Slashdot Mirror
Mark Zuckerberg's Big Facebook Mistake
Hugh Pickens writes "Nathan Vardi writes in Forbes that in the last two months, Mark Zuckerberg has had a rude introduction to the capital markets. With Facebook's stock in free-fall, down more than 40% from its IPO price, Zuckerberg has a big problem. 'Zuckerberg did not want to deal with the pressures of being a public company. Like many entrepreneurs these days he viewed the capital markets with suspicion,' writes Vardi. 'So Zuckerberg made a fateful decision, he decided to keep Facebook a privately-held company for much longer than other success stories like Google or Amazon.' But waiting eight years to conduct an IPO has turned out to be an impossible problem to manage. The bankers at Morgan Stanley applied all the lessons of the last 15 years and priced the IPO at $38, which was very aggressive, in an attempt to avoid leaving any money on the table and the embarrassment that a huge IPO pop would represent. With such a big valuation at IPO time, Facebook had to show some results. But the numbers that Facebook announced in its first quarterly earnings report were underwhelming and the trading hordes drove Facebook's stock down by 15% in Friday morning trading. Now the early institutional investors are heading for the exits and it's hard to imagine morale at Facebook won't take a hit that correlates with the loss in value of the shares belonging to the employees. 'The lesson of the Facebook fiasco for Silicon Valley is clear. Start-up entrepreneurs cannot evade the discipline of the capital markets any more than can the prime ministers of Spain and Italy.'"
They sold all the stock didn't they - to greedy investors who thought it'd go shooting up the day after IPO and they could make a killing flogging their stock (which I think all the institutions did), or stupid investors who thought that FB is the new paradigm and would take over the world's communications.
Either way, who cares? The only ones I see whining are those who bought the stock expecting to make easy money. The IPO price was obviously set at the right price as there was enough demand.
As for FB itself, it's still a private company, old Zucker didn't want any pesky shareholders (ie company owners) voting on what to do so all that stock is (IIRC) non-voting. So apart from a huge pile of cash taken from the stupid and/or greedy, nothings changed.