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Wednesday
Aug072013

Bad vs Worse: Facebook vs US Treasuries

In the midst of all the recent talk about a potential Twitter IPO at some point in the near future, the conversation inevitably turns to what a disaster the Facebook (FB) IPO was.  While there is little good to say about the IPO of FB back in May of 2012, the stock's recent rally has put the share price slightly back above its IPO price.  As of this afternoon's trading, the stock is up just under 2% from the initial offering price of $38.  Compared to the broader equity market, this small of a gain is almost an embarrassment.  If you have been holding on to the stock since its IPO, though, look on the bright side - you could have had that money in US Treasuries instead.

The chart below compares the total return of Facebook's (FB) stock since its IPO to the total return of US Treasuries over the same period.  To calculate the performance of US Treasuries, we used the BoA Merrill Lynch index of US Treasuries with a maturity of ten or more years.  As shown in the chart below, following FB's strong earnings report in late July, the stock is now up just under 2% since its IPO.  At the same time, long term US Treasuries are down over 10%.

Click here to read CNBC.com's recent article on Bespoke Investment Group.