After five days, Facebook ranks as worst IPO flop of the decade

By on May 25, 2012, 4:30 PM

Facebook’s introduction on the Nasdaq certainly hasn’t lived up to the hype leading up to last Friday and the current forecast isn’t looking much better. The stock is down 16 percent from its IPO price, prompting Bloomberg to declare it the worst large IPO in the past decade based on the first five days of trading.

In an interview on Bloomberg TV, markets reporter Sheila Dharmarajan compared Facebook to four other poorly performing IPOs: Blackstone Group, General Motors, Mastercard and MF Global, the latter of which filed the eighth largest bankruptcy in US history last year. This comparison, she says, really shows the magnitude of the flop for Facebook’s IPO.

Some would argue that the decline started even before shares were made available as lead underwriter Morgan Stanley urged Facebook to increase the number of shares being offered by 25 percent. The introductory price was also raised ahead of the big day.

But the trouble didn’t stop there as Morgan Stanley allegedly cut their estimates for the stock mid-road show. News of this extremely rare move supposedly only tricked down to high-level investors, leaving Joe Trader in the dark.

On opening day, issues with the Nasdaq software delayed the IPO for nearly 30 minutes and additionally meant that many brokers were unable to get confirmation on whether their clients’ orders were actually processed.

It’s anybody’s guess as to what the future holds for Facebook on the stock exchange. Do you think Facebook will recover over the coming weeks / months or are they ultimately headed for more doom and gloom?




User Comments: 21

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gwailo247, TechSpot Chancellor, said:

So basically a giant pump-and-dump that ended before the IPO even began.

Every investor that bought shares once the IPO began basically paid for the profits made beforehand.

Guest said:

burn, FB, burn!

davislane1 davislane1 said:

Called the short on this behemoth months ago. I want Jim Cramer's job at CNBC.

Ranger12 Ranger12 said:

All these tech companies going for billions and hundreds of millions reminds me of the dot com boom of the late 90's/early 2000's. They typically defy traditional company valuation practices because of the unique nature of the companies. However, very few are valued accurately and we end of with stuff like this. Lots of hype followed by people losing money.

Guest said:

Oh noes the rich lost their money, I'm so sad :(

howzz1854 said:

actually the rich are the winners here. they're the insiders who dumped the stock at opening at $38 and made $16billions combined. the losers are the little retail consumers. this thing stank way from the beginning. way overhyped by the marketing and the underwriters. talk about 100 billion valuation, it's not even worth 50 billion. I wouldn't even pay $15 for a share let along $30. its intrinsic value is just not there. with lack of real profit, unproven business model. it always makes me upset when I see people going to super market and comparing prices between $2.50 and $2.99. and when a joe schmo calls you on the phone, people will buy anything they sell on the other line without even looking into the income statement. $^%$^% makes me mad people.

p51d007 said:

I wouldn't buy this or any other "dot.com" stock that does not PRODUCE a product.

Other than information, what does FB actually "make"

I use an ad blocker, never play any of the "games" on FB, never click on the company "likes" pages. It's just for family to keep in touch. FB may go the way of myspace, if the next "cool" thing comes along.

I think this IPO was nothing more than an over inflated ponzi scheme.

Guest said:

Die Zuckerberg, DIE!

Opus Opus said:

<p>Die Zuckerberg, DIE!</p>

LOL what does Zuckerberg has to do with it? That's the work of underwriters I.e. Morgan Stanley and Goldman Sachs. That IPO didn't deserve $100 billion in the first place as FB doesn't produce any thing. No real products no real valuation. That IPO was risky in the first place.

ansh1993 said:

<p>
<p>Die Zuckerberg, DIE!</p>
</p>

<p>LOL what does Zuckerberg has to do with it? That's the work of underwriters I.e. Morgan Stanley and Goldman Sachs. That IPO didn't deserve $100 billion in the first place as FB doesn't produce any thing. No real products no real valuation. That IPO was risky in the first place.</p>

Correct the IPO was overvalued ! The IPO floated at 38$ per share ... and that's too much ,....

Guest said:

I see Zuckerberg saved a cool 111 million pounds by selling off some of his shares before the price fell.

[link]

Guest said:

Ha Ha Ha. I'm still laughing about this. Alll these so called "investors" lost money. Give me a break. Just looking for a quick buck but got burned instead. I love it!

TJGeezer said:

Goldman Sachs.... Goldman Sachs... where have I heard that... didn't they have something to do with driving the whole trashed US economy off a cliff? I wonder what genius picked them to help drive FB off a similar cliff.

Well, no doubt they're all geniuses who know what they're doing; I certainly don't know what they intended, but stealing more money seems like a good guess.

treetops treetops said:

Just as I said, its going to continue to plummet they valued each fb acc at 100$, so unrealistic. Also it will go the way of myspace eventually I see nothing stopping people from a mass migration to a new social media site.

I predict it being worth 1% of its original pricing of 100 billion within the next 2 years.

3DCGMODELER 3DCGMODELER said:

hahahahahahahahaaaaa

so much for moving out of the U.S. and giving up his american citizenship...

hahahahahahahahahaha

Guest said:

Actually, is was just the "worst IPO", or the "best IPO flop". G

killeriii said:

I don't think this will affect their business.

At the same time, I don't think the stock will recover until they stimulate their company somehow.

(maybe new service)

Tygerstrike said:

@Ansh

Actually they do "produce" a tangible product, Ad revenue. Each account on FB will generate a certain amount of revenue for FB. Every single ad that your not really paying attention to brings in money. It may only be like $0.02 every ad, but it ads up quickly when that ad is splashed across every active account. Thats what they are basing FB value at. How many ads they can show any individual account in any given day. However a $100 per account seems like they over inflated their estimates just for the IPO sale.

Guest said:

Who in their right mind decided to invest in FB? Dont you realise is a big amount of bs?

I mean....How many years left has fb? 1...maybe 2...maximum 3....or are you going to be saying...hi hello and happy birthday every year to your friend? I mean.....Who in their right mind decided to invest in FB? the deserve to lost the money for being not intelligent in the first place.

Guest said:

I would not buy a share in Facebook not even if it cost 1 pence. Not even in that case, because I know I will be loosing money. Facebook is just "air" nothing else.

alen9331 said:

with less innovation, facebook has being the setting down sun.

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