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TheStreet Open House

Facebook: When the Buyer Did Not Beware

Stocks in this article: FB

NEW YORK ( TheStreet) -- I've got nothing but love and respect for CNBC and TheStreet's Jim Cramer. He does what the best writers and media personalities do. Cramer prompts you to think, react and reconsider your own convictions.

On Tuesday, I thought, reacted and reconsidered after reading Cramer's latest article on Facebook (FB), The Disgrace of a Stock Lifetime.

In the article, Cramer lashed out at the Facebook situation:

I don't know about yours, but I have to tell you that the sour taste of the Facebook deal hasn't left my mouth yet.
If you go back just a couple of weeks, we were at a crucial moment in time. The individual investor has been crushed for so long now that it was almost impossible to think about what could bring him back to stocks ...

I could not agree with Cramer more. As with Tiger Woods heading into the US Open coming off of a win at the Memorial, Facebook brought otherwise casual observers and many non-participants into the stock market. It's a shame that things did not turn out better, but you cannot blame anybody but yourself if you got taken by this IPO.

At every turn, the individual investor expects to be spoon-fed or, put aptly, protected from herself.

One of the biggest gripes from Main Street posits that only insiders knew Facebook expects a possible slowdown in revenue due to mobile monetization issues. That's interesting.

Facebook went public on May 18. On the U.S. Securities and Exchange Commission's Web site, check out the page that lists all of Facebook's filing.

Starting with the amended S-1 on April 23, Facebook mentions the word "mobile" roughly 170 times each in five amended S-1s leading up to the IPO. If you search (CTRL-F on a PC) "mobile," you will see that a lion's share of those occurrences mentions clearly and specifically warn of a possible slowdown in revenue as the rapid shift from desktop to mobile outpaces Facebook's ability to place ads in front of its users.

That's public information. Was Facebook supposed to deliver an S-1 to every household in the world via overnight mail? Was Mark Zuckerberg? How about Morgan Stanley (MS)? Maybe the SEC should have been charged with the task? Of course, large factions of society would have moaned about a "waste of taxpayer money."

Please allow me to digress, but also understand I am not being sarcastic.

That information was public. I would venture that people who follow the stock market on an hourly basis rarely look at SEC filings, listen to conference calls or read more than the headlines the mainstream media hand picks for them. But, yeah, only "insiders" had the knowledge that Facebook might experience mobile monetization problems. Since when was an insider a person with an Internet connection, a brain and an ounce of initiative?

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