It was the most hyped IPO (Initial Public Opening) in history. The Company founder, Mark Zuckerberg, is now a billionaire many times over. But it wasn't without some turmoil that the Social networking site Facebook ("FB")(whose 900 million user strength is only behind China and India's populations) went public on Friday. First, the launch was delayed by 30 minutes after shares got listed at Nasdaq. Then, it barely blipped higher before retreating to the original price of $38. Even the underwriters had to jump in to buy more shares to save face. From there it floated higher for a while. Then ended the day embarrassingly close to where it started. Was the IPO a flop? Did the Nasdaq spoil FB's coming out party? Or could this be the classic case of a great company, but a poor investment?
Only time will tell. Let's look at what we do know. What began in a Harvard dorm room as a platform to connect college mates in US eight years ago, on Friday, May 18 th, 2012, is valued at 109.36 billion after it raised a whopping $16 billion. With a market value of over $106 billion, FB is among the most valuable US companies, ahead of sector giants Amazon ($98 billion) and Cisco ($89 billion). But it remains behind fellow technology giants like Google ($203 billion) and Apple ($495 billion). Yet, what presumably appeared to be a big vote of no confidence, General Motors pulled its ads from FB right before the IPO, calling them "ineffective," according to a Wall Street Journal report. The automaker determined that its ads on the platform "had little impact on consumers." Curious?
And what about this Nasdaq? FB's stock was expected to start trading at 11 a.m. (ET), but didn't open until 11:32 a.m. (ET) because it was backed up with orders, and some investors did not learn for hours whether or not their orders even went through. The CEO of the Nasdaq stock exchange says it is "humbly embarrassed," at the glitch, but there's no indication the delay contributed to the underwhelming performance of FB's stock, which ended only 23 cents above where it began.
So, did anyone benefit? Well we heard claims that Bono's company, Elevation Partners "made $1.6 million in the FB IPO, and numerous other reports claiming that there were now hundreds of "Menlo Park millionaires" who held shares in the social networking company.
But what about the average person? Can it be that the new technology emperor really has no clothes? Or is this a small set back? Again, we will see, but it seems that the best move is to sit back on the side lines a bit more not jump on the biggest band wagon of all technology giants.
*Lavell is a corporate Wall Street attorney who manages a small hedge fund in the Birmingham area. His company invests in technology companies and stocks. Lavell routinely contributes to the Birmingham Weekly on new technology trends and related stories.
chris kay