Facebook IPO disappoints

After Facebook's IPO suffered technical glitches, and banks had to prop up the share price, stock analysts are already saying 'sell'.

by Michael Northcott
Last Updated: 19 Aug 2013

When Facebook’s $16bn worth of shares went to auction on Friday at 4pm GMT, an enraptured global audience waited to see what the share price would do, and imagined the things they could buy if they were in CEO Mark Zuckerberg’s shoes. But 4pm came and went, with a full half an hour passing before any shares could be sold, thanks to a software glitch with NASDAQ’s computers. Embarrassing stuff, especially since it was the third largest IPO in American corporate history.

Chief executive of NASDAQ Robert Greifeld said the exchange felt ‘humbly embarrassed’ by the software glitch, which lasted half an hour. In that time, orders for more than 30 million shares were received by the exchange, and Greifeld conceded that about half of them would be disputed because of the confusion. 

Trading closed with Facebook’s share price up just 0.6% to $38.23, and it emerged in a regulatory filing that the Facebook’s main underwriters, JP Morgan and Morgan Stanley and Goldman Sachs, were trading hundreds of millions of dollars worth of shares to keep the price above the starting point of $38 in its opening day. Facebook’s five key banks finished the day owning 86% of the shares issued in the IPO, prompting analysts to question the site’s perceived value in the market. 

So a shaky start for the social networking giant, and evidence that investors are not keen on another dotcom bubble bursting all over their portfolios. Zuckerberg himself has had a great weekend though: he married his long-term girlfriend on Saturday, having just secured himself a personal fortune of more than $17bn. Zuck on that…

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