George Soros: Facebook
George Soros has made a large fortune by buying stocks when nobody else wanted them, and selling them when everybody wanted them. On some occasions, though, one has to wonder if the 82-year-old is out of touch with the fact that the way things seem with the Internet aren’t always the way they are. Case in point: Soros’ $10.6 million investment in Facebook (NASDAQ:FB).
From a “buy them cheap” perspective, it’s not a bad bet. Shares of the social networking site declined immediately after the IPO, and they currently are at all-time lows — at $19 — and still falling, through sales as well as earnings were both up last quarter.
Yet, the red flags that don’t immediately show up on an income statement are waving like crazy. Engagement (length of visit) and activity (number of visits) per user are falling, much like those measures did for MySpace before it disintegrated. The gamble might well pay off, but there’s more downside than upside here, which doesn’t make sense no matter who you are.