Facebook at $22 Seen in Structured Warrants

I believe a real valuation for FB should be at $15 and then grow from there. Everybody wins in the long run. But the market is not made to make everybody win, au contraire, to take the money from the fool in every possible way.

You saw how MS placed a concrete floor to the stock on opening day, even buying over 60 million shares to avoid a collapse.

Everybody thought it was solid enough then they invested.

Then it dropped.

Then they panicked.

Then they sold.

Then it stabilized and everybody thought it was ok now.

Then it dropped even more to its real value.

Almost a trillion dollars changed hands in just a week. Only a few got rich.

A fool and his money, that's wall street credo.

For those like me who hadn't heard of warrants before and thought they sounded a lot like options, the key difference seems to be the source of the warrant is different than an option, and a warrant lasts longer.

http://en.wikipedia.org/wiki/Warrant_(finance)#Comparison_wi...

good to know some investment professionals are doing their homework and are being critical about FB's valuation. $22/share is a $60bn valuation, and given the growth reduction announced by FB, it reflects a fair economic value. This is the opposite of what the media pundits have been doing: throwing large, random, unjustified numbers at headlines to make them look good.

These are basically just options and options trade at all kinds of strikes all of the time. They don't even seem to be trading at particularly high prices, based on this quote:

Julius Baer sold the securities with the largest trading volumes, two put warrants with strikes of $35 and $30 on the Scoach exchange in Zurich. Investors traded 402,000 contracts yesterday valued at $335,780 of the former and 603,000 warrants for $322,620 of the latter, data compiled by Bloomberg show.

Nothing to see here, really.