What does Facebook IPO say about our own expectations?

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.


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  • Irv Halland

    To me, the fact that even after the huge buildup and hype that was put out leading up to the IPO, the stock closing just about even with the offering price – proves that: 1) the investment bankers did their job well and pulled the max possible amount out of the general public and 2) the so called company valuation of ca. $100B is a total fiction that is aided and abetted by the media every day. FB is not worth anywhere close to $100B despite what we are told every day. Multiplying the latest stock price by the number of shares does not equal company worth IMHO. It sure will pump up the local real estate and Porsche prices though.

  • Here we go again… Facebook, “The Valley”, “the tech”.
    Let me try again… Facebook is a scam. The biggest one. Yet a scam. A Ponzi. Facebook has no value, business model, a product (the only product FB can make money of, is NEW customers, NOT existing ones , because its new customers are its merchandise). Facebook simply cannot be valued 3 times Boeing. There is no way! The only reason FB (and the like) exists is the IPO itself – inflate value, sell off, get as much as possible funds (holding your retirement money by the way) to buy FB stock and “apres nous le deluge!”
    Get a clue!

  • Taylor Mead

    At one time, this valley actually had real companies, real tech, real jobs, real incomes and ignored by the media.. just not sexy to pump up.

    We need to flush the hucksters out of the valley and get back to what we did best.