else.
    Will start buying FB around $8-12 per share…

  10. The S&P 500 closed today at 1,278.04, down 2.46% for the day, down 6.24% from our post in February.…The S&P 500 remains up 1.6% for the year.

    And at that 1,278.04 level, the S&P 500 is down 10.1% from the index’s peak during the first week of April, 2012.
    BB, I think you’re right about The U.S. vis a vis Europe, but you forgot to take into account the forthcoming debt ceiling debacle, part II, which combined with Taxmageddonshould itself be good to knock GDP back into recession territory.

  11. I just have to respond to this:
    is the market that these companies play in (mobile, social, etc.) decreasing or increasing?
    What Facebook sells is actually advertising, and thus, their market is ads. They may be able to effectively market those ads due to their large and growing user base, but still, that’s the market. The same is true of Google. I imagine this is less true of Zynga, whose profits are probably more tightly coupled to the size of its user base (given that the users are actually paying for things like virtual tractors or whatever). Groupon I don’t pretend to understand, but the point I’m trying to make is that people conflate “users” and “market” a lot when talking about these tech companies. Your market is whatever you actually sell, for money, and it’s that process that’s worth observing for impacts on local real estate.

  12. Aaa and ES futs are at 1266 right now. So much for support at 1280. The options market makers pinned the 1280 strike very well on Friday but there doesn’t seem to be any actual support at 1280 outside of expiry day.

  13. I wonder if those panicked buyers and speculators who bought up all of the property in order to flip it to FB/ZNGA employees are all sweating their shorts off right now

  14. It’s not really “sweat” in their shorts.
    The sad case is all those who thought they could finally dump their 2006 purchase at breakeven (less six years of inflation, but we’ll ignore that). Nope.

  15. Oh you’re talking about all of those people, of course they have not real “fake quote” sweat in their shorts.

  16. Yes, “all of those people.” i.e. everyone who bought a place in San Francisco in 2006! Well, keep waiting as I’m certain some other bubble will come along soon and THAT will give you the opportunity to untether your ball-n-chain!

  17. Anybody who has anything good to sell this spring is feeling just fine, regardless of when they last bought.

  18. @Po Hill Jeff, good point. I wasn’t clear – more of my point was that the market for mobile/tablet/electronic advertising appears to (at least for the moment) be a continuing growing vs. a shrinking market. Not sure if FB and Google will execute as well as they’ve done in the past, but I do think that market in general will continue to do well (vs., say, print advertising).

  19. How is this for Facebooks ad algorithms… I once posted a picture of some ethiopian food/ injera bread and facebook now advertises me low rates to call Ethipoia.
    … go figure

  20. April high = 1,363.61
    7.5% of 1,363,61 = 102.27
    7.5% under 1,363.61 = 1,261.34
    Current: 1,323.43
    What 7.5% are you talking about?

  21. ^ The high for the S&P 500 this past April was 1422.38, on April 2, 2012.
    1363.61 was the high for April 2011. Surprising that someone who follows this stuff as closely as R (ZNGA RSUs, the costs of shorting, etc.) didn’t know that the index had broken 1400 two months ago.
    Thanks for making the point that stocks are down slightly since 14 months ago, however inadvertently the point was made.

  22. D’oh. I took that number from the SS post, and jumped a year.. Thought it sounded strange, was on my way to check, but then didn’t bother to. My bad.

  23. “Profit declined as Weiner increased spending aimed at recruiting more business from employers seeking to hire. Net income fell to $2.81 million, or 3 cents a share, from $4.51 million, or 4 cents, a year earlier. Profit excluding some items was 16 cents, matching estimates. Costs soared 93 percent to $214.7 million, with sales and marketing more than doubling to $75.7 million.”
    3 Whole Cents per Share
    And Decling Proftits
    Costs up 93%
    When will These Tech Miracles End
    No Bubble

  24. Not the opinion of investors.
    LNKD over $100 AH, only $20 away from its all-time-high.
    Their IPO was priced right. They’re investing where it counts and executing very nicely.
    Still a winning company.

  25. I think Mountain View’s LinkedIn is doing pretty decently. Not great but not too shabby. Should be good for Mountain View, Palo Alto and San Jose.
    Closer to SF, Zynga continues to collapse and even Menlo Park’s Facebook is a slow motion train wreck. But some of those companies much further south are not doing bad.

  26. “Not the opinion of investors.”
    Is a Bubble
    Was a Bubble
    While Back Investors paid $14 For Zynga … $45 for FB
    “I think Mountain View’s LinkedIn is doing pretty decently.”
    Not Gonna Colapse
    But 640 X Declining Earnings … Bubble

  27. Like half of LNKD’s Bay Area employees live in SF, they offer a shuttle to the Valley, and they have office space for 400 in SF in One Montgomery. Some of the weirdest anti-sf rants go unchallenged on here!

  28. Indeed very bizarre logic. According to the perma-ra[e]nters, Palo Alto FB’s loss of value is a negative for SF while MV LNKD’s success would have no impact on SF?
    There’s a lot of twisted logic among these few perma-ra[e]nters. They stopped making sense when the market recovered.

  29. “Indeed very bizarre logic.”
    LNKD Price Near Alltime High Means Not A Bubble?
    Think About That
    You agrree With Jonny that the Federal Govenment is a Bubble
    But LNKD is Safe As Houses at 640 X Earning?
    Dont Wait Up for That Phone Call from MENSA!

  30. You know what’s bizarre? Why someone would change their name and write in jibberish on a real estate site.

  31. what is even more bizarre is how rfr is tolerated by Adam on this site. rfr gets to call lol an idiot by saying “don’t wait for a call from mensa” and if anyone else make a statement like that its bye bye comment. Adam you need to take responsibility. Your site is [being] ruined. it is no longer a place to plug in to local news on san francisco real estate. It is reminiscent of internet stock message boards circa 1999. what was once valuable is no more. the emperor wears no cloths. this will probably deleted but this is for you Adam. anyone else that sees it is just a bonus.
    [Editor’s Note: A post about stocks and a volatile equities market at which point FB was trading at $27.22 (currently $22.00) and ZNGA was trading at $6.01 (currently $2.77) elicits comments about valuations and their impact, real or perceived, on the local real estate market? Go figure. And if you don’t want to enter into the discussion, simply go read something else.]

  32. I am no more offended by an insult from TrollingForRealtors than by a crazy homeless guy who randomly showed me the finger last week. What am I gonna do? Waste what is turning out to be a pretty nice day, and for what?

  33. So then it’s ok to call lol an idiot? Just him, or is it ok to call other people idiots as well?
    [Editor’s Note: See lol’s comment above.]

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