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
"cheeki kea Ha! Good one!"
This is Paris Now… You Won’t See This in the Tourist Brochures
In this video, I take you through Marché Barbès and its surrounding neighbourhoods — an area that reflects the modern, complex face of Paris most tourists ne...
Trump's Big Beautiful Bill Passes Amidst Democrat Lies About a Tax cut for the Rich Being Averted
AP Photo/Rod Lamkey, Jr.It’s over, folks. President Trump and congressional Republicans aimed to…See More
"I wonder what wearables must have been like before the last reset. "
"EVERYONE'S BEEN SHOT UP HERE": Arsonists Set Wildfire In Idaho, Open Fire On Firefighters, Police
"AAAAAAND…….HE’S ANOTHER TRANS…"
"Another scare tactic to push people into anew regime of vaccinations! Either that, or this is a…"
Dr. Mike Yeadon Speaks Out Against Digital ID, CBDCs, and Agenda 2030
Dr. Mike Yeadon, ex-Pfizer VP, urges public rejection of digital ID, CBDCs, and Agenda 2030, warning of future restrictions on freedom and privacy.
"EVERYONE'S BEEN SHOT UP HERE": Arsonists Set Wildfire In Idaho, Open Fire On Firefighters, Police
- Shocking news just broke that multiple firefighters and officers were shot in an ambush at the Canfield Mountain Natural Area in Coeur d'Alene, Idaho.Acco...
Well Known Wilderness Photographer Disappears in the Cascades-Guess Why?
In August of 2023 another aficionado of the great outdoors went missing. The chilling revelations…See More
The Draconian Show
Sometimes I talk to my invisible friend, IkeHe comes from another dimension when magnetic fields…See More
"Listen man I know where you're at but back in October of 2023 thru December of 2023 for months…"
Architecton | Official Trailer HD | A24
SUBSCRIBE: http://bit.ly/A24subscribeWritten and directed by Victor Kossakovsky and starring Michele De Lucchi. ARCHITECTON – Coming Soon RELEASE DATE: Comin...
© 2025 Created by truth.
Powered by
You need to be a member of 12160 Social Network to add comments!
Join 12160 Social Network