It has still left many of the investors and tech savvy folks gasping. The Facebook IPO listing was a flop. A huge outcry over the alleged irregularities, is heard from many investors, which has forced the market regulators – SEC & FINRA to review the process.
David Weidner on MarketWatch wrote “Facebook is nothing but embarrassment. The company and its products keep making fools of us. As consumers, Facebook encourages us to overshare our lives, even though we know we’ll live to regret it. As investors we are tempted to overbuy, and we are regretting that, too.”
The company’s share price has continued to slide from its IPO price of $38. On Wednesday, the shares of Facebook were trading at $31 on Nasdaq, down by a whopping 9% from its previous close.
Allegations have been surmounted that the only ones who made money out of the IPO are Mark Zuckerberg, Facebook’s management and financial backers. Almost all of them have been alleged to sell out at $38 a share, which was nearly 10% to 15% higher than the original price expectations.
The SEC and the FINRA regulators have launched inquiries into whether some of the privileged Wall Street insiders were alerted to the company’s weakening financial projections, which led to their immediate selling of the stocks after it got listed in Nasdaq. Morgan Stanley, which was the lead underwriter for Facebook IPO, came under fire following reports that the bank had told some favored clients that the bank was cutting its revenue estimates for Facebook.
Apart from these issues, even Nasdaq is getting sued for the glitches in trades during the IPO listing of Facebook. “While clearly we had mistakes in the Facebook listing, we still want to highlight the fact that it was the largest IPO ever and on Friday of last week, we processed over 570 million shares,” Nasdaq Chief Executive Bob Greifeld said at the shareholder meeting. A suit has been filed in the Manhattan federal court seeking a class-action status for anyone who lost money due to a mishandled order. The exchange has reportedly set aside money to compensate customers.