Facebook sinks as Nasdaq scrambles to square trades | Hacker News Reader

Facebook sinks as Nasdaq scrambles to square trades

reuters.com

17 pointsnextstep13 comments

"As the stock fell, there was a long list of questions -- ranging from whether the underwriters priced the shares too high..."

I understand there needs to be a fine line between leaving money on the table and having a pop at the open. But who is the IPO process supposed to really benefit? If it's Facebook, then thumbs up for pricing it just right. If it's the underwriters and insiders, then thumbs up for pricing it just right.

So true, quite frankly I'm so dumbfounded that IPOs are seen as a "gift" to Wall Street so they can make some quick cash for contributing absolutely nothing of value.

IPO is nothing more than a transaction between two conterparties that is supposed to be mutually beneficial. The ideal IPO should go sideways. i.e. no money left on table and investors aren't ripped off. It should continue to move sideways until additional material facts emerge that cause it to be revalued by investors.

I wish the WSJ, Bloomberg, and all the talking heads would celebrate a sideways moving IPO as a success because that's what it is. Since they only write from the other side of the table (investors) they can't consider anything but walking away with free money like bandits as a "success", when success should be getting equity at a fair price for the long term. Success should come 1+ quarters from the IPO date.

It should be more than ~1 quarter from the IPO date, because otherwise you're playing the second game of Analyst Expectations. A bunch of outsiders get to predict what will happen and then all tsk tsk when the outcome doesn't happen as they say.

Thankfully some companies like Apple seem to sandbag what they're going to predict instead of being super-optimistic and then get slapped around when they miss by a $0.01/share.

Totally agree, but as a slight counterpoint you need to remember that (1) they recently missed earnings expectations due to weaker than expected mobile advertising revenues, and (2) things move really fast in this industry. Given how critical mobile revenues are going to be to Facebook's future, I'd say these near-term material facts are relevant beyond a simple game of analyst expectations.

Things move fast in all industries these days, that's no excuse to hypermonitor Facebook's earnings. If you were a JP Morgan shareholder, you'd agree that surprises happen everywhere.

True.

They didn't price it right. The underwriters had to continuously buy any shares to artificially hold the price above $38.

"I basically told people they weren't going to get any, and luckily, it proved to be a bust," the adviser said.

Seems like this type of attitude is part of the problem as well. If everyone is assuming they will make a quick dollar, then certainly the underwriters will price things high. If people are investing for long term value then you can't exactly call FB a "bust" quite yet.

That's why investing in stocks is more like playing a game of poker. As the saying goes, you don't play your hand (company performance), you play the other players' hands (investor sentiment). So the raw performance of a company is not as important a metric for deciding to buy or sell as the opinion of other investors.

Is it too late to short the stock?

Nope, go for it :)

Not at all: http://www.reuters.com/article/2012/05/18/us-facebook-shorts...

The article seems to have been deleted. I wonder why.

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