SELL USDINR 50% AT AROUND 56.50 AND 50% AT 57.50 SL 58.50 TRGT 54, 52.
Wednesday 23 May 2012
Friday 11 May 2012
Facebook IPO Overvalued at $96 Billion in Global Poll
Facebook Inc. (FB), seeking as much as $96 billion in its initial public offering next week, is overvalued at that price, according to a Bloomberg investor poll.
Underscoring concerns that growth may taper for the world’s biggest social network, 79 percent of respondents in the Bloomberg Global Poll of 1,253 investors, analysts and traders who are Bloomberg subscribers said Facebook doesn’t deserve a valuation so high.
While Facebook’s communication and photo-sharing tools have helped it amass 900 million users, the Menlo Park, California- based company is vulnerable to startups that can win over Web surfers with new, competing social media sites, said Bob Rich, director of investments at Oppenheimer & Co. At the high end of a projected range of $28 to $35 a share, Facebook would be valued at 99 times its earnings, a higher multiple than 99 percent of companies in the Standard & Poor’s 500 Index.
“This stock is going to come out, it’s going to go to the moon, and then it’s going to burn a lot of people,” said Rich, one of the surveyed investors. “The valuation is asinine, and I would not put my clients’ money near it.”
Facebook, co-founded by Mark Zuckerberg in 2004 in a Harvard University dorm room, seeks a valuation at 24 times revenue, compared with 5 times for Google Inc. (GOOG), according to data compiled by Bloomberg.
Weaker IPO Demand
Only 7 percent of those surveyed said Facebook was properly valued, while 3 percent said it was undervalued. Among respondents to the May 8 poll, 11 percent said they have no idea how Facebook should be valued.
The IPO has so far generated lower-than-expected demand from institutional investors who are concerned about growth prospects, people with knowledge of the matter said yesterday.
Already the company’s growth has shown signs of slackening. Sales climbed 88 percent to $3.71 billion last year. According to researcher EMarketer Inc., revenue may increase 64 percent to $6.1 billion this year. That would be the third straight year of slowing growth.
Chief Operating Officer Sheryl Sandberg and other executives, now traveling across the country to pitch the IPO to prospective investors, have said one of the most promising areas of growth for Facebook is in the area of mobile advertising. Of the people who access the site each month, 488 million did so on mobile devices in March, Facebook says in regulatory filings.
Teens on Tumblr
Even gains in mobile don’t always translate to ad growth. Increases in daily users outpaced advertising growth in the second quarter as more members accessed the site from mobile devices, Facebook said in a May 9 regulatory filing.
Larry Yu, a spokesman for Facebook, declined to comment.
Luke Rasnake, a senior vice president of fixed income sales at RBC Wealth Management, is among investors who say Facebook is overvalued. He formed his view by watching his daughters use social media. The girls, aged 12 and 14, have started using sites like Tumblr to interact online, he said.
International investors are more skeptical than those on Facebook’s home turf. Of those surveyed outside the U.S., 82 percent said Facebook was overvalued. That compares with 74 percent in the U.S. Facebook is getting an increasing share of its sales from outside North America. The U.S. and Canada made up half of revenue in the first quarter, down from 58 percent in 2010, amid rapid growth in areas including Germany, Brazil, Australia and India.
Room for Growth
Zuckerberg, 27, and other executives are working to drum up interest in the shares by touting gains in daily active users, which increased 41 percent to 526 million in March, and increases in user engagement. Users generated an average 3.2 billion “Like” postings and comments a day in the first quarter.
The message is getting across. Some investors will rush to the stock just because of the site’s popularity, said Simon Lee, a research analyst at Navy Federal Credit Union, who said in the survey that the company is undervalued.
“It’s just impossible to say in the Internet industry how much farther a company can grow,” Lee said. “Facebook still has a lot more room, and there will be a lot more demand than supply for their stock.”
Only 3 percent of the investors polled were less than 25 years old, while the largest portion, 36 percent, were between 35 and 44 years old. Andy Krystal, a 24-year-old research analyst at Royal Capital Asset Management Inc. in Toronto, said older investors may not be regular users of the site.
“They may not appreciate the value, whereas I use it all the time to check on friends,” said Krystal, also a respondent.
Biggest Internet IPO
The company and its holders plan to sell about 337.4 million shares in the offering. At the high end of the range, the IPO would raise $11.8 billion, making it the largest initial share sale on record for an Internet company. The shares will be listed on the Nasdaq Stock Market under the symbol FB.
The IPO would dwarf the 2004 IPO of Google, the world’s most valuable Internet company. Google’s offering, the same year Zuckerberg helped found Facebook, raised $1.9 billion and valued the company at about $23 billion. Mountain View, California- based Google has a market value of $200.3 billion.
In January 2011, 69 percent of investors said Facebook was overvalued at $50 billion. The Bloomberg Global Poll was conducted by Selzer & Co., a Des Moines, Iowa-based firm. It has a margin of error of plus or minus 2.8 percentage points.
Producer Prices U.S. Decrease for First Time in Four Months
Wholesale prices in the U.S. fell in April for the first time in four months, led by a decline in fuel costs that signals inflation may cool.
The producer price index dropped 0.2 percent after no change in March, Labor Department figures showed today in Washington. Economists projected the gauge would be unchanged in April, according to the median estimate in a Bloomberg News survey. The 1.9 percent increase over the past 12 months was the smallest since October 2009.
Falling raw-material costs mean companies will have less incentive to charge customers more. Slowing inflation would underscore views of some Federal Reserve policy makers who have said higher fuel prices will have only a temporary effect, allowing the central bank to stick to its plan to keep interest rates low at least until late 2014.
“Inflation’s not really a worry, neither is deflation at this stage,” said Sean Incremona, a senior economist at 4Cast Inc. in New York, who accurately forecast a decline in the producer-price index. “It doesn’t seem like there’s much cause for companies to pass along costs at this point.”
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in June dropped 0.8 percent to 1,347.3 at 8:45 a.m. in New York after JPMorgan Chase & Co. revealed it had a $2 billion trading loss.
So-called core prices, which exclude food and fuel, rose 0.2 percent in April, matching the median forecast of economists surveyed, after climbing 0.3 percent the prior month, today’s report showed. About a quarter of the increase in April was attributable to pharmaceuticals, the report said.
Core Cools
The core index advanced 2.7 percent over the past year, the smallest 12-month gain since August.
Fuel expenses dropped 1.4 percent last month, the biggest decrease since October, while food costs climbed 0.2 percent.
Oil prices have kept retreating after reaching the highest level this year. Brent oil for May delivery has dropped 11 percent through yesterday’s close from a peak of $126.22 a barrel on March 13.
Fed Chairman Ben S. Bernanke said on April 25 that a rise in gasoline prices “has created a temporary bulge” in inflation that’s likely to “pass through the system.”
Cheaper agriculture and materials may reduce pressure on companies to raise prices on American consumers facing an 8.1 percent unemployment rate. The Thomson Reuters/Jefferies CRB commodity index was 294.83 yesterday, down 9.5 percent from a five-month high reached Feb. 24.
Commodity Costs
That decline has helped food companies like Sara Lee Corp. (SLE)
“We are currently not anticipating any significant commodity inflation,” Mark Garvey, chief financial officer at the Downers Grove, Illinois-based firm, said on a May 3 earnings call.
The cost of intermediate goods dropped 0.5 percent, the most since October, reflecting the drop in energy expenses, today’s report showed. Crude prices decreased 4.4 percent, a decline last exceeded in February 2009.
Producer prices are one of three monthly inflation gauges reported by the Labor Department. The cost of goods imported into the U.S. fell 0.5 percent last month, reflecting lower costs for fuel. The consumer-price index is due May 15.
COMMODITY UPDATES
Buy Silver 50% At Around 53500 and 50% around 52500 SL 51500 TRGT 54500, 55500, 57000.
Wednesday 9 May 2012
COPPER UPDATES
LME DATA MAY 9/
LME COPPER DN 7525/ALU DN 20875/NICKEL UP 150/LEAD DN 2700/ZINC UP 3050/
MCX COPPER UPDATES FOR MAY 9 2012
WEDNESDAY
TRADING LEVELS FOR MORNING SESSION
MC JUNE COPPER
S1 RS 433.8 , S2 RS 430.5 , S3 RS 428
R1 RS 439, R2 RS 442 R3 RS , 445.6
COMMODITY MARKET UPDATES
MCX CRUDE OIL TRADES/MAY 9/
Sell Crudeoil May between 5185 - 5190 SL above 5225 T1 5150 T2 5120. Medium Risk
MCX CRUDE UPDATES FOR MAY 9 0212
WEDNESDAY
TRADING LEVELS FOR MORNING SESSION
MCX MAY CRUDE
S1 RS 5135 , S2 RS 5098 , S3 RS 5055
R1 RS 5210 , R2 RS 5241 , R3 RS 5286
Moneycontrol » News » Markets » Expert & FII Outlook Rupee could move to 56-58/$ if 54 not held: CLSA
Laurence Balanco, Asian Technical Research at CLSA expects the Nifty to trade rangebound between 4,700 and 5,100 for the near-term.
"For us, base case scenario is that we need to rebuild a basing pattern between 4700-5100 areas. And if we had a slip below 4700, that does see the technical picture deteriorate even further," he told CNBC-TV18.
According to Balanco, the Nifty has unperformed significantly in dollar terms so far this year.
Data on SEBI and NSE showed foreign investors were net sellers of Rs 992 crore in Indian equities on Monday and Tuesday, despite the delay of GAAR provisions by a year, in a week marked by steep global risk aversion.
The rupee opened lower on Wednesday as renewed concerns about the euro zone battered riskier assets, setting up the prospect of continued intervention from the RBI.
Balanco says the Indian currency could move to 56-58 versus the dollar if the 54 level does not hold.
Banking stocks have played a major role in the sharp fall in markets. Investors have been selling banking stocks, especially public sector banks, over renewed asset quality concerns.
Balanco believes the Bank Index could retest its late 2011 lows.
The fall in Europe and the US markets amid political uncertainty in Greece had its affect on Asian market as well. Analysts said that investors were worried that political wrangling may delay the process of solving the EU's debt crisis.
CLSA sees 20% downside risk in Asian markets, Balanco informed.
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