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Mark Zuckerberg Took on the Sock Puppet and the Sock Puppet Won

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2000's infamous Pets.com IPO was a bigger success than Facebook's.

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MINYANVILLE ORIGINAL

Another day, another dollar down.

Facebook (FB) is once again having an awful lot of trouble gaining any kind of upside traction as investors continue to avoid what was supposed to be easy money.

In fact, Facebook is now significantly underperforming the last mega-bubble IPO, 2007's Blackstone (BX), as well as that of the last generational Internet IPO, 2004's Google (GOOG) deal.

But perhaps most importantly, based on an intraday quote of $27.12, Facebook is on track to underperform the most infamous IPO flop from Internet Bubble 1.0: Pets.com.

Yes, the company best known for losing money and having a commercial with a sock puppet is beating the world's biggest and most profitable social network.

As you can see on our chart here, which measures post-IPO stock performance on a scale of 100, Facebook (70.9) is actually slightly underperforming Pets.com (71.6), which hit the public markets precisely when investors started to think that earnings, revenues, and cash flow might actually matter:



In fact, for Facebook to stay above Pets.com, it will have to close at $27.37 or higher today.

So what's going on here?

Well, it's simple: There are no buyers for Facebook stock.

At 49 times expected full-year earnings, it is far from cheap so value investors aren't coming.

Growth investors see the deteriorating monetization metrics, and so they have to be worried about the company hitting the numbers. (See: Facebook's Q1 Results Indicate Further Deterioration in Growth and Monetization Metrics.)

The retail crowd that got burned on the disgrace of an IPO isn't coming back, and I'd bet that other everyday-Joe investors aren't interested either given the nasty headlines (like the one you see on the top of this page).

And as for the institutional guys, Facebook just might be something they don't want to be seen owning come quarter-end.

The way I see it, Facebook has to put up some huge numbers when it makes its first quarterly earnings report to put the IPO out of investors' minds.

The problem is, the quarter doesn't end until June 30, and the company will need at the very least a few weeks to close out the books. So odds are, we're about two months from seeing just how Q2 shaped up.

For now, given the revelation that underwriters like Morgan Stanley (MS) may have tipped off certain big investors about a slowdown at Facebook, odds are the stock's going to have trouble just staying flat, let alone rallying.

And ouch! Facebook just broke $27. Time to update the chart...

Twitter: @MichaelComeau

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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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