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
Alligator Creek and a Japanese Massacre
The year is 1942 just a few months after the Pearl Harbor disaster. Despite losses suffered by the…See More
CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25
"With all due respect this guy comes off as a drunken asshole and he didn't even know who…"
Was a Planned Civil War Averted?
We are living in sadly historic times where good and evil are in battle all the time. Not that this…See More
President Trump addresses U.N. General Assembly - FULL SPEECH
President Donald Trump speaks at the United Nations General Assembly in New York City.Full video here: https://www.c-span.org/event/white-house-event/preside...
2 MIN AGO: Western Provinces MAJOR New WEXIT Announcement - Canada EXPLODES!
In a stunning turn of events, Western provinces just made a major new WEXIT announcement — and it’s shaking the foundations of Canadian unity. Is Western sep...
How You Provoke a Civil War
In the world of counter intelligence which is simply one aspect of many pertaining to asymmetrical…See More
CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25
"I don't follow as much with Josh Reeves than I use to. He seems to be a documentary producing…"
CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25
DONATE-paypal-dayglow76@yahoo.comCashapp-reevesradioVenmo-Josh-Reeves-61FILMS AND AUDIOBOOKS DOWNLOAD STORE-https://store.payloadz.com/results/242828-josh-re...
CHARLIE KIRK VIDEO THAT KEEPS GETTING REMOVED OFF OF SEVERAL PLATFORMS
I had not planned to share this publicly, but I believe Advar, who spoke with Charlie Kirk while I was very ill, would have wanted me to. After my interview ...
Former President Trump?
When was this article written? It is attributed to Victor Davis Hanson. He is a Fellow at Hoover…See More
Don’t Go Hunting For Bigfoot
It is October 19, 2019 at 5:46 AM. This will be the last time any visual evidence of Mark is seen…See More
Most Corrupt Series: Elizabeth Warren | Forgotten History
Elizabeth Warren has built her reputation as a "reformer", but her political career has also drawn sharp criticism. Questions have been raised about her fina...
"less prone, Thanks for your support Buddy! "
Charlie Kirk Assassination
September 10th 2025 in Utah Turning Point USA CEO has been assassinated. Coincidentally, answering…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