Facebook should be considered a huge success for everyone on the inside that got rich on Friday’s IPO – the Zuckerberg-Chan clan, Eduardo Saverin, the smart VC guys that got in early, countless Facebook employees, and maybe even the Winklevii.
But with the stock breaking the $38/share offering price and hitting a low of $33 this morning, it’s looking like a mess for everyone else.
Think about it.
The lack of a big one-day pop indicates that the bankers extracted maximum value for the company, but it’s a negative indicator for the broader markets.
If there was any stock that could get the individual investor revved up again, it would be Facebook, which I’m sure many people imagined could be an in-your-face "obvious" home run like Apple, at least until the fundamental bugs became obvious. (See this piece from February for more details: Facebook, Running Out of Bodies, Is in Need of Major Reacceleration in Monetization Rates.)
On Friday afternoon, online broker TD Ameritrade said that trading in Facebook accounted for 25-29% of Friday’s trading volumes, according to the Wall Street Journal.
So the individual investor showed up. But how burned did they feel this morning when they fired up their stock quotes?
If people can’t get pumped for Facebook, then what will it take to get them excited about investing again?
And what does this say about excitement for future IPOs and Wall Street’s image?
Again – the bankers did their job by extracting maximum value for Facebook, but right or wrong, the individual investor is going to feel like Wall Street pulled a fast one and that’s going to make the next deal doubly hard to sell.