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Facebook Orders Banks To Stop Leaking IPO Details
redletterdave writes "In the weeks leading up to Facebook's massive $100 billion initial public offering, Mark Zuckerberg reportedly told JPMorgan Chase, Morgan Stanley, Goldman Sachs and the other banks involved in the IPO to stop leaking information to the media. Zuckerberg was reportedly unhappy that the banks leaked details about his company's Wall Street debut, including the Feb. 1 date it chose to file its S-1 paperwork with the SEC. Facebook execs are also miffed about the subtle rivalry between Morgan Stanley and Goldman Sachs, which were jockeying to become the lead underwriter for the IPO, the largest since Google's $1.7 billion offering in 2004. The banks are heeding Zuckerberg's warning, urging their employees to keep quiet about Facebook's filing, because disobeying Zuckerberg's wishes could mean getting dropped from one of the most lucrative IPOs in recent memory. The banks stand to make $40 million from their deals with Facebook."
Remember, a pop in the stock price isn't a sign of success - it's a sign that your underwriter priced your stock too low and you got shafted.
It could also be a sign that the stock is wildly overvalued beyond expectations. VA Linux?
Aren't SEC filings like this public documents?
Government's idea of a balanced budget: take money from the right pocket to balance...oh who am I kidding?
There are things that Facebook doesn't want to share with the world? Now they know how we feel when Facebook fails at honoring basic Privacy settings.
Basically, there are reasons to love this model for everyone involved except the John Q public who get shafted on IPO day with stock that has already had the full value sucked out by the private investors.
It's all about bucks, kid. The rest is conversation.
Sig this!
What you said should be true, but it is not in many (and specifically in this) case
Usually companies do a public offering of a chunk of their private stock to raise working capital, fund growth etc. In those cases the company wants to get as high a price as possible. It used to be the case that the banks would indeed shaft the companies by allocating stock to their preferred customers at a low price and letting the stock pop (giving profits to these "preferred" clients). After the dot com bust, NY courts have come down on this practice pretty hard.
In this case, Facebook is only IPOing 5% of their stock. So what price it is is sold is less important than having it sold at all. And even more strangely, the company has no need for the IPO proceeds. The prospectus specifically says that the reason for having the IPO is to have an opportunity for the privately held stock to be sold later on. It also says that no specific use for the 5 Billion has been found.
So in that sense they do want the stock to pop after launch -it gets everyone excited and hopefully the euphoria will last 6 months when the insiders can finally sell.
http://slashdot.org/submission/1062723/Cheap-mobile-data-plan?art_pos=2
But it's worse than that. Zuckerberg is keeping control of the voting shares in a way that allows the other investors zero say in how the company is run. He will appoint the directors. He will tell them what to say. He will decide all by himself how much he spends on development and how much on salaries including his own and how much he returns to investors in dividends or stock buybacks.
Good. Companies ran by boards in the interest of shareholders and not the business (not mutually inclusive) typically have a way of fucking over the business, the workers, and the product by driving incredibly hard for cheaper and faster. I think Zuckerberg has done a brilliant move with this. Other than simply retaining control he's also showing shareholders that the direction of the company is stilll in his hands - the same leader that managed to get 10% of the world's population using his product(I read this figure somewhere recently). Love it or hate it - there's something to be said for it.