5 ms·

We know it was MS that's supporting them at that psychologically important $38 figure, but that $2.3B figure is just speculation. Still, I'm sure there are som

We know it was MS that's supporting them at that psychologically important $38 figure, but that $2.3B figure is just speculation. Still, I'm sure there are some very nervous traders this weekend over at MS. Would not be surprised to see a lot of shorts on stocks like Yelp, Zynga as a hedge. What a disaster this IPO was (for the banks, not for facebook). Though, I'm sure the people at Facebook aren't exactly happy with the way things went and all the (unfair?) negative press / scrutiny that they will receive now.

soup10 14y ago
Haha, just wait until/if it drops below $38... the banks could get hosed on this.
redthrowaway 14y ago
I honestly can't see them caring a whole lot. Scrutiny and bad press can only impact your stock prices in the short term; in the long run they'll revert to the mean. If Zuck and co. feel like facebook is a fundamentally strong bet, then they'll be inclined to ignore fluctuations in the price and look to the long term a la Amazon. Also, Zuck owns 57% of the voting shares, so it's not like he really gives a damn what the traders think.
- joering2 14y ago
  Ok and this is what I don't get. Usually companies that are traded publicly have responsibilities toward stockholders to do anything in the power (reasonably) for the stock to be going up. That the simplicity of a stock market - no investor is willing to lock its money knowing a company is not willing to grow. Now, if you have one guy (that to average person is called a "hacker in the hoodie"), how do you trust a stock? What if there is some terrible decision he is about to make and the board can do shit to stop him because he has the majority of vote. Basically, fatum of all stockholders money in this stock lays within one single guy and his 57% of vote. Can you imagine, hypothetically what would happen if tomorrow Mr. Zuckerberg is hit by the bus? ? Yes, I am sure they have backup plan for the backup plan in situations like that, but cant you imagine what kind of signal would that send to media? The stock would dive like a scubadiver on a deep-dive mission!
  - netrus 14y ago
    The bus factor is priced in, as is the assumption that Facebook will dramatically increase its revenue in the long run. If Facebook would not grow anymore, the stock would instantly collapse.
    - joering2 14y ago
      netrus, I don't think it works like that. You just described a crystal ball. You sure they know everything that is in this stock? Would there be a justify reason behind something called "Stock exchange" if everyone would know everything in the future? And what do you mean by instantly? Like the first day or first year, or what? because as far as I remember everywhere I talked with bankers, everyone from teen that just turned 18 to a 95 years old grandpa withdrawing last savings were going to buy Facebook stock. But this is not what Friday has showed to us. 2 things; either: a) entire world change its mind overnight (I spoke with banker as late as last Thursday), or b) there was so much selling happening, that if the world was buying, it wasn't just enough to build demand and push the stock up. I go with gate #2, considering how much underwriters were willing to buildup on $38. A $300,000,000 worth dam!! I guarantee you, plenty of big fish is shitting in pants right now. To many of them this weekend, before Monday opening, is not a chilling out and relaxing time. I think by next Friday you will see some spectacular action on this stock. Further, I think that Zynga, Groupon, Zillow, Linkedin, ZipCar, Pandora and others -- they are all assuming dramatically increase in revenue. But yet they are all below (some significant like Groupon or Zynga) their IPO price.
- arnoldwh 14y ago
  Well, I'm not sure this is true. You typically want to have a strong IPO to generate momentum for your company and shape the public's perception. Perhaps this is different because so much was trading in private markets before the IPO, but it does seem like perhaps they should have priced around the $36 range. Now the story over the weekend is "Facebook fails to live up to the hype" http://www.thenewstribune.com/2012/05/19/2150253/facebook-fails-to-live-up-to-hype.html http://www.thenewstribune.com/2012/05/19/2150253/facebook-fa... "Facebook Fails Day-One Pop, Lags Behind Google" http://www.businessweek.com/news/2012-05-18/facebook-failing-to-garner-day-one-pop-lags-behind-google http://www.businessweek.com/news/2012-05-18/facebook-failing... Had they priced it a bit lower and left some money on the table, you likely would have had enough positive momentum to probably maintain a 10-15% pop. Does this matter for the company? Probably not. From my very limited experiences, the quality of people at facebook seems generally very high, and the culture seems focused on building product, not managing investor perception. Big picture, it's just a blip, but on the margin, it wasn't the ideal outcome.
  - ahi 14y ago
    $2/share is a lot of money to leave on the table for a nice weekend of press.
    - arnoldwh 14y ago
      Don't think it's just weekend press, and I don't think the investor community thinks of it that way either. It's sending a statement that they don't necessarily care about rewarding their investors. We won't really know what happens until MS isn't around to support the price. I'm excited to see what happens when you have a company that explicitly lets investors know that they're out to build products, not manage investor relations.
      - zwischenzug 14y ago
        Isn't that what Jobs and Bezos have done?
        14y ago
bickfordb 14y ago
Although this situation with the underwriters propping up the price makes Facebook's value pretty questionable and will create a negative sentiment, I believe it's positive for Facebook that the price didn't pop. Facebook already has a pretty steep road to travel to live up to the offering valuation. As a CEO I think I would prefer having a muted, non-volatile stock price than an inflated, volatile one. Inflated prices are good when you're ready to sell but can be a distraction when you're growing. Underwater options and market reactions can destroy employee morale --- look at Yahoo.
- maayank 14y ago
  "Underwater options and market reactions can destroy employee morale --- look at Yahoo." As are employees locked in for 3 months while seeing their stocks free falling.

soup10 14y ago

Haha, just wait until/if it drops below $38... the banks could get hosed on this.

redthrowaway 14y ago

I honestly can't see them caring a whole lot. Scrutiny and bad press can only impact your stock prices in the short term; in the long run they'll revert to the mean. If Zuck and co. feel like facebook is a fundamentally strong bet, then they'll be inclined to ignore fluctuations in the price and look to the long term a la Amazon. Also, Zuck owns 57% of the voting shares, so it's not like he really gives a damn what the traders think.

joering2 14y ago
Ok and this is what I don't get. Usually companies that are traded publicly have responsibilities toward stockholders to do anything in the power (reasonably) for the stock to be going up. That the simplicity of a stock market - no investor is willing to lock its money knowing a company is not willing to grow. Now, if you have one guy (that to average person is called a "hacker in the hoodie"), how do you trust a stock? What if there is some terrible decision he is about to make and the board can do shit to stop him because he has the majority of vote. Basically, fatum of all stockholders money in this stock lays within one single guy and his 57% of vote. Can you imagine, hypothetically what would happen if tomorrow Mr. Zuckerberg is hit by the bus? ? Yes, I am sure they have backup plan for the backup plan in situations like that, but cant you imagine what kind of signal would that send to media? The stock would dive like a scubadiver on a deep-dive mission!
- netrus 14y ago
  The bus factor is priced in, as is the assumption that Facebook will dramatically increase its revenue in the long run. If Facebook would not grow anymore, the stock would instantly collapse.
  - joering2 14y ago
    netrus, I don't think it works like that. You just described a crystal ball. You sure they know everything that is in this stock? Would there be a justify reason behind something called "Stock exchange" if everyone would know everything in the future? And what do you mean by instantly? Like the first day or first year, or what? because as far as I remember everywhere I talked with bankers, everyone from teen that just turned 18 to a 95 years old grandpa withdrawing last savings were going to buy Facebook stock. But this is not what Friday has showed to us. 2 things; either: a) entire world change its mind overnight (I spoke with banker as late as last Thursday), or b) there was so much selling happening, that if the world was buying, it wasn't just enough to build demand and push the stock up. I go with gate #2, considering how much underwriters were willing to buildup on $38. A $300,000,000 worth dam!! I guarantee you, plenty of big fish is shitting in pants right now. To many of them this weekend, before Monday opening, is not a chilling out and relaxing time. I think by next Friday you will see some spectacular action on this stock. Further, I think that Zynga, Groupon, Zillow, Linkedin, ZipCar, Pandora and others -- they are all assuming dramatically increase in revenue. But yet they are all below (some significant like Groupon or Zynga) their IPO price.
arnoldwh 14y ago
Well, I'm not sure this is true. You typically want to have a strong IPO to generate momentum for your company and shape the public's perception. Perhaps this is different because so much was trading in private markets before the IPO, but it does seem like perhaps they should have priced around the $36 range. Now the story over the weekend is "Facebook fails to live up to the hype" http://www.thenewstribune.com/2012/05/19/2150253/facebook-fails-to-live-up-to-hype.html http://www.thenewstribune.com/2012/05/19/2150253/facebook-fa... "Facebook Fails Day-One Pop, Lags Behind Google" http://www.businessweek.com/news/2012-05-18/facebook-failing-to-garner-day-one-pop-lags-behind-google http://www.businessweek.com/news/2012-05-18/facebook-failing... Had they priced it a bit lower and left some money on the table, you likely would have had enough positive momentum to probably maintain a 10-15% pop. Does this matter for the company? Probably not. From my very limited experiences, the quality of people at facebook seems generally very high, and the culture seems focused on building product, not managing investor perception. Big picture, it's just a blip, but on the margin, it wasn't the ideal outcome.
- ahi 14y ago
  $2/share is a lot of money to leave on the table for a nice weekend of press.
  - arnoldwh 14y ago
    Don't think it's just weekend press, and I don't think the investor community thinks of it that way either. It's sending a statement that they don't necessarily care about rewarding their investors. We won't really know what happens until MS isn't around to support the price. I'm excited to see what happens when you have a company that explicitly lets investors know that they're out to build products, not manage investor relations.
    - zwischenzug 14y ago
      Isn't that what Jobs and Bezos have done?
      - 14y ago

bickfordb 14y ago

Although this situation with the underwriters propping up the price makes Facebook's value pretty questionable and will create a negative sentiment, I believe it's positive for Facebook that the price didn't pop. Facebook already has a pretty steep road to travel to live up to the offering valuation. As a CEO I think I would prefer having a muted, non-volatile stock price than an inflated, volatile one. Inflated prices are good when you're ready to sell but can be a distraction when you're growing. Underwater options and market reactions can destroy employee morale --- look at Yahoo.

maayank 14y ago
"Underwater options and market reactions can destroy employee morale --- look at Yahoo." As are employees locked in for 3 months while seeing their stocks free falling.