Facebook’s IPO “Disaster”
OMG, a rational piece on the Facebook IPO. Crazy.
NYT columnist Joe Nocera talking about Splunk, which went public five weeks ago:
The offering raised $229.5 million for the company. But if the bankers had done a better job of pricing the shares — and had come closer to the $35 a share that investors were willing to pay — the company would have reaped twice as much. Putting cash in a company’s coffers is supposed to be the whole purpose of an I.P.O. Isn’t it?
The only real “losers” of the Facebook IPO so far are a select group of bankers. And that's only because they had hoped to profit from a quick stock pop which never occurred. It really is that simple. Why everyone is so confused about this fact, I have no idea.
The IPO was a massive win for Facebook, which raised $16 billion. Let me say that again: they raised sixteen billion dollars. They can now use that money on whatever the hell they want. 16 more Instagrams? Why not.
Had Facebook been priced at say, $20 a share at opening, it would have been a huge win for the bankers hoping to sell on the pop, but a huge loss for Facebook as it would have meant they did not get their maximum value out of the IPO.
Any regular trader who bought Facebook on day one and sold the next day after it didn't pop is, quite frankly, a fool. They're selling on bad news for some hype-chasing traders, not bad news for Facebook. Does Facebook have some question marks going forward? Of course. Every company, private and public, has question marks. For Facebook: mobile, ad rev, etc. But those are long-term problems. And those problems existed before IPO too. If you didn't know that, you shouldn't be investing in Facebook.
My guess is that Facebook's stance on the IPO backlash amounts to this: zero fucks given. Again, they did great. Better than great, really — the most money ever raised in a tech IPO. And they only had to give up a small portion of the company.
The fact that the story is now that Facebook may be weak as a company only shows just how many people really don't get it. Both from the perspective of knowing how IPOs work and the perspective of knowing how Facebook, the company, works.
Facebook's IPO was a massive win for Facebook. It was a win for longterm investors (who now have the option to invest in Facebook). It's only a loss for those who were looking to make a quick buck. Boo fucking hoo.
Disclosure: By way of a recent acquisition, CrunchFund owns some Facebook shares. And if I bought public stocks, I'd definitely buy Facebook — just like Michael did.