Skeptical of Facebook IPO: Opinion


Was Facebook’s IPO overvalued? Yes. Although a technical glitch marred the opening this past Friday, Facebook’s shares plummeted throughout the day from a high of about $45 to close at $38.23, just 23 cents per share higher than the starting price.

I agree with analyst Bill Smead of Smead Capital Management, who said in this story that Facebook and its underwriters priced the stock at the top range of its potential.

“The underwriters got greedy on behalf of selling shareholders and bumped the price high enough that they didn’t get much of a bump on the first day,” Smead said.

Although Facebook is a large company and has a ton of users, how much growth potential does it have? There are simply some people who will never sign up for Facebook’s status updates and games.

Nor is advertising revenue a given for providing a steady stream of income, with GM’s announcement it was “unfriending” Facebook.

Facebook may yet prove it can avoid the fate of past would-be-giants like AOL and MySpace. But until then, betting your stock investments on Facebook will be risky business.

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Dollar General goes after higher earners – Nashville Business Journal


Dollar General goes after higher earners – Nashville Business Journal.

Targeting those making $75,000 a year and who want consumables…

The question is, will this be a brilliant move to expand market share or will it lead to a diluting of Dollar General’s brand by moving away from its core mission of selling cheap goods to super-discount shoppers?

via Dollar General goes after higher earners – Nashville Business Journal.

Mountain Dew: From hillbillies to hip-hop


Here’s a fascinating read from Business Week about Mountain Dew.

PepsiCo understandably wants to create a thirst for its Mountain Dew brand in a greater market. The sugary drink has roots in the hillbilly culture of the Southeast and moonshine liquor, which was nicknamed Mountain Dew. Now, PepsiCo has enlisted hip-hop artist Lil Wayne and street skateboarder Paul Rodriguez to entice potential customers age 18 to 24 to pop the top on their product.

I won’t go into the whole story here, since you can read it on Business Week’s site, but this is a smart move for several reasons. Why not try to broaden your product’s appeal? The target age audience is increasingly diverse and is often located in urban areas outside the Southeast. Coca-Cola’s Sprite and Fanta have gained market share in that age bracket.

I love Mountain Dew and Sprite both, but in a nod to PepsiCo’s brilliant marketing move, I’ll choose a Mountain Dew the next time I need a refreshing drink, and I’ll think of hillbillies and hip-hop while I do so.

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