Facebook’s Debut Marred by Trading Glitches | Hacker News Reader

Facebook’s Debut Marred by Trading Glitches

dealbook.nytimes.com

53 pointsjamgraham38 comments

I was at a trading desk today, there really were issues at Nasdaq. I've never seen such fury and never heard such obscenities. Traders didn't know what their positions were and those who did know of their positions, couldn't be sure of the price they received.

So, any guesses what these weird after-hours spikes @$42 are? http://www.google.com/finance?q=NASDAQ%3AFB

See the peaks at 4:24, 4:52, 5:10PM pacific? Nearly a million shares changing hands after hours >10% above the official closing price for the day? That is some strange stuff on IPO day.

I don't know and am not in the biz, but anecdatally, from my memories of the manipulation of SCOX in years past the high afterhours trades are used to bump up the opening price the next trading day.

Good question. Looks interesting, unfortunately I have no idea.

Despite witnessing countless "enterprise" systems built out of bubble gum and popsicle sticks, I still have a hard time believing that Nasdaq really couldn't handle this technically... I'm not sure what to make of this.

There's been a lot of stories lately about these financial platforms falling apart.

This is no more outlandish than thinking that BATS can't handle their own IPO due to technical issues ;)

I read it as a PR push and an implication of deus ex machina for the lack of spike in their share price.

At least one person on here complained about it earlier. https://news.ycombinator.com/item?id=3993787 It could well be true, after all there were half a billion trades today on FB alone.

82 million trades for FB in the first 30 seconds.

I have no idea if that's a lot or not, but it's pretty impressive to build a system capable of doing that.

As a point of comparison, NASDAQ handled trades for 750 million shares in 1.1 seconds for last year's Russell Reconstitution[1], one of the busiest equity trading days of the year.

[1] -- http://en.wikipedia.org/wiki/Russell_Indexes#Annual_reconsti...

Trading systems are trivially shardable by symbol or letter range; not so much help for a single symbol as in the case of an IPO.

They said 82 million shares were traded. That doesn't mean 82M trades. A trade often has a quantity higher than 1 share. It could be (say) 82 thousand trades with an average quantity of 1000 shares. As far as system performance is concerned, number of trades matter, number of traded shares don't.

I don't have insight into it but this sounds to me like the underwriters making excuses for a "poor performing" IPO.

I have no idea which way FB will head on Monday but am pretty sceptical that this is at all relevant to their 1st day performance. I wouldn't base optimism specifically on the viewpoint

I had a limit buy order at $45 which I placed at 11am (when it opened) which was never filled (and should have been, as the price never went above $43 or so). There were definite trading glitches, and if they were skewed on the buy side, that could definitely have affected the price.

EDIT: Actually, the order did go through (annoyingly, at $42). The delay was just in the reporting. So never mind.

What I've heard (from a friend at MS) is that the initial delay was due to the underwriters convincing larger funds not to just dump all their shares at the open ...

Can you provide more detail about your source?

Friend works for MS. (updated parent)

Maybe I'm being really thick here, but what does MS have to do with this?

MS = Morgan Stanley perhaps, the lead underwriter.

Sorry about that, but 'MS' = Morgan Stanley.

Ah, of course. In my line of work 999 times out of a 1000, MS is Microsoft ;-)

The other 0.1% would be multiple sclerosis.

For programmers, "MS" auto expands to Microsoft. I'm guessing you meant "Morgan Stanley" instead? Took me a minute or 2 to guess that.

Sorry about that -- I mentally associate MSFT (the stock symbol) with Microsoft and MS with Morgan Stanley

Glad to see I'm officially not considered a programmer :)

Something was definitely broke, as I was watching stocktwits to see what people were saying about Facebook. I saw at least 3 or 4 people saying that their orders were not being confirmed and still listed as pending. One was using scottrade I believe.

However, I was able to purchase stock just fine via tdameritrade.

So does anyone think that on Monday if Nasdaq stays more stable, Facebook's stock will do better?

It's certainly possible; however, today's showing already has some media outlets discussing whether or not the IPO was horribly over-hyped.

When you consider that we still have the issues in Europe, growing losses at JP Morgan, and a weak economic recovery hanging over our heads, things don't look too promising for the market as a whole. I can see a high probability of Facebook moving with the rest of the market. That's not investment advice. It's just the way I see things.

I think that's exactly why Facebook announced the Karma acquisition after markets closed Today. Since there won't be any underwriter protection to keep the price at above $38 on Monday, I believe Facebook timely released the acquisition news to open Monday in favorable terms.

Given the skepticism about the Instagram acquisition, the Karma acquisition could be interpreted either positively or negatively by different investors, couldn't it?

It might be the other way around.

If Facebook does well, the market will recover. If Facebook has another highly visible stumble, it could trigger a broader sell-off.

I know better than to make blind predictions about market prices, but trouble with individual securities has been known to tank the entire market.

For example, see http://en.wikipedia.org/wiki/Friday_the_13th_mini-crash .

Today was a Friday.

Markets usually sell off on the last day of the week before heading into the weekend; i.e. traders don't (usually) like holding positions for two days more than they have to.

I think it's important to factor this into any discussion of Facebook's trading debut.

I personally would be waiting to see who things fair next week/monday.

[addendum] I'm quite surprised the IPO was set for a Friday because of this.

I almost think this was intentional. I think that Zuck has extremely savvy advisors. And I think he is rather shrewd himself.

I would not be surprised it this thing triples next week.

What good does that do?

Triple? Easy there, cowboy!

Do you have a source for your day-of-week hypothesis, or is it just your own intuition?

The data I've seen show that Fridays finish higher about 52% of the time.

Here are a couple sources:

http://traderfeed.blogspot.com/2008/01/2007-stock-market-ret...

http://www.equityclock.com/2010/02/16/best-day-of-the-week-t...

I wonder what the data looks like if you control for market performance during the week. NASDAQ has been falling for several days. http://www.google.com/finance?cid=13756934

Separate note: Considering Facebook is up 10-20% from the previous month on second market while the broader market was down quite a bit, it didn't do that badly.

I, for better or worse, decided to invest some of my dollars in Facebook. Like many others, I received radio silence about my trade. At EOD, I got a call from my brokerage, Fidelity, apologizing about the trading issues and offered to cancel my trades. They were going to absorb the costs to make me happy... And I didn't even complain. I was on the fence about canceling my order but that was besides the point, for me Fidelity just secured a lifelong customer and now, apparently a Fidelity evangelist!

puts on tinfoil hat

Trading "glitch", or engineered opportunity? Any smart person can make a small fortune off of a delta. As I always say, if there is a way to make money, somebody, somewhere, is going to figure out how to do it.

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