Was Facebook’s IPO a dud? \u00a0It didn’t double on the first day like other high-profile IPOs, and it’s currently down about 10% from the IPO price of $38.<\/p>\n
How much does a super-strong opening really matter, in the long term? \u00a0If their stock had closed at $60 (as I had predicted), that would have meant it was underpriced, leaving money on the table for the underwriters and their clients.<\/p>\n
Some argue that a big IPO pop is important to the continued momentum of a company, but I’m not so sure. \u00a0Most of my friends don’t know (or care) they went public. \u00a0The initial price gyrations aren’t about long-term value; \u00a0they’re\u00a0about underwriters and traders\u00a0jockeying\u00a0their positions (e.g. propping up at $38 on Friday, and likely selling today to minimize exposure). \u00a0Apart from NASDAQ’s problems handling the trading volume,\u00a0I bet this IPO will be a distant memory in a few quarters.<\/p>\n
I think Facebook actually played it pretty well. \u00a0Maybe it was priced slightly high, but most of the proceeds went to the company (and inside sellers), not aftermarket traders, which is how it should be. \u00a0The underwriters are certainly earned their fees by providing float for the stock on Friday.<\/p>\n
I like owning companies that play it well.<\/p>\n
Disclosure: \u00a0I’m long FB.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Was Facebook’s IPO a dud? \u00a0It didn’t double on the first day like other high-profile IPOs, and it’s currently down about 10% from the IPO price of $38. How much does a super-strong opening really matter, in the long term? … Continue reading