NASDAQ is to offer some $40m compensation to brokers and investors caught up in the bungled early buying frenzy. Maybe it should be the other way around with investors thanking NASDAQ for stopping them from buying into Facebook at up to $45 a share in those early moments!
Facebook shares have since slumped by 30% from their $38 IPO price. So the valuation is getting closer and closer to the $50b which I suggested as ‘fair’ in my 6th Feb 12 post The $100b Facebook Question. The problem is that I’ve really changed my views on Facebook quite significantly since. Seems to me that public sentiment has turned against them in a big way. All the big money is currently on shorting Facebook.
Over the next few months there are several icebergs lurking in its path. First will be the unlocking of the restrictions on employees and other investors selling their shares. Second will be the lifting of restrictions on those that took part in the IPO issuing their research notes. You may remember that this was one of the main causes of the fury over the IPO. Finally, Facebook will issue its first ever quarterly results. There is a goodly chance they will be pretty poor on a number of fronts.
So quite how low Facebook has to go before it becomes a ‘Buy’, I will now leave up to others. But, Facebook is not an ‘island’. Firstly, the failure of its IPO has brought the share prices of every other social media stock down. It has caused the cancellation of other impending IPOs. And it has made investors wake up to the fact that every sensible person already knew – this really was a bubble just like the 1999 internet bubble.