‘Paradise on earth is where I am.’ –Voltaire
If you are an IPO company founder and — even more explicitly — you are Facebook CEO Mark Zuckerberg, you want your share price on the first day to go exactly nowhere, which is what Facebook did. That means no money was left on the table and the company got the best possible deal.
Zuckerberg didn’t and doesn’t care about investors in this scenario. He just doesn’t give a damn. Investment bankers do give a damn because they’d like to have another IPO next week or next month and have that go very well, too. Zuckerberg expects Facebook to never issue another share of stock. He’s done raising money thanks, and on his honeymoon.
I’m sure there was a struggle at the end over how to price the offering. The bankers would have preferred $34 or even $32, but Facebook went for $38 and they were correct to do so from their point of view because we now see it was the optimal solution.
{ Cringely | Continue reading }
As Facebook shares continued their slide, regulators launched inquiries into whether privileged Wall Street insiders were alerted to the company’s weakening financial projections, leading them to shun the stock or dump shares just as buying was opened to the public. […]
SEC Chairwoman Mary Schapiro said the agency will examine “issues” into the bungled Facebook public offering. […]
The legal issue raised could be “securities fraud — plain and simple,” said Ernest Badway, a securities lawyer in New York and New Jersey and a former enforcement attorney at the U.S. Securities and Exchange Commission.
{ LA Times | Continue reading }
One mutual fund source said they had never, in a decade of experience, seen an underwriter cut a company’s outlook during the road show prior to an offering. […]
Brokers who over-ordered shares in the expectation that supply would be limited continued to complain they received too much stock to handle and were left in the dark about forecast changes.
photo { Victor Cobo }
