I’m going to preface this by saying I’m not an economist, stock broker or legal beagle – but seriously… can you honestly tell me that no one saw the Facebook Initial Public Offering (IPO) stalling before it even started?
After almost two weeks, Facebook stock (which opened at $38 a share) continues to plummet, losing almost $20 billion in value.
Maybe it’s cynical, but I think the real question is, “who didn’t see this coming?”
We see this kind of hype all the time in Hollywood; and too much hype often leads to disappointment… except the Avengers movie, that was pretty awesome! But I digress.
Let’s look at this logically… Facebook doesn’t ‘make’ anything. And I’m talking about an actual concrete product, not just making “friends.” Connections are valuable, but investing in the power of making “friends?” Sure, the possibilities of advertising revenue are massive, but it’s still nothing tangible; in other words, it’s risky.
If this were 5 years ago, when Facebook was still somewhat “new” in the soon-to-be-booming world of social media, I could understand shocked investors. I also can understand wanting to “get in at the beginning,” but you’re not getting in at the beginning when everyone else knows about it.
Now, there may be legitimate concerns regarding the delayed opening, and the alleged selective sharing of information about Facebook stock forecasts being diminished prior to sale. These are issues for the regulators and likely the courts to decide. We’ll have to wait and see.
My question is, are investors concerned because a company is allegedly not following the rules? Or, are they just upset about not making the easy, quick buck as “expected?”
To be fair, I suppose, the Facebook IPO could have gone either way. If nothing else, this opening debacle reminds us that there is no “sure thing.” It’s a gamble. And, sometimes, you lose.