

Facebook IPO Seen Deepening Investor Distrust Of Stocks - rajpaul
http://www.bloomberg.com/news/2012-05-25/facebook-ipo-fallout-deepens-investor-distrust-of-stocks.html

======
squeed
You know what? Good. A stock that explodes after the IPO means it was priced
too low, and the company didn't raise a fair amount of capital.

Facebook is obviously smart enough to think for the long term. I don't trust
the financial machinery to do that.

~~~
adgar
Here's how real people think about a hyped, flop of an IPO:

People don't like the feeling of being sold something for more than it's
worth. We call that being "ripped off," and most folks don't take too kindly
to it. I believe you described this as getting a "fair amount."

People also don't like the folks who rip off other people. It's kind of a dick
move to rip someone off. Those folks tend to do quite well, yes. That's FB in
this case, who as you note made out just swell.

People especially resent it when those guys get incredibly wealthy by ripping
off millions of people.

> Facebook is obviously smart enough to think for the long term. I don't trust
> the financial machinery to do that.

I think we can all agree - there's nobody we can trust more than Facebook to
rip us off properly.

~~~
mark_integerdsv
I'm with you.

It still baffles me how anyone could think that this IPO was about anything
but making vulgar amounts of money for Facebook.

I guess the label is now more accurate than ever: "...dumb fucks."

~~~
acdha
What IPO isn't about making money for the company? Only the VC pump-and-dump
scams, not anything you want to be part of

~~~
adgar
Most companies' IPOs don't include going to great lengths to successfully
offload far more of their shares at a significantly higher price than the
shares could sustain.

There's a big difference between leaving money on the table and riding the
hype wave for all its worth. Plenty of room for reasonable compromise.

------
crikli
No it's not. FTA:

"The IPO produced the worst five-day return among the largest U.S. deals of
the past decade."

That's an _extremely_ qualified factoid. Please retitle this post.

~~~
rprasad
Yes, it is. On an absolute basis, the Facebook IPO resulted in the lowest
5-day return of _any_ US IPO in the past century. The qualifier "largest" was
used only because FB lost more capital in 5 days than the total market caps of
the companies involved in the worst IPOs, so it is not the worst IPO on a
relative basis. Even then, Facebook still ranks among the worst IPOs in the
past decade.

------
ww520
That means the IPO was priced right. Investment bankers used to deliberately
priced IPO low to let their favorite clients profited with the popup right off
the gate. The companies lost lots of money when their IPO priced low.

Looks like Facebook avoided the problem and got the right price.

~~~
soup10
It's not all good. Facebook employees are locked up for 3 months right? So the
winners here were the VC's and other "preferred stock holders" who were
allowed to sell their stock as part of the IPO. And the banks/underwriters who
apparently always profit from ipo's even if they are mispriced.

The losers for the most part were retail investors and various funds/traders
who believed the banks that the IPO was correctly priced, and probably
facebook employees who will have to sell at a lower price now because this
botched IPO has sown a lot of distrust in facebook stock.

The goal for an IPO is to correctly price the offering. Usually tech stocks
are wildly over-valued and speculated on when they IPO, that doesn't make the
banks wrong for setting a reasonable price.

 _Shrug_ it's all bullshit anyway. When your talking in the scale of billions
of dollars, capitalism can get pretty inefficient. Internet bubbles just
highlight the most absurd parts of it. $1B for a 1 month project on
iOS(instagram)? $100B for a monopoly on the social graph?(facebook) It makes
no sense, but it's really just the tip of the iceberg when it comes to market
inefficiencies and the huge amount of capital some companies have compared to
the value they provide to society.

~~~
ww520
Well, the main thing is the FB company got a great price on the IPO. The
employees etc can be benefited in the long run from the great cash position
the company is at.

------
brisance
I'm amazed the article didn't mention the lawsuits that are being filed
against the lead underwriters Morgan Stanley, Goldman Sachs, JP Morgan etc;
according to the claims, some institutional investors got insider info that
presumably leaked through the "Chinese wall" that FB was ill-positioned to
take advantage of growing mobile ad views and thus would have to lower its
earnings guidance for the next quarter.

Then again, the SEC and practically all government agencies are revolving
doors with big business so I wouldn't be surprised that all they get is a slap
on the wrist.

------
endlessvoid94
It's been less than a week.

~~~
jlgreco
That is exactly what they are considering...

 _"The IPO produced the worst five-day return among the largest U.S. deals of
the past decade."_

------
zeroonetwothree
A 16% drop hardly qualifies as the "worst performing IPO of the decade".

~~~
jlgreco
Is there one that is worse that they missed? Article seems to suggest that MF
Global Holdings Inc. had the second worst opening week.

~~~
veyron
BATS IPO had to be pulled. Although it's not the worst because traders were
made whole.

------
cocolos
I wouldn't touch fb stocks with a 10 ft poll.

------
jellicle
The funny thing to me is how everyone swears that they only invest due to
fundamentals, they absolutely aren't just gambling their money in the big slot
machine and hoping to see three cherries come up instantly and coins pour into
the tray.

And then when three cherries don't come up on the first spin, man, are they
pissed off.

------
veyron
We won't know for some time (at least until a possible twitter IPO) the scale
of the damage caused by the Facebook IPO on investors' appetites for social
stocks. I'd reserve judgment.

------
RomP
Can we just stop beating this dead horse for once please?

~~~
tatsuke95
Why? Like it or not, FB is the bellwether for the current technology/economic
climate. It's one of the biggest IPOs ever, not just in size, but in renown.
There was a mainstream movie made about it before it was even public. It's a
_huge_ story.

It's important to gauge these things as they happen, so the next time around
you get to be the one saying, "I've seen this before." These stories may all
turn out to be moot, and in 10 years Facebook could be a huge brand, in which
case you can look back and remember how Bloomberg labelled it the worst
performing IPO of the decade. Or, it could go south....

~~~
juiceandjuice
You're right, it's important to gauge these things, and there's been a lot of
things going on this past week, and people tend to assume because the facebook
IPO didn't behave the exact same way as the linkedIn IPO that it has somehow
failed... but it's the stock market. It's unpredictable, and so many things
affect the price of a stock. There were trading glitches, largely affecting
daytraders and companies who had no desire to hold the stock long term in the
first place. And there's also been a lot of back and forth on the European
debt crisis this past week and general volatility over all tech stocks, not
just facebook, but facebook is in the spotlight right now.

I don't think facebook's IPO has any real bearing on the industry at hand.
Other recent tech IPOs like LinkedIn and Jive have varied by more than 10% in
the past week.

------
tedunangst
What's funny is FB still had a better week than DELL. Somehow that surprise
just isn't worth talking about.

