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Facebook (FB) Stock Surprise: FB Does Massive Deal With China (Satire)

Facebook already has 900 million users. Mark Zuckerberg, the company’s founder and chief, has always believed that the world was his oyster and that every person around the globe is a potential FB customer. In that regard, he took a giant step forward by negotiating a deal with the People's Republic of China to be its exclusive social media provider.

The transaction involves a large investment of cash by the PRC of $10 billion, which will be used to buy back FB shares from employees and other insiders. This effectively eliminates the overhang of the stock that will be free to trade in a few months after a lock down period expires. For the investment, the PRC will receive a 10% stake in the company in the form of non-voting preferred stock that matures in 10 years and has no coupon. Essentially, the stock is being sold to the Chinese at approximately the IPO price. Additionally, the PRC will begin to manufacture mobile devices that are capable of exhibiting advertisements. This development should defuse the on-going issue relating to mobiles and their impact on FB revenues.

FB will take no risk in China; it will build no facilities in the country and not hire Chinese workers. Together, FB and the Chinese government will work to create acceptable ways for the Chinese people to communicate with each other. Mr. Zuckerberg would not estimate the revenue or profit implications of the transaction, other than to say he was “freaking stoked” about having 1.3 billion new Chinese users and the associated ad revenues affiliated with them. The Chinese have decided to deal with the issue of social media and attempt to build an infrastructure that does not conflict with their principals.

At a news conference, Zuckerberg, wearing a brand new hoodie with “I’m the richest man on earth” printed on the back, was highly critical of all the “jerks” who did not have confidence in his abilities to make FB “the greatest company on earth.” And, he said he had more surprises for the investment community in the months to come.

On the news, FB stock soared to about $56/share, double the IPO price of $38. The “stock flippers” and banking “masters of the universe” (as Zuckerberg referred to institutional investors who sold shares and banking analysts who criticized his company) have lost an opportunity to make a big killing on FB stock because they were “too stupid and arrogant” to appreciate the potential of the FB business model. He said “he was delighted to see that all the retail buyers of the stock, who were “mullets” in the IPO, were the principal beneficiaries of this new deal with the PRC. 

Institutional investors who feel that FB should have disclosed the Chinese deal prior to the IPO have already threatened to litigate. Zuckerberg told them to “pound sand.” They “chickened out” and they will not share in the tremendous upside of FB. And, he said “bring it on” [the litigation], if they must.

What a remarkable turn of events! Morgan Stanley has been vindicated, sort of, as has NASDAQ, sort of. Zuckerberg has declared tomorrow, June 9, “Revenge of the Zuckmeister Day.” Employees will be treated to a carnival-like atmosphere that will include a skateboarding contest, a hot dog eating contest, and dunk machines that have investment bankers on a perch ready to fall into a tub of water if the target is hit. And finally, everyone will receive a t-shirt with ”Don’t Mess With the Zuck” on the backside.

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