After months of media hype we sobered up rather quickly. The Facebook IPO revealed some surprising lessons learned about the US stock market system.
- We learned that the NASDAQ, a trading platform that is in business since 1971 and that supposedly has more trading volume than any other electronic stock exchange in the world, can be overwhelmed. And it was.
- We learned that a social media company is in the end not that social. Facebook optimized their short-term gains. They leveraged the hype maximizing both the share price as well as the number of shares sold in the market place. They got a premium for their IPO shares. They also traded their short term gains for a publicity disaster.
- We also learned that apparently after ten years of Sarbanes-Oxley there is still room for clubby information exchanges among the few true insiders. In the aftermath of the Facebook IPO Morgan Stanley (MS), Goldman Sachs Group (GS) and J.P. Morgan Chase along with other underwriters and Facebook were sued by investors who claimed they were misled in the purchase of the social network firm’s stock. The courts will have to decide about the appropriateness of any pre-IPO disclosures.
Now the JOBS Act is supposedly making it easier for companies to raise money and to file for an IPO. We are officially in the Grace Period after President Obama signed the law on April 5, 2012. Lawmakers and regulators alike will have to deal with the fall-out from the Facebook IPO. While innovators and entrepreneurs want less bureaucratic hurdles in their business pursuits, nobody has an interest in an ill-defined process that creates mistrust, public uproar and law-suits.
Turnarounds are not for the fainthearted among us. Turning around a troubled entity is complex. There are many stakeho
Facebook is one of the most popular site in the world and earning lots of share profit.All other business should learn from facebook.Wishing facebook a great business future in stock market and every business should larn more from them.
I didn’t know that NASDAQ was a trading platform that is in business since 1971. Great stuff.
Great post. Love to learn more.
Facebook is so popular but will always be known now for their horrible IPO and huge losses when they went public. They need to find more revenue streams for there company to increase there sales more.
Three really great points here on the Facebook IPO. Interesting that Facebook got a premium for their shares. But that is the world of stock these days. Companies get hyped up just to get the public in a frenzy to invest. Higher ups get a premium for their shares that way and make a bundle.
It is a shame and pity, that so many investors were led down the garden path and led to believe that the Facebook IPO was going to be such a success. I am not very happy with either J.P. Morgan or Facebook. I think they should be held accountable for their actions.
I Find It So Completely Shocking At The Power Facebook Seems To Have Over The World These Days… Chances Are Taken Everyday Within Social Media, And This Has Been A Lesson To Us All…
I, personally, have never trusted Facebook, and have always found it to be just another money-raking machine of the capitalist world. This scam right here is my proof. I find it sad that a multi-billion dollar company like Facebook only wants more.
I’ve never really known a whole lot about the stock market, to be honest, but I’ve always been interesting in learning more. However I think it’s crazy how ridiculously rich companies only seem interested in getting themselves MORE money. Do something useful.
wow! i use facebook all the time. Didn’t know what went on behind the scenes. i never knew that they were being sued by high ranking banks. it’s a wonder how they get to still be the one of the biggest multi billion dollar companies around.
Facebook has always been on edge and overrated. After reading this article I would never invest in a share with Facebook.
This is a good article about Facebook IPO.
I feel that it should of been obvious to people that buying stock in a social media site was not a good long term investment. Social media sites are can only stay afloat if they can hold the attention of the public and not matter how great a site might seem eventually the times will change they will become outdated.
I can’t mess with the stock market. It’s just too unpredictable, and Facebook isn’t something I would want to buy. Zukerburg has too many problems with his site, and the his stocks are a huge give away he’s in trouble.
There is a romour that facebook share is worth 128 billion.By reading this article I know the exact what is it.Last time I saw in the Newspaper most of the confuse about the Facebook share but now I am clear and this article is very helpful for me to invest in the share market,Thanks a lot for this blog.
Wow. I am joined Facebook but do not know a whole lot about it. This was a crazy IPO.
Facebook is still a good stock, from my opinion. why? because it is the leader of the new market: social network. anything new need time to prove its value. we need to pay more attention. i don’t think it is ” and end” but “a beginning”close your eye any ask yourself : what will you have when you have a link to nearly 1 billion people.it is future that will answer the question facebook IPO is a failure or a victory.
Wow, this blog post sure creates a sobering view of Facebook. They seem far from the idealized, wonderful social network that they are perceived as by popular culture. It is a pity they had to resort to insider trading and hype to jack up the price of their shares. I don’t blame their investors for being angry.
I really enjoyed reading this article! This was very informative. Its amazing how popular Facebook has become, and I believe it will be profiting for many more years to come!
Very interesting and informative article. The whole business model of Facebook is very fascinating to me, so this article was a great source of information regarding the network. Also, it’s hard to believe the NADAQ could legitimately be overwhelmed, but I guess that’s the Facebook IPO for you. In short, excellent article. It was scripted beautifully and quite eye-opening. Thank you very much.
Now a days Social Media has become an integral part of our everyday life and conversation in America and around the globe, with many people spending the better part of their day passively or actively participating on Facebook, Twitter etc. & facebook is one of the best social sites.
This article outlined those three things which i was not aware of. We know facebook is famous but do not want to know what is going on behind the name & fame. Thanks for this great info , i would never think of investing in it.
I’m surprised and not so surprised. I’m surprised that a huge entity like NASDAQ could have been so overwhelmed by one IPO. I’m not surprised by the allegations against facebook though. I have for some time now not trusted facebook or its CEO. I think he is a money-hungry egocentric prick! I also think this obsession with facebook has gotten way out of hand and I’ll be glad when this fad is over!
I think Facebook like any other social media website has multiple goals yes they are social but there is also a lot of profit and money that goes into it when planning the next big thing they were smart about it and that’s why it’s so big and makes so much money
Facebook was in many ways very social because they were able to use their own name to get people very excited about the IPO. I heard lots of hype and news stories. Regardless of how it turned out they did a great marketing job.
I think it has also given people a chance to really focus on what genuine business value Facebook has when it comes to wealth creation. The performance of the share price since its debut seems to be one of negative expectation.
Facebook share prices may have dropped initially, but I believe this is just a temporary hiccup and they will take off in the next 6-12 months. Rome wasn’t build in a day.
Facebook is the most popular social media website. But even the most hyped product find difficulties in share market business. The NADAQ is a difficult place to predict and trade and should be careful before investing.
Facebook probably believed they were doing what was best for the company. And while, lawmakers and regulators alike will have to deal with the fall-out from the Facebook IPO,” I don’t really think that Facebook is going to regret their decision.
Facebook is a popular site in the world. One of the best site to share knowledge, information and other things. They are worth the money now and more in the future.
Facebook are the biggest money thieves I have ever seen. They stole an idea then used it for profit. Talk about highway robbery! I think everyone should just boycott them.
It is a such a shame that that so many investors and people were led to believe that the Facebook IPO was going to be such a success. I am not so happy with Facebook nor J.P Morgan. I think that Facebook and J.P Morgan should be held a for both of their actions. It is also a shame that they had to resort to insider trading to up the price of their shares. I still do not think that facebook will last forever and that there will be another Social media site that will take over.
Facebook marketing can be the future of money making in Internet World We must take this opportunity very serious and treat it as it should. There is no wonder that Facebook got listed in the market.
This is a very interesting article and shows you can learn from Facebook’s mistakes!
Personally I just could not understand Facebook being valued at the price it was. The public is so willing to follow the next great idea. What happens to the advertising revenue Facebook generates when the next “facebook” comes along and everyone decides to follow the leader to the new site?
Think the hype connected with the float of Facebook was always going to turn it into a downer. Hiring 11 banks to sell the shares?
Morgan Stanley raised the IPO Price at the last minute and increased the number of shares sold. At the same time a Morgan Stanley analyst tells some clients its downgrading Facebook’s revenue forecasts, and Goldman Sachs and JP Morgan start lending shares to hedge funds wanting to bet against the float… Share price slumped. And now, there’s suing.
Bankers selling at over-inflated prices is nothing new I suppose, its what they do, taking Glencore as an example.
All comes down to greed I guess.
Completely agree with this blog post. Well written, and informative.