©2012 By ILANA MERCER
The more you hear from your average, financial-markets hater—the more you wish you could transport each one back to a mud hut in a far-away land, where women wear grass skirts, and carry their groceries on their heads, and where no man dares to or is capable of dreaming-up businesses like Costco, Overstock.com, or Facebook.
Planet Facebook, in particular, is a global, social, political, and potential economic revolution. Had the idea for this social-networking site not come into being, we’d be the poorer for it. Facebook users love it and cannot imagine life without. Yes, they complain endlessly—but largely because they can. Unlike government (and CNN’s Anderson Cooper), you can keep private enterprise honest. Business aims to please its constituents, the consumers. Complaints encourage compliance.
Facebook went public. In the process of going public, some people got rich, or richer; others didn’t.
INDIVIDUALS VS. CORPORATIONS: To the media, these are two antagonistic and atomistic solitudes, never the twain shall meet. This “angels versus demons” caricature is lapped up by the masses, even though most of them own shares in major American companies, through their pension funds. Most Americans benefit from and are heavily vested in corporate America.
True to this cartoon, the Little Guy is depicted as good; Big Players as bad. Invariably, those who can’t get rich off an initial public offering (IPO) are labeled sympathetically as “small investors,” or “retail investors.” Those who land in the lap of luxury for the umpteenth time, because of their capacity to invest vast sums, are dubbed derisively “big investors,” “Wall Street.”
SIMPLIFIED: People with oodles of money make a killing. People without much money would kill to be in their shoes. U2’s Bono exemplifies the first type. Bono might be a chap who fronts a three-chord band of unimpressive droners, but he knows a good business deal when he sees one. In 2009, the singer invested $90 million in Facebook stock.
Cui bono, you ask. And the answer as to who benefits from Bono’s industry is this: The singer has pledged the $1.5 billion he reaped from his Facebook investment to charities in Africa. Business, in contrast to Barack Obama, is a positive-sum game.
Still, the losers refuse to accept that they didn’t have as many casino chips as the winners. The Little Guy, behind whom politicians strategically coalesce—thumping majorities prevail in a democracy—cannot abide by a reality in which greater wealth affords greater “access.”
The envious refuse to accept that freedom is inegalitarian.
The best way to put a dampener on a good thing is to call in the regulators to probe the matter of “unfair advantage.” But not before you stage a catastrophe.
Thanks to invidious resentment toward big, “bad,” business, coupled with the quest for headlines—a good thing has been portrayed as something that went sour.
Facebook went to market. The stock exchange got crowded. The equivalent of a traffic jam ensued. Or, as Forbes’ Joan Lappin put it, “NASDAQ suffered a major wardrobe malfunction.”
Screamed one headline: “The SEC and regulatory body FINRA both said they would look into the matter [of favorable access].”
“Facebook IPO Adds to the Debate: Is Wall Street Fair?” another caption blared.
More headline hyperbole: “Did Facebook Kill the IPO Market?”Or, “Facebook (FB: 31.00, -3.03, -8.90%) shares are lower, again. The social stock sank a whopping 11 percent yesterday!”
Is “whopping” really the right adjective for an “eleven percent” market correction in share value? Aren’t prices supposed to fluctuate continuously, as market forces bring supply and demand into balance?
Apparently not. Certain stock-market players talk as if they have a right to the company’s initial-offer price. In their minds, the onus is on IPO underwriters, CFOs and early investors to calibrate this price to a T, if the wrath of the Financial Industry Regulatory Authority and the Securities and Exchange Commission is to be averted.
Look, you have to be without imagination—and/or someone who has never used Facebook to productive ends—not to realize that Facebook is no hot air, dot.com, financial balloon. No doubt, the Facebook business model needs refining. The company has yet to demonstrate its future ability to grow a robust revenue stream. But at 4 dollars per annum, Facebook’s revenues per user are low. They have the potential to grow.
Besides, what other company in history has had the almost undivided attention of close on a billion users? What other company has been “Liked” by 67,091,154 people on its personal Facebook page?
Make that 67,091,155.