Facebook Inc. (NASDAQ: FB) saw a massive drop in the short interest, and now the short interest is lower than it has been in all but a few occasions. The November 30 short interest fell to 56.89 million shares, versus 95.3 million shares in mid-November. It was 87.988 million shares before that and 73.38 million shares before that. The final big lock-up passage obviously was the prior draw.

Firsthand Technology Value Fund (NASDAQ: SVVC), an investor in Facebook and other social media efforts, saw a gain to 244,905 shares short at the end of November, versus 227,807 shares short in mid-November. While this is not a high on a nominal basis, this is a high on days to cover at almost 8 days worth of volume now that trading volume is lighter each day.

Groupon Inc. (NASDAQ: GRPN) saw yet another gain, with its short interest rising to 46.2 million from 43.5 million. This is a smaller gain compared to the prior short interest gain of 20%, but the days to cover was flat at 1.58. This new reading is still one of the highest short interest readings of 2012 for the coupon website.

LinkedIn Corp. (NYSE: LNKD) saw its short interest rise to 5.21 million shares short at the end of November, versus 4.44 million shares in mid-November. This is the second highest short interest since mid-May.

Renren Inc. (NYSE: RENN) saw its short interest cut by one-third to 6.32 million shares at the end of November, versus 9.89 million shares in mid-November. This was the lowest short interest of 2012 and only about one-quarter of the peak short interest of more than 24 million shares short in mid-May.

Global X Social Media Index ETF (NASDAQ: SOCL) is light in volume but it is focused on the social media space (more or less). Its November 30 short interest fell to 14,385 shares, versus 16,415 shares in mid-November. This is the highest days to cover, at 3.6 days, going all the way back to July.

Zynga Inc. (NASDAQ: ZNGA) short interest had been dropping, but it grew by 21% to 13.228 million shares short at the end of November. That is still way down from more than 56 million shares short in May.

JON C. OGG

SolarCity’s pricing is expected to be between $13.00 and $15.00 per share and the common stock will trade under the ticker “SCTY” on the NASDAQ. This IPO has a rather large underwriting group for the size: Goldman Sachs, Credit Suisse, BofA Merrill Lynch, Needham & Company, and Roth Capital Partners.

24/7 Wall St cares about this offering quite a bit. We just issued our Cleantech and Alternative Energy Stock Picks and Pans for 2013. If the recent growth and total market opportunity of SolarCity does not excite investors enough for a good IPO then these sectors tied around cleaner or green energy may have further pain ahead. Why this matters further is that many public companies have ties here as well, as you will see below.

Investors have a lot to watch here. SolarCity’s chairman is Elon Musk, who is also top dog over at Tesla Motors (NASDAQ: TSLA) and also on SpaceX. Musk has indicated that he intends to purchase $15.0 million worth of the company’s common stock in this offering from the underwriters at the initial public offering price.

SolarCity promotes its Better Energy plan whereby most customers agree to a 20-year contract term by putting solar panels on the roofs of customers. With electricity rates having doubled in the last 20 year period, SolarCity’s most recent filing shows that solar panel prices were 472% higher in cost versus today’s solar panel prices.

The company has raised $1.57 billion through 23 investment funds and related financing facilities established with banks and other large companies. These include Credit Suisse (NYSE: CS), Google Inc. (NASDAQ: GOOG), PG&E Corporation (NYSE: PCG) and U.S. Bancorp (NYSE: USB). It even claims that about $602 million of the amount it has raised remains available for future deployments. Firsthand Technology Value Fund (NASDAQ: SVVC), which you may recall as a pre-IPO investor in Facebook, Inc. (NASDAQ: FB), recently showed that it most recently held 426,300 shares of common stock and represented
approximately 3.6% of its investable assets in SolarCity.

If this deal prices at the mid-point of the range ($14) then the 71,708,364 shares outstanding after this offering will generate a market capitalization of right at $1 billion.

SolarCity has seen a very large change in its revenue mix. In 2009 the operating leases were only $3.2 million versus $29.4 million in solar energy system sales. By the end of 2011, that mix was $23.1 million in operating leases and $36.4 million in solar energy systems sales. Here is the mix for the first nine months of 2012 versus the same period of 2011 (lease versus systems sales):

• 2011: $16.1M lease and $22.7M on systems, $38.8M total
• 2012: $33.6M lease and $69.8M on systems, $103.4M total

Here is the latest revision filed with the SEC, which should be updated very soon for a pricing. It is important to look at both the good side and the bad side of the equation. We would note that not everyone has been positive here:

• Bloomberg said it is valued at about 19-times its peer group
• GigaOm calls it a bellweather for cleantech exits
• New Energy World Network said this was under the $200 million indicated offering
• IBD outlined whether its market and economy can support its growth
• IPOhome.com showed that returns have been dismal in the sector with other cleantech IPOs being withdrawn

JON C. OGG

Recent trading is showing some share price stabilization.  The lowest we have seen Facebook trade this last week is $25.52 on Wednesday and the lowest close was actually on Tuesday at $25.87.  With shares up 3% at $27.15 mid-morning on Friday the stock is now up over 6% from the lows.  That won’t do any good for the investors who are ‘long and wrong’ at $38.00 or higher, but this is where the amazing level comes into play: If Facebook manages to get above $27.72 it would actually be up for the entire week and it would mark a recovery of almost 9% from its post-IPO low.

Again, it is almost hard to even note that Facebook shares may have bottomed out.  It is the ticker tape and the fundamentals that matter the most here and our job in this case is to give investors both sides of the case…

Some analysts and reports have managed to be positive… S&P Capital IQ, which does not buy and sell shares for the public, actually upgraded Facebook in recent days to a less-cautious position.  Social media deals are actually continuing to come.  Even rival LinkedIn Corporation (NYSE: LNKD) recently saw its insiders sell millions of dollars worth of new shares and its stock has risen since.

This week came a comScore post titled “It’s Time to Change the Discussion on Measuring Facebook Effectiveness” and it was very much in favor of Facebook over the long haul for its ad and traffic metrics. The company has now also launched its App Store to garner more revenues.

Then there is the flip-side of the coin…  One analyst went so far as to say that Facebook would be dead in 5 years even though it is not actually a bankruptcy prediction.  Bernstein gave it an ‘underperform’ rating on June 4 and some analysts and market pundits have called for much lower prices versus even now. Even at the end of May there were reports that the IPO troubles may have negatively impacted its loyalty measurement.

Mary Meeker as “Queen of the Web” recently talked down all social media and Web 2.0 valuations.  Is a Facebook smartphone really a good idea?  We might change the name to Earbook if this comes out.  And, should it buy the Opera browser when it has Microsoft Corporation (NASDAQ: MSFT) as a shareholder with Bing access?

The stock exchange and underwriters messed up… Nasdaq OMX Group Inc. (NASDAQ: NDAQ) totally botched this IPO on the technology and order flooding side, and its remedy is just insulting.  Morgan Stanley (NYSE: MS) took heat over not offering support endlessly at the $38.00 IPO price, probably because it knew it was cheaper to let Joe Public lose billions in value rather than trying to support the shares losing billions of dollars for Morgan Stanley in the process.  The brokerage firm’s public defense was somewhat insulting.

Facebook & Zuckerberg are to blame too… There is a ton of blame here on Facebook itself as well for how poorly this IPO went off. CEO Mark Zuckerberg obviously demanded too high of a valuation at $100 billion.  He wore a hoodie to the roadshow after at first trying to signal that he might not even present live at the roadshow, he announced his wedding on the same weekend as the IPO, he went to Italy for a honeymoon, and he forced IPO underwriters to take a token fee for their underwriting efforts. We pointed out the negative revenue situation before the IPO and highlighted the top 18 risks that investors had to consider (and still have to consider).  All those insiders got to sell as many shares as they could at $38.00, over 30% higher than this week.

Facebook was the lynchpin of our 11 companies where shareholders have no power at all and are totally at the mercy of the CEO.

So, you have been given a 360-degree review for why Facebook shares might be in the bottoming-out process.  It is very hard to believe when you have seen this carnage.  After all, what if stocks this summer turn out to be like summer of 2011 or 2012?  They say “Sell in May and Go Away!” for a reason.  Some are still bullish and many are still very cautious or just outright negative for the long-haul.

Here are two charts to consider from the ErlangerChartRoom:

Your email address

subscribe

terms and conditions

JON C. OGG

GSV Capital Corporation (NASDAQ: GSVC) is down 3.4% at $12.70.   Firsthand Technology Value Fund, Inc. (NASDAQ: SVVC) is down 2.4% at $18.80 on over 17,000 shares.

SINA Corporation (NASDAQ: SINA) got a huge bump ion on its “Chinese version of Twitter” pop last week but after peaking above $59.00 mid-week the stock is indicated down less than 1% under its $53.11 close from Friday.  Keep in mind that this one may act differently as its 52-week range is $46.86 to $128.17.

LinkedIn Corporation (NYSE: LNKD), Facebook’s only real competitor based in the U.S., is trading down 2% at $97.01 on 50,000 shares.

Renren Inc. (NYSE: RENN) is down 8.3% at $4.52 on over 300,000 shares.

Global X Social Media Index ETF (NASDAQ: SOCL) will follow these lower if all of these remain where they are.

Yahoo! Inc. (NASDAQ: YHOO) is up 4% at $16.04 on 2 million shares and AOL Inc. (NYSE: AOL) has not traded due to its NYSE listing but is indicated higher along with Yahoo!  Google Inc. (NASDAQ: GOOG) is up 0.4% at $602.40.

JON C. OGG

GSV Capital Corporation (NASDAQ: GSVC) owns Facebook shares and has for some time at what may be as much as a 50% profit.  The closed-end BDC has also raised capital on more than one occasion each time the stock popped up. Shares were at $19 earlier this week and the stock closed at $16.10 on Thursday.

Firsthand Technology Value Fund (NASDAQ: SVVC) was at $30.00 earlier in the week and it is already under $27.00 against a 52-week range of $14.12 to $46.50.  This one recently raised  $127.7 million via a secondary offering and it plans to invest the cash in portfolio companies.

The one ETF we would be watching is Global X Social Media Index ETF (NASDAQ: SOCL), but only AFTER the Facebook IPO for a few days.  This ETF will ultimately include Facebook with likely a max of 10% weighting at the onset of the inclusion date.  Keep in mind that it does not own Facebook shares before the IPO.

Zynga, Inc. (NASDAQ: ZNGA) has still been trading as a busted IPO but it and Facebook have very deep revenue ties due to the social gaming.  Here is where you can spend real life money on virtual farm animals!

As a reminder, Goldman Sachs Group Inc. (NYSE: GS) owns (with affiliates) over 65 million shares and it is selling more than 28 million shares.  Microsoft Corporation (NASDAQ: MSFT) also owns 32.7 million shares, but those are of the Class B shares.

Tree Top Industries, Inc. (OTCBB:TTII.OB) rallied on news that it owned no less than $100,000 worth of Facebook shares.  The company calls itself a mini conglomerate based on Teledyne’s business model.  Oh boy!

Facebook is the new F-word on Wall Street.  Starting next week and the week after that, the financial media is going to have to find something new and hot to talk about all day long.

JON C. OGG

We noted last week that there are other companies with ties to Facebook, including Microsoft Corp. (NASDAQ: MSFT), GSV Capital Corp. (NASDAQ: GSVC), and First Hand Technology Value Fund Inc. (NASDAQ: SVVC) which already own shares in Facebook, and Global X Social Media Index ETF (NASDAQ: SOCL) which will have to acquire shares as soon as it can after the IPO.

But Zynga gets the most bounce because Microsoft’s holdings are not large enough to give the software giant a big boost. The others are straight financial plays which may turn out well for investors or may not. So Znyga gets the focus.

Somehow, though, it’s hard to figure how Facebook’s being a public company helps Zynga’s revenues or profits much. Are more people going to become Facebook users once the company is publicly traded? Will Zynga raise its prices? Will Facebook pay Zynga more? Sure Zynga’s CEO stands to make some money with his sale of Facebook shares, but how does that help his company?

The one thing Zynga continues to have, and that it has had for some time, is a popular for-fun casino that could easily be switched over to a gambling model if the US Congress ever approves such a law. But, again, how exactly is that tied to Facebook’s status as a publicly traded company? And when Zynga’s deal with Facebook expires, who’s in the driver’s seat in negotiations for a future deal?

Plenty of people think there’s something there, because Zynga’s shares are up 7.9% shortly after noon today, at $8.57 in a 52-week range of $7.34-$15.91. Shares were up nearly 11% at one point this morning.

Paul Ausick

Wedbush Morgan’s Buy rating came with a price target of $44.00 per share.  That is above the $28 to $35 initial price range of Facebook.  The firm’s Michael Pachter said that Facebook warrants a premium multiple due to growth in advertising, mobile, and payments.  The firm’s $44 target is based upon 22-times its projected 2015 earnings of $2.00 EPS and it sees earnings of $0.50 EPS in 2012 and $0.65 EPS in 2013.

The new report today is even more ambitious as Stern Agee initiated coverage on this one with a “Buy” rating and with an even more optimistic price target of $46.00 per share.  Stern Agee is setting forward earnings estimates of $0.56 EPS for 2012 and $0.69 EPS for 2013.

We do have some cautions, but they are beyond a drop in sequential revenues last quarter. Our concerns include worries over how a low-float is going to put an even larger premium out there.  There is also the issue that the board of directors do not have as much say here, there is a young CEO who often looks at services for customer reward more than how Facebook can monetize that effort.  The common shareholders will also have effectively no say at all and this is being considered a closely held entity by many investors.  The most recent filing shows that Zuckerberg will have about 58.8% of the total share votes between ownership and proxy.

Anyhow, there are now already two analysts calling for investors to buy shares at the IPO with a price target range of $44 to $46 per share.

Here are a few vehicles which already own Facebook shares or are tied to Facebook, but keep in mind these have all been known for a while:

Zynga, Inc. (NASDAQ: ZNGA) is viewed as a key secondary beneficiary of the Facebook move because so much of Facebook’s revenues are tied to the social gaming company.

Microsoft Corporation (NASDAQ: MSFT) will have a large gain in its holdings of some 32,784,626 Facebook Class B shares but that company is far too large to view as a true direct beneficiary based solely upon the valuation bump-up from the Facebook value.

GSV Capital Corporation (NASDAQ: GSVC) claims direct ownership of Facebook shares that it has bought through private-public exchanges.

Another ‘Facebook Winner’ is the lesser-known Firsthand Technology Value Fund, Inc. (NASDAQ: SVVC) with its Facebook shares: as of Monday the firm claims to have an investment of 600,000 shares of Facebook’s Class B common stock.

Global X Social Media Index ETF (NASDAQ: SOCL) most likely does not yet own Facebook shares in the ETF holdings but as soon as Facebook comes public this ETF will be forced to begin adding Facebook shares as it gets added into the public social networking index yet.  This would be a bet that Facebook will lift the tide of all social networking stocks.  This ETF did spike after it became known that Facebook was filing its IPO paperwork.

If you are going to be watching the media reports following the IPO roadshow for Facebook, you can probably assume that it is all going to be how the investors interpret and react to Mark Zuckerberg’s leadership.

JON C. OGG

The WSJ has reported that a new S-1 filing is expected after the close of trading this Thursday.  Today’s aim is an expected price range in the high-$20s to the mid-$30s per share in the IPO for a valuation of roughly $85 billion to $95 billion.  Another issue is the date of May 18 as the initial public offering date, but we would warn that pegging an exact date with two weeks or so to go for an IPO is probably more alchemy than science even if this is Facebook and even if the date turns out to be the right date.

Our concern is the sequential revenue issue.  Facebook is supposedly one of the thorns in the Google Inc. (NASDAQ: GOOG) advertising model because it is so targeted to users.  If so, then it should be growing endlessly every single quarter.

Zynga, Inc. (NASDAQ: ZNGA) is viewed as the secondary beneficiary of the Facebook move, but its shares are down since earnings and the stock is technically trading as a busted IPO.

Microsoft Corporation (NASDAQ: MSFT) will have a large gain in its holdings of Facebook shares but that company is far too large to view as a true direct beneficiary based solely upon the valuation bump-up from the Facebook value.

GSV Capital Corporation (NASDAQ: GSVC) is down today but shares are up well over 30% from the start of the year due to the BDC’s direct ownership of Facebook shares that it has bought through private-public exchanges.

Another ‘Facebook Winner’ is the lesser-known Firsthand Technology Value Fund, Inc. (NASDAQ: SVVC) with its Facebook shares: as of March 2, 2012 the fund’s investment in Facebook consisted of 200,000 shares of Class B common stock.

Whatever the valuation comes out to be, let’s all just hope that Facebook comes public and gets this endless hype over with.

JON C. OGG