Facebook IPO – A Flop?

So this month we’ve seen quite a few things happening, what with Greece possibly opting out of the Eurozone, the first succesful commercial space launch (no, really, it was!), the catching of an escaped penguin (that one was the highlight of the newsreel, apparently) and Apple CEO Steve Jobs Tim Cook foregoing the huge cash payout he might’ve gotten in dividends, and the not-so-surprising news that Obama DID smoke weed, but wasn’t such an outlaw after all. But what May was supposed to be all about was Facebook’s much lauded IPO, a shining beacon of hope in an otherwise rather gloomy economic landscape. And… It flopped.

On May 18, Facebook have gone public with their shares, with the initial offer price of $38, with shares dropping spectacularly to low thirties, reaching measly $32.05 today (which is slightly better than Tuesday’s late-night trading „record” of $30.79).

Should anyone worry? Apparently, yes. First of all, the launch of the initial offering was botched, to say the least. NASDAQ experienced some technical issues, delaying the shares’ debut; some actually went up in arms about the situation, shedding some rather unflattering light on the trading platform. But more worryingly, the flop has caused a divide among the investors. For one, value of FB stock is really hard to ascertain, with actual projections for, well, anything related to buying, selling or pricing of the shares of an online-only company to be taken with a grain of salt. In addition, it’s now apparent, that the main underwriters of the IPO actually had less confidence in the company’s well-being in the future than the market, as Morgan Stanley apparently cut the projected growth figures for the company on the eve of the IPO.

But the most devastating blow has been dealt to the individual investors, AKA you and me; even famous billionaire Mark Cuban commented on this in his blog. He actually bought a total of 150k FB shares at varying (but lossy) prices, stating that this was a collector-like purchase more than any actual investment. And he had this to say on topic of individual, small-scale investors –

Say goodbye to the individual investor on Wall Street. Whatever positive impression they had of the IPO market and the stock market in general was just torched to the ground. When everyone you know associated with the stock market is telling you and the media is confirming that this could be a huge IPO that will make money for those lucky enough to get shares and the opposite happens, goodnight. All confidence in the stock is destroyed.

And the most puzzling thing about the whole FB fiasco? Mark Zuckerberg is keeping silent, in the vein of the late CEO of Apple. Mysterious silence apparently begets investor confidence, or perhaps it’s simply too embarrassing to admit defeat (or, at least, a blunder). Not that FB’s head is actually guilty of anything – diminishing returns on the IPO have been attributed mostly to the uncertain future of the social platform on mobile devices (even with rumours of FB buying Opera browser). Long-term, FB actually wins with higher initial price without too big a gain on the share at present, since the money offered for their stocks now isn’t vastly different from what they set it at IPO; thus someone else, like corporate investors or banks (or even competitors), isn’t making a killing at their cost, which in turn means FB isn’t going barefoot like the proverbial shoemaker. It’s just a shame that amid continuing volatility of the global economy we still aren’t getting too many positive signs for the average Joes.


newsreel – kronika filmowa, wieści
to for(e)go sth – zrezygnować z czegoś, odmówić (sobie) czegoś
outlaw – tu: rebeliant, niepokorny
lauded – wychwalany, zachwalany
IPO (Initial Public Offering) – pierwsza oferta publiczna (akcji spółki na giełdzie)
to flop – ponieść porażkę/klapę
measly – marny, mizerny
botched – spaprany, zepsuty
to delay – opóźnić
to go/be up in arms about sth – być czymś oburzonym
to shed light on sth – rzucić na coś światło
unflattering – niepochlebny
divide – rozdźwięk, podział
to ascertain – upewnić się, ustalić
to take sth with a grain of salt – traktować coś z przymrużeniem oka, ze szczyptą rezerwy
underwriter – gwarant (wystawiający gwarancję ceny akcji lub zwrotu z inwestycji)
eve of sth – wieczór poprzedzający coś
AKA (also known as) – znany jako, również znany jako
purchase – nabytek
puzzling – zagadkowy, niepojęty
in the vein of – na wzór, podobnie do
to beget sth – spłodzić, spowodować
investor confidence – zaufanie inwestorów
to admit defeat – przyznać się do porażki
blunder – potknięcie
diminishing returns – zmniejszające się zwroty (z inwestycji), coraz słabsze osiągi
vastly – znacząco, ogromnie
to make a killing – zarobić krocie/fortunę
to go barefoot – chodzić na bosaka
proverbial – przysłowiowy
amid – pośród
volatility – niestabilność
average Joe – przeciętny Kowalski

by Prochor Aniszczuk

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