06-17-2012, 06:33 PM
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Purveyor, Fine Asian Porn
Industry Role:
Join Date: Jul 2004
Location: San Francisco Bay Area
Posts: 38,323
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FFN Stock Plunges to 91 cents...
Quote:
Originally Posted by grumpy
hmm.. a burger flipper is talking him down on not making 10b but only 9b??
you think he gives a fuck?
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Quote:
Earlier this year, Groupon (NASDAQ: GRPN), Zynga (NASDAQ: ZNGA) and FriendFinder Networks (NYSE: FFN) surged on the popularity of social media stocks in the halycon days before the initial public offering of Facebook (NYSE: FB).
In March, Zynga was close to $16 a share. Now it is around $5 a share. Based in San Francisco, Zynga operates online games such as FarmVille and Zynga Poker that have been popular with the Facebook crowd.
Groupon was at around $25 a share in March. It is now trading around $9.60. The on-line coupon company is now trading at a discount.
FriendFinder Networks operates adult websites out of Boca Raton, Florida. In the February-March period, FriendFinder Networks was around $2.50 a share. Now it is trading for under a $1. FriendFinder Networks was selected as a short well over a year ago.
Like FriendFinder Networks and Zynga, Facebook has plunged dramatically from what its valuations were back in the early spring. The high for Facebook has been $45 and it is now trading around $27.30. Both Zynga and FriendFinder Networks have short floats of over 20%. Groupon has a short float of 5.92%. A short float of 5% is considered to be troubling.
What each is of these companies has in common is the lack of a wide economic moat. There is nothing to prevent a competitor from challenging the dominant social media company. It happens all of the time. MySpace is an obvious example. The share price trajectory of Zynga, Groupon and FriendFinder Networks serve as other examples.
A social media site has nothing in the way of a wide economic float like a utility, oil company or high tech company. A utility is protected by the start-up costs required and the regulations involved. An oil company is not something that can be created in a garage or a dorm room. High tech concerns are protected by patents and the cash flow to pay high priced law firms to prosecute and protect its intellectual property.
As the shareholders of Groupon, Zynga and FriendFinder Networks have found out, there is little to protect their investment in social media sites in the way of a wide economic moat. This allows for niche players like Yelp! (NASDAQ: YELP) to perform very well in their specialty. Those who bought Facebook at the initial public offering price are now realizing that, too.
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FFN stock dropped nearly 20% last week, to close at .91 cents... 
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