Image of the week
It’s another entry in the “pedestrian walking past something” genre so beloved of photographers assigned to finance stories, but this image taken outside the Nasdaq MarketSite in New York manages to capture both the cause and the effect of the bad vibes currently surrounding Facebook.
The effect is the plummeting share price after its overpriced IPO.
The cause is the pedestrian’s hand accessory – not the umbrella, but the phone. The controversial earnings downgrade by bankers in the run-up to last week’s flotation related to Facebook’s inability to date to cope with the rise of mobile consumption and the danger that this poses for its advertising revenues. (Photograph: Scott Eells/ Bloomberg)
In numbers: Facebook special
$16 billion
– The sum raised by Facebook on its May 17th flotation in what was the biggest technology IPO of all time, valuing it at $104 billion.
$630 million
– The sum lost by retail investors between Friday’s IPO and the close of trading on Wednesday, by which time Facebook’s share price had plummeted 16 per cent to $32.
25
– The percentage increase in number of shares on offer in the IPO by Facebook and its bankers Morgan Stanley in the days before the offering. Investors claim this contributed to the stock’s poor performance.
42
– The percentage fall that will take place this year in Facebook’s share price, as predicted by structured-product holders on track to profit if shares drop below a certain level.
The lexicon: Farcebook
“Farcebook” is not a new word but, up until last Friday’s glitch-laden stock market debut, it was usually used to describe the content of some of the more narcissistic Facebook profiles – the ones that have been self-spun into a litany of glorious triumphs and model-worthy posing – than its underlying business.
The botched IPO is now just the beginning of what is set to be a litany of lawsuits from retail investors who claim they are victims of an earnings downgrade by the company and its syndicate of bankers that was only “selectively disclosed” – essentially, they weren’t to know that there was a crazy mismatch between Facebook’s IPO valuation and its forecast revenues. The crazy mismatch between its valuation and its actual revenues, on the other hand . . .
Getting to know: Robert Greifeld
It was all looking so sunny for Nasdaq chief executive Bob Greifeld this day last week, when he could be found clapping next to Mark Zuckerberg amid a gathering of Facebook employees at its Menlo Park, California, headquarters.
Commentators on CNN and CNBC heaped praise on Greifeld for his coup in attracting Facebook to the Nasdaq.
But then there was that strange, chaotic 30-minute delay to the scheduled start of the stock’s trading.
Nasdaq’s systems were so overloaded with late cancellation messages that it was unable to set an opening price, while traders were not given confirmation messages for their orders, leaving them unsure as to whether they had been processed.
By Sunday, Greifeld was forced to assure reporters that his job was secure.
