Short facebook. On Nov 14th, it will be trading under $10

The losing 50% analogy is not quite right. I think most FB employees knew going in that FB was overvalued. And FB management knew as well. That's why employees were compensated with restricted stock units and not restricted stock options.

Say you are an early employee who's lockup expires on Wednesday. You see your company trading near its historic lows, you have just come off of a good earnings report that exceed expectations, your company is still the largest social network around with no close competitors and extremely steep entry barriers. Quite frankly, the future prospects look pretty good.

If you don't need the cash right away, why would you sell? The over-valuation has already been priced in, the stock is now trading at a reasonable P/E.

As I stated earlier, the decline on Friday was not driven by insider selling, it was shorters who were late to the party. They were betting on another decline today, and they all just got burned.

The ones still in and holding out on tomorrow are going to be skittish during the open. If it doesn't sink but inches up, they will rush for the exits. There is enough short interest on this stock to easily drive it up another 4-5% over the next two days. And given that few insiders are going to be selling Wednesday, the 14th is going to be a non-event. Only thing that might happen is a ridiculous rise in prices like with YELP when the most hardcore shorters realise they were wrong.
 
Quote from fareastcoast:

And given that few insiders are going to be selling Wednesday, the 14th is going to be a non-event.
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Why on earth would you think this?

IPO 500+ million shares dumped - insiders sold.
271 million share lockup expiration - insiders sold
234 million share lockup expiration - insiders sold
773 million share lockup expiration - insiders ???

Come on...are you telling me the biggest share lockup expiration in history as a percentage of current outstanding shares coming onto market isnt going to affect the stock price because people "expect" it?

Math doesnt lie. But people lie to themselves all the time.
 
Quote from peilthetraveler:

Why on earth would you think this?

IPO 500+ million shares dumped - insiders sold.
271 million share lockup expiration - insiders sold
234 million share lockup expiration - insiders sold
773 million share lockup expiration - insiders ???

Come on...are you telling me the biggest share lockup expiration in history as a percentage of current outstanding shares coming onto market isnt going to affect the stock price because people "expect" it?
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You are missing some key differences. Early lockup expirations were pre-earnings, and most shareholders were VC's whose are supposed to cash in in this fashion. The lockup expiration on the 14th comes very close to the previous one. E.g. when people sold in anticipation of the last expiration, they also priced in this one.

We'll see in 2 days who's correct.
 
http://blogs.wsj.com/marketbeat/201...losing-appetite-as-lockup-looms/?mod=yahoo_hs

The number of short positions on FB declined 40% in the last month, currently, short interest is at the lowest levels since June.

Confirms my hunch that the smart money is no longer short FB, most probably got out Friday like I did. My sense is that the lockup expiration has been priced in for a while now.

A lot of dumb money probably went short on Friday and Monday when they saw the break below $19.

Hope you have covered peil, otherwise, there's some major butthurt in store for you tomorrow :p
 
Will "they" (those nasty market makers) pin FB's price at about $20-21 for end of week? There are a lot more outstanding puts than calls. That price level seems around max pain to me.

Thoughts?
 
Quote from fareastcoast:

http://blogs.wsj.com/marketbeat/201...losing-appetite-as-lockup-looms/?mod=yahoo_hs

The number of short positions on FB declined 40% in the last month, currently, short interest is at the lowest levels since June.

Confirms my hunch that the smart money is no longer short FB, most probably got out Friday like I did. My sense is that the lockup expiration has been priced in for a while now.
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The other day you said...


11-08-12 02:50 PM
There's a HUGE amount of short interest in FB right now. It is highly susceptible to a short squeeze. If there is a squeeze, it will be one of epic proportions
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So, according to you, if there is a huge amount of short interest, there is a short squeeze coming and the stock is going up. And if there is 40% less short interest then that ALSO means the stock is going up.

You can't have it both ways. Its either one or the other.

Also, I'm not short this stock. I have $19 puts that I bought at 20 cents. Currently the price is at .35 so I'm up about 75%.

I know there have been a few articles flying out around there spreading mis-information. That article for instance that implies that out of 773 million shares, 504 million are zuckerbergs, leaving 269 million shares that have the possibility to be sold. This implication is completely untrue. Its true that 504 million shares of zuckerbergs is being unlocked on the 14th, but that was taken from the original 1.2 billion shares unlocked number. The 10-Q CLEARLY states that the 773 million share lockup expiration excludes zuckerbergs 504 million shares.

http://investing.businessweek.com/r...5H53OV47GHI3IO5EE&docFormat=HTM&formType=10-Q

(page 49 so you can look it up and read for yourself)

These types of articles that are going around which technically are not lying, but they are leading the reader to draw a conclusion that isn't correct.

Now here are the consequences of such misdirection. When the lockup comes tommorrow, that means very little short covering to help buy up all those shares as they are being unleashed tommorrow. If there is no buying, then we are talking about a huge plunge tommorrow. I'm talking bloodbath plunge.

You guys have about an hour left to pick up your puts, short this stock, or at least dump your long position so you are not holding overnight.

But do what you will. I think you have already made up your mind because you gave 2 contradiction reason why the stock will go up. Nobody is going to change your mind.
 
Yea, my statement posted last Thursday was made prior to the squeeze on Monday. In effect, I predicted correctly that a squeeze would occur, hence the exit of my short position on Friday.

Monday had 2x the volume of Friday. My second assertion made today was that first, the smart money has exited their shorts. Most pulled out on Friday, the slower ones got out Monday morning when 19.25 was breached. The dumb money that shorted on Friday got squeezed out on Monday.

As a result, there's not a lot of shorts left and no new shorts looking to enter the fray. So what will happen tomorrow?

Well, for one, the stock won't drop. When there is no drop, the last short holdouts will cover. Not a lot of them left, but enough to push it up. And when it is clear there won't be a bloodbath, institutional buyers waiting on the sidelines will step in as they see the price rising. Long is the correct bet on FB right now. Any shares picked up for under $20 should be considered a bargain. Close above $21 highly likely tomorrow.
 
Quote from fareastcoast:

Yea, my statement posted last Thursday was made prior to the squeeze on Monday. In effect, I predicted correctly that a squeeze would occur, hence the exit of my short position on Friday.

Monday had 2x the volume of Friday. My second assertion made today was that first, the smart money has exited their shorts. Most pulled out on Friday, the slower ones got out Monday morning when 19.25 was breached. The dumb money that shorted on Friday got squeezed out on Monday.

As a result, there's not a lot of shorts left and no new shorts looking to enter the fray. So what will happen tomorrow?

Well, for one, the stock won't drop. When there is no drop, the last short holdouts will cover. Not a lot of them left, but enough to push it up. And when it is clear there won't be a bloodbath, institutional buyers waiting on the sidelines will step in as they see the price rising. Long is the correct bet on FB right now. Any shares picked up for under $20 should be considered a bargain. Close above $21 highly likely tomorrow.
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Well shit I just bought puts today :O
 
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