Tue
May 22 2012
07:22 am
Facebook fallout
By: R. Neal

The Facebook IPO farce continues.

Message from Fidelity this AM: "Fidelity continues to deal with the aftermath of Friday's market issues in delayed processing of orders for Facebook (FB) stock. As they did then, Fidelity's systems continue to operate normally. Although some executions were reported back from market makers over the weekend, we are still waiting for final responses on other orders. This is an industry-wide issue and we are working aggressively to address it. We appreciate your continued patience."

Close below IPO: Facebook shares closed yesterday at $34.03, down 11% from the $38 debut. At one point during the day, shares fell to $33.

NASDAQ liability: NASDAQ has set aside $13 million to cover losses related to trading problems, but the liability could be more than $100 million.

SEC investigation: The SEC will review Facebook trading glitches at NASDAQ.

Earnings estimates cut before IPO: An analyst at underwriter Morgan Stanley cut Facebook earnings estimates in response to a Facebook SEC filing just before the IPO. JPMorgan Chase and Goldman Sachs followed suit.

Morgan Stanley short? It's complicated, but possibly so.

Topics:
R. Neal's picture

Pre-market

Submitted by R. Neal on Tue, 2012/05/22 - 9:00am.

Facebook is down 1.26 to 32.77 (-3.70%) in pre-market trading this AM.

Michael's picture

Surprised?

Submitted by Michael on Tue, 2012/05/22 - 9:25am.

I'm not.
~m.

R. Neal's picture

Me either.

Submitted by R. Neal on Tue, 2012/05/22 - 9:28am.

Me either.

R. Neal's picture

Pre-market sucker punch

Submitted by R. Neal on Tue, 2012/05/22 - 9:31am.

FB opens at 32.00, -2.03 (-5.97%)

R. Neal's picture

After two minutes of trading...

Submitted by R. Neal on Tue, 2012/05/22 - 9:32am.

31.61 -2.42 (-7.11%)

Oh, my.

R. Neal's picture

Hammer time

Submitted by R. Neal on Tue, 2012/05/22 - 4:38pm.

FB closes at 31.00, down 3.03 (-8.90%), down 18% from IPO.

At 4:35, after hours trading looks even worse at 30.82.

$20 billion loss in market cap in 2 1/2 business days. Impressive.

Well, at least their P/E is down to 72. What a bargain!

Andy Axel's picture

dot-com bust all over again

Submitted by Andy Axel on Tue, 2012/05/22 - 5:30pm.

You'd think these lessons would have been learned around the year 2001.

Tess's picture

Why?

Submitted by Tess on Tue, 2012/05/22 - 8:13pm.

I am a country girl, but can get on Facebook for free.

I know the advertisers pay for the rolling ads on the sidebar that might catch someone's attention.

The stock seemed overvalued to me from the get go.

Free access plus combined ad revenue sounded good but may not be such a goldmine.

bizgrrl's picture

One analysis: P/E too high.

Submitted by bizgrrl on Wed, 2012/05/23 - 6:48am.

One analysis:

P/E too high. To get it down to where it should be (14%), Facebook's stock price would have to stay at $31 and earnings growth would have to be 65 percent per year until 2015.

Waited too long to go public.

Must be able to grow/change their business model. Facebook gets 82 percent of its revenue from advertising, but no one has figured out how to make substantial money from mobile advertising.

fletch's picture

Insider (no) trading...

Submitted by fletch on Wed, 2012/05/23 - 8:40am.

According to this article Facebook execs told institutional investors that earnings weren't up to public expectations before the IPO, so the big money wasn't there to keep the stock price up. The little guy didn't have access to this information.
(link...)

R. Neal's picture

Was just getting ready to

Submitted by R. Neal on Wed, 2012/05/23 - 8:57am.

Was just getting ready to post about that. More:

Regulators, investors turn up heat over Facebook IPO

"Selective disclosure" leaves small investors in the dark...

FINRA chief: "Matter of regulatory concern to us and the SEC..."

Massachusetts subpoenas Morgan Stanley...

Class action lawsuits against NASDAQ...

Andy Axel's picture

What was the penalty for

Submitted by Andy Axel on Wed, 2012/05/23 - 11:07am.

What was the penalty for withdrawing the IPO?

R. Neal's picture

Rumors

Submitted by R. Neal on Wed, 2012/05/23 - 5:38pm.

Facebook looking to move from NASDAQ to NYSE?

(link...)

Hildegard's picture

Here is Matt Taibbi's take

Submitted by Hildegard on Thu, 2012/05/24 - 12:22pm.

Here is Matt Taibbi's take

R. Neal's picture

FB trading below

Submitted by R. Neal on Tue, 2012/05/29 - 3:06pm.

FB trading below $30

Currently at $28.90, down $3.01 (-9.43%) for the day and down nearly 25% from IPO.

Options trading started today, putting more pressure on the stock. Some gamblers are pegging the July price at $25 and some say $16 by December. It may get there sooner.

R. Neal's picture

FB closes at $25.87

Submitted by R. Neal on Wed, 2012/06/06 - 8:40am.

FB closed at $25.87 yesterday, down 32% from IPO. New market cap $55 billion, nearly half of valuation wiped out.

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