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                    Paul A Drockton M.A.
          Facebook IPO a 'Pump and Dump'?
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Paul A Drockton M.A.
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Facebook will soon be a stock traded on one of the major exchanges. According to its financial filings, the company has:

Users: 845 million, of which 483 million are daily users

Annual revenue: $3.7 billion

Operating income: $1.8 billion

Profit: $1 billion


Since there are no membership fees, the website generates its revenue from the sale of advertising. It offers companies the ability to target specific demographics based on common interests.So does Google. Google, BTW, has started a service similar to Facebook called Google +.

"Google had a really strong quarter ending a great year. Full year revenue was up 29%, and our quarterly revenue blew past the $10 billion mark for the first time, said Larry Page, CEO of Google. I am super excited about the growth of Android, Gmail, and Google+, which now has 90 million users globally well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+ we will create amazing experiences across our services. Im very excited about what we can do in 2012 there are tremendous opportunities to help users and grow our business. (Source)


Google is trading at about $656 per share, BTW. with a price to earnings ratio of about 19.24, which is extremely high. There are 209 billion dollars invested in Google and about 326 million shares outstanding. In the last market correction (2008), Google went from $715 per share down to $262 per share, so it still hasn't recovered.

Facebook has about 10% the revenue that Google brings in. It is expected to offer its stock at $35 per share which is a whopping 70 times company earnings. That won't stop the stock from being hyped up by the MSM and initial demand could push the price much higher. Yet, don't expect it to last.

In the classic "Pump and Dump" scenario a company is taken public and the price rises because of insider manipulation (The Pump) and glowing press releases. Once the stock has sucked up every possible penny in value, the insiders start selling their shares (The Dump). They also hold Put Options against the stock so that all the value that was in the market is transferred to them.

The Shadow Government has been involved in the Pump and Dump schemes since the public has been investing in the stock market. Mutual Funds and other Institutional Investors have made the process that much easier (they sell the Put Options against their own stock holdings).

The warning flag is a price not justified by current earnings and the promise that those earnings will increase dramatically in the near future. The whole stock market is one big Ponzi scheme when you get right down to it, and has been responsible for looting investors to the tune of trillions of dollars.

With the imminent collapse of the Euro and the financial sector, it won't take much to push the whole thing over a cliff.


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