Facebook face plant has boomerang effect on other IPOs
Facebook's flopping share price is having a negative impact on other initial public offerings.
Yesterday, the company closed at $31.91, down 16 percent below its original price.
Marketwatch has reported that two companies with nothing in common postponed their IPOs after the Facebook face plant.
Corsair Components Inc., which makes gaming products, and Tria Beauty Inc., which advertises laser-hair removal on infomercials, both decided not to go public on their previous time horizon.
They cited "market conditions". Marketwatch also mentioned that another company, Palo Alto Networks, has refused to say if it will proceed with an IPO.
Morgan Stanley shepherded Facebook through to its listing, but only told some clients about a negative report on the company before the shares became available to the investing public.
Lawsuits have ensued, which shouldn't come as a surprise to anyone, given the amount of money that has been lost in just a week of trading.
Comments
2 Comments
DavidH
May 26, 2012 at 3:02pm
Regardless of the share price, the sad reality is that Facebook - like most companies that go public - is doomed.
The minute that shares are traded, the leaders of the company are required to stop caring about the business itself (what it makes and who buys it) and focus on "shareholder value". If an increase in shareholder value requires screwing the customer and screwing the employees, well, that's just the way life is.
Control of the company shifts from the CEO and his executive team to a small group of influential stock analysts who demand quarterly "apologies" from the company. It's very sad to watch. Zucker-boy will be reduced to protecting his personal interests and toys, and the company itself will deteriorate.
This is particularly sad because (a) Facebook didn't really need the market capital, and (b) Capital could have easily been raised privately.
Facebook as an investment? Run away!
Mike305
May 27, 2012 at 9:18am
@DavidH - Zuck hold a majority of shares in the company. He can still do whatever he wants.