Facebook's IPO Debacle

Facebook stock has lost 20 percent of its value in only three days. In that alone, it is not remarkable. Large IPOs rarely perform well just after going public. What marks Facebook stand out is that, at nearly every junction where wisdom, care and moderation ought to have intervened, they did not. Mark Zuckerberg, Facebook's CEO, made it clear for months that he disdained the company's IPO, and deigned to show up to only one meting with potential investors. That could not have done much to convince those investors to believe that Facebook took the Wall Street system seriously enough to give them a good return on their investment.
It is alleged that executives and insiders made the IPO primarily a way to enrich their won fortunes - rather than the company's and their stock dump accounted for 57 percent fo the shares sold in the offering (reinforcing the old joke that ""IPO" stands not for "initial public offering", but "insider profit opportunity") To pour more money in the pockets of these insiders and the company coffers, Morgan Stanley, the lead underwriter, hiked the price the company was charging investors - USD 38 - and flooded the market with tens of millions of extra shares. (The investment bank then had to rush back into the market and buy millions of those hares to artificially support the price of the stock on the first day.)
There was also incompetence. Nasdaq, the company's chosen exchange, froze up and delayed the IPO three times in the space of an hour because it could not handle the volume of orders from investors - a good number of whom appeared to be rushing for the exits to sell the stock. And finally, there may have been something in violation of securities laws. The most respected publications in the US reported that Facebook's chief ninancial officer tipped off research analysts at the company's there biggest banks that its upcoming financial results would be lower then expected. The analysts ten took the incredibly rare move of tipping off large investors to the specific negative impact this would have on Facebook's stock.