Facebook IPO: Once Again, Wall Street Wins, Muppets Lose
Facebook IPO: Once Again, Wall Street Wins, Muppets Lose
By EconMatters
We warned of a social network tech bubble 2.0 over a year ago due to the hype and overvaluation of Facebook based on the reported deals by Goldman Sacks and a Russian investment firm--Digital Sky Technologies on the secondary gray market. At that time, the two deals valued Facebook at about $50 billion, with a 100+ price-to-earnings (PE) ratio.
Fast forward to 2012, Facebook actually went IPO on May 18 with a similar lofty vaulation - the $38-per-share IPO price valued Facebook at $104 billion--100+ times historical earnings (the company's profit for 2011 was $1 billion). Facebook stock has since plummeted 27% to $27.72 from its initial $38 a share. Bloomberg estimated the stock would need to sink another 20% to match the average PE ratio for the Nasdaq Internet Index based on estimated earnings in the next 12 months.
The technical glitch on NASDAQ aside, many have blamed the so-called "botched" IPO event on stock mis-price or overvaluation. On the surface, it may seem like a simple mis-pricing by the main underwriting banks and Facebook. However, judging from the sequence of reported events (see timeline below), instead of a "botched" event, the IPO is actually a total success by Wall Street standard, since concerted effort appeared to have been made to ensure an "acceptable" return for the insiders.
May 8: It was reported that Facebook "quietly" added E-Trade as one of the 33 underwriters just two weeks before the actual IPO, "making good on Mark Zuckerberg's desire to give casual [retail] investors the chance to participate", and that "the inclusion of E-Trade on such a high-profile IPO is unusual," although not unprecedented.
Views: 301
Comment
-
Comment by guest_blog on August 1, 2012 at 10:04am
-
Search Results
UBS: Facebook IPO Cost Us $350 Million
Wall Street Journal - 1 hour agoUBS said the loss on the Facebook IPO wiped out nearly half of its second-quarter profit, and it accused Nasdaq of a gross mishandling of the ...
In-Depth: Facebook fiasco drags UBS profit lower Reuters
Blog: UBS Hit by Facebook Loss; Vows Legal Action Against Nasdaq Barron's (blog)It’s not yet clear how much UBS will attempt to recover. The company detailed what it called Nasdaq’s “gross mishandling” of the IPO in a statement.
“Due to the gross mishandling of Facebook’s market debut by NASDAQ we recorded a loss of CHF 349 million in our US Equities business as a result of our efforts to provide best execution for our clients. As a market maker in one of the largest IPOs in US history, we received significant orders from clients, including clients of our wealth management businesses. Due to multiple operational failures by NASDAQ, UBS’s pre-market orders were not confirmed for several hours after the stock had commenced trading. As a result of system protocols that we had designed to ensure our clients’ orders were filled consistent with regulatory guidelines and our own standards, orders were entered multiple times before the necessary confirmations from NASDAQ were received and our systems were able to process them. NASDAQ ultimately filled all of these orders, exposing UBS to far more shares than our clients had ordered. UBS’s loss resulted from NASDAQ’s multiple failures to carry out its obligations, including both opening the Facebook stock for trading and not halting trading in the stock during the day. We will take appropriate legal action against NASDAQ to address its gross mishandling of the offering and its substantial failures to perform its duties. Although as in all such matters there can be no assurance as to the amount of any recovery we may obtain, we intend to pursue compensation for the full extent of our losses.”
-
-
FB - Facebook Inc (NASDAQ)
21.00 -0.71 (-3.27%)Aug 1 10:03am ET - DisclaimerOpen: 21.50 High: 21.55 Low: 20.87 Volume: 9,042,370 Avg Vol: 25,946,000 Mkt Cap: 44.90B
"Destroying the New World Order"
THANK YOU FOR SUPPORTING THE SITE!
Latest Activity
- Top News
- Everything
Charlie Kirk: Grief And Outrage From Turning Point USA in Phoenix
We went to Charlie Kirk's Turning Point USA headquarters in Phoenix to talk with people who were there to pay their respects.►Join my community to get exclus...
"cheeki kea, Yes that was released on to book sites 19 hours before the tragic event and also there…"
Charlie Kirk Was Terrified Of Israel
Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.
"The internet is fractioned that's for sure but it never sleeps and the big question of the day…"
"It seems America has many meanings to many people. The internet has fractioned everybody. I had…"
"Cheeki kea I'm glad that the giant Moa downsized to this turkey looking land walker.!"
"I don't know what difference if any that he was also a member of Council for National Policy.…"
"I remember when they found out that the united Council of Churches worldwide had been funding…"
A Few More Rats in Your Skull Concerning Charlie and the Rampaging Left
Political violence and death has been perpetrated for a long time now in America. The Democrats…See More
Charlie Kirk Assaination
September 10th 2025 in Utah Turning Point USA CEO has been assassinated. Coincidentally, answering…See More
Bow to Your New Masters
Dr. Jerome Corsi reports that the discovery of a new wireless system that can corrupt any…See More
"Wow I never knew penguins got down sized also over time. I knew of the Moa which is really now a…"
Civalyze meme
meme ad for a fake drug that would do away with black fatiguecivilyze you're not racist your just exhausted
Is the Timing of Alex Jones and Charlie Sheen Connected?
Alex Jones is sperging out.Charlie Sheen is coming out of the closet.Is this why Alex Jones is…See More
Buying the Last haunted House on the Left (A partial autobiography)
Note to the reader, there are events here that are true and some that are fictional.Chapter IIt was…See More
© 2025 Created by truth.
Powered by
You need to be a member of 12160 Social Network to add comments!
Join 12160 Social Network