IPO

Facebook was offering the most hyped technology since Google went public, but the sale proves to be a disaster for the company

The first

Facebook

stock market was supposed to be the sale of the century. The social networking phenomenon had bothered investors about an initial public offering of more than a year. Now the sale proves to be a disaster for the company and the banks that had supported him. A week later, and the share price was around $ 32, up 15% from the $ 38 opening, it was wrong?

too high

technology IPO since Google the most publicized went public was always going to be a lie, but Facebook was actually worth $ 100 billion? The company and its bankers thought, investors who do not.

As critics noted, Facebook was valued at about 100 times earnings last year, well above high-tech rivals like Apple and Google made many, many, more money.

But critics be damned. Just before Facebook became public, the company raised the price range of shares in the $ 28-35 $ 35-38 to action. Facebook, then set the price at $ 38, the upper end of the range, and the "price of perfection" as the runners said. As had been expected by many, the actions of Facebook has been a "pop" - up 11% in early trading. However, the actions soon proved less than ideal price and lost all his winnings.

Too

in part, experts say the stock market, the failure because Facebook had too many shares to sell. This is supposed to be the hottest IPO in a generation, the frustration grew as investors around the world demanded action, the sale was oversubscribed 25 times in Asia. Then, just before the IPO, Facebook increased the number of shares for sale to 25% of 421 million.

In a joint action with hot IPOs, many investors had deliberately sought more shares than they wanted in the hope of obtaining the desired amount, if it is minimized. Be careful what you wish.

Too

investors hoped at least he asked suddenly discovered that he had done more than expected. Indeed they have become forced sellers. Early indications on the morning of the IPO was that Facebook could sell for $ 40 more per share, which means a quick profit on the table. Investors have the option of Facebook and shares fell to their bankers now had to intervene and stop the fall in prices below $ 38 departure.

too late

The social network is on track to reach one billion users this year, one third of the planet. But users are now increasingly mobile and earlier this month, the company warned that "at present are not directly generate significant revenues" from the phone. The number of users has been growing faster than revenues, the company said. If Facebook was a public company, the new fall would probably have sent their shares.

The timing of the update, so close to the IPO, it is unfortunate to say, and has led some to wonder why Facebook CFO David Ebersman did. Bank analysts drafting the IPO, the legal obligation to act independently of their colleagues in investment banking, reducing its outlook for the company after the update. Meanwhile, IPO bankers in the same banks and executives from Facebook have worked for a sale at the top of your price range.

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