Winners:
Facebook – No matter how you spin it, Facebook just raised a ton of cash that it can now use to begin the next phase of its world domination. By this measure, and it’s the only measure likely to matter to Zuckerberg and friends, the IPO was a huge success. Skeptics – Were you one of the people looking at Facebook’s price to earnings ratio and trying to tell everyone willing to listen that $40 per share was an absolutely crazy price? If so, everyone else owes you a drink. Lawyers – No surprise here. The fallout from the trading glitches and alleged mishandling of the IPO on the part of the firms that underwrote the offering will inevitably lead to court rooms or mediated negotiations – either way, legal counsel will be present on both sides, and you better believe those will be billable hours. Morgan Stanley and the underwriters – Yes, they may have acted inappropriately or perhaps even illegally in the days and hours leading up to the IPO, but the fees these banks took home for bringing Facebook to the public market still amount to a mountain of money, even after the lawyers have been paid.
Losers:
The New Tech Bubble – It doesn’t look anything like 1998 right now. It was prophesized that if the Facebook IPO popped, it could lead to many less worthy tech companies throwing hats in the IPO ring and inflating Bubble 2.0. A week later, the Mayan prophecy that the world only has seven months left suddenly seems like a safer bet. Facebook – Lots of us have a harder time trusting Facebook more with each passing day. Being accountable now to a combination of shareholders and Mark Zuckerberg, combined with all the issues surrounding this IPO, sure aren’t making most people feel any better about these issues. Facebook, I think you and I and the other 800 million of us need to go to counseling. Zynga — A bad week for Facebook is a bad week for Zynga, which enjoys and suffers a very symbiotic relationship with the social network. When Facebook stumbled out of the gates, Zynga’s stock sank and trading of the company’s shares was actually suspended for almost an hour. Nasdaq – Technical glitches delayed initial trading of Facebook stock by a half-hour and caused all kinds of confusion in processing orders. Some investors tried to cancel their buy orders when things went haywire and even received verification of those cancellations, only to find out later that glitches prevented them from actually happening, leaving them saddled with a sinking stock. Some brokerages are now advocating for their clients and pressuring Nasdaq to “mitigate” the impact of the glitch on customer accounts. Can you say black eye? Morgan Stanley, et. al. – Attention bankers, prepare to be sued. I’m pretty sure that dissing Facebook right before its IPO, but only to an exclusive group of your clients, is a big no-no. Then again, what do these guys care? They still made a ton of money, and their rep wasn’t exactly sterling before last week in the eye of the public. “Flippers” – Bloomberg has called Facebook’s IPO the “biggest flop of the decade.” That’s undeniably bad news for retail investors who jumped on the stock when it started trading last Friday at $42 in the hopes it would “pop” in 1998-era fashion and bring big returns on its first day of trading. it’s already on steady downward spiral. Comment
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