If you are wondering what to do with your Facebook shares, which are now trading a lot better than it’s low of $25.52 closing yesterday at $31.41, you can follow the lead of billionaire Mark Cuban. He originally brought 150,000 shares during the IPO and has dumped them all. He told CNBC, how and why he got out of the bad investment,
“I already sold it, I took my hit, my thesis was wrong. I thought we would get a quick bounce just about the excitement about the stock. I was wrong, and when you are wrong you don’t wait, you just get out. So I took a beating and left,”
Cuban labels the transaction a trade versus an investment. He classifies and investment as a longer term commitment and a trade as a short in and out. He says the issuance of 421 million shares was why he knew it would be a gamble.
“I mean if you look at other companies like LinkedIn they issued 8.4 million shares and the stock skyrocketed. If Facebook would have come out with 8.4 million shares, instead of 421 million, the stock would be at about $200 right now. So it was just the circumstances that led to me getting in and out,”
Cuban is a pioneer of the internet space. He sold Broadcast.com to yahoo back in 1999 for $5.04 billion dollars, a website that today just redirects to yahoo’s home page. He sold his shares quickly as he knew just how volatile the internet space was and was able to liquidate a fortune.
MOBILE ADS ARE THE FUTURE
Cuban says that serving up ads in the mobile space will be the next challenge; not just for facebook but for other companies like Google ad Zynga as well.
“Everybody is dealing with the same issues. I think you will see an increase of monetization on the mobile level. But if Facebook can’t do it, everybody else has the same risk and the same problem.”
If you are still holding your shares then you have seen some nice gains over the week. Investors who got in at 26 are happy, but on the other side of the spectrum those who got in at 45 a month ago are looking for the dislike button and ready to de-friend Zuckerberg.
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