Welcome to the Social Media Bloodbath

The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and chief technology officer Jeremy Phillips discuss topics across the investing world.

Over the past year, Jeremy and Eric have been discussing the opportunities that will arise after the Facebook IPO. Mainly, they believe many of the weaker players like Yelp and Groupon will rightly be beaten down, and take high-quality companies like LinkedIn with them. The pair believes that when this happens, there will be a very strong buying opportunity in LinkedIn.

Facebook recently became the largest company ever to IPO. Yet,all the buzz around this social media monster could prove off-base as Facebook has deep problems converting its millions of members to sales. We've created a new report, "Forget Facebook -- Here's the Tech IPO You Should Be Buying," which details a much better social media stock that has a longer runway for growth than Facebook. The report won't be available forever, so click here to get access today -- it's totally free.

Eric Bleeker has no positions in the stocks mentioned above. Jeremy Phillips has no positions in the stocks mentioned above. The Motley Fool owns shares of LinkedIn. Motley Fool newsletter services recommend LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On May 22, 2012, at 11:48 AM, suckerturd wrote:

    Linkedin will buy up social media? You mean england dont you?

  • Report this Comment On May 22, 2012, at 11:50 AM, Rokclimber1 wrote:

    FB will eventually become a penny stock and then likely sold off for pennies, if not completely defunct.

    The valuation put on FB was and is ridiculous. By all technical measures, it is OVERVALUED at even $1 per share.

    Whats sort of funny (or sad, depeninding on if you were dumb enough to go long FB) is the media kept harping on how FB was falling but seeing support and the downward move really wasnt that bad, nor should longs be concerned about it falling further since they have so much 'support'.

    'Support' is the key thing here. underwriters like GS DID support this....BIGTIME...To the tune of billions more dollars in an effort to 'support the share price' and keep it from fallling too much more. So, even with that massive support (I wonder how GS feels now after buying so much stock to try to support the share price only to now see massive losses), FB still fell a good bit. Had GS and others not stepped in, FB would have dropped alot lower. ALOT! As it fell near its ipo price and a tad below GS and others were buying from those selling. So, had they not bought, how much more would FB had dropped with GS and others not stepping in to buy? And after only 1 day, they will no longer 'support' the stock. Can you blame them? They just lost BILLIONS of dollars and dont....CANT...lose any more...so, FB no longer has the fat cats willing to buy in an effort to stop PPS from falling.

    FB is toast and lets also remember that FB could go to ZERO...become a penny stock....sell it for scraps....and insiders will still get filthy rich, so there is no motivation for insiders to really care and Zuck even said as much....So, even if (when, in my opinion) FB becomes worthless insiders will make a fortune as will the shorts and folks if you dont think the shorts are droling, trust me they are. And that too will cause an even larger fall and shorts wont be in any hurry to cover until FB is nearing maybe $1. And isnt it ironic that the same underwriters and even insiders are SHORTING this now and those who arent are ready to......

    Apple at $1000 is 100X's (maybe 1000x's) CHEAPER then FB would be at a dollar. Thats not my opinion, thats a fact that anybody can see in the technicals.

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