There’s a lot of post-mortems tonight on the Facebook IPO. The stock didn’t pop the way many
thought it would. Was it a disaster?
The argument for no: By pricing it close to where it closed, the bankers made a perfect calculation of demand.
The problem: Many are reporting that bankers were buying up the stock furiously at the end of the day to keep it above its opening price of $38. We many never know just how much they spent. But it must have cut into whatever fees they collected.
But here’s something else I’ve been wondering: What role did Facebook’s decision to wait so long to go public play in the way its stock performed on the first day?
Dow Jones had recently reported that Facebook raised more venture capital than any other company in history. And we know that much of that money was actually investors buying stock from employees rather than investing in the company directly.
That secondary market is not as liquid, but the share prices there rose quite a bit over the last couple of years. So, it seems possible that much of the upside in the stock already played out before it got to the public markets.
We’ll never know for sure. And to be clear, it’s very likely that this course was the better one for Facebook. After all, it still raised all the money it wanted Friday.
But means the rest of us need to recalibrate our expectations for big IPOs.