First, I need to get the silly headlines out of the way, or I won’t be able to concentrate.
- Time to face the music
- Status: fiasco
- Who needs friends when you have bankers?
- The honeymoon’s over (By the way, hearty congratulations to Mark Zuckerberg on his recent marriage.)
So it seems like the value of Facebook’s $16 billion initial public offering may’ve been a little overblown. In the few days after the social networking site to end all social networking sites went public on May 18 with a share price of $38.23, stocks have tumbled dramatically, ending at $31 per share at close of trade Tuesday. And in that same time span, CBS News reports that Facebook’s worth went from $104 billion to just shy of $67 billion.
Add to that the fact of possible insider trading-esque funny business on the part of Morgan Stanley, the investment bank that served as Facebook’s lead underwriter during the IPO process and you have, in the words of former SEC chairman Arthur Levitt a “dreadful” situation for the markets in which “nobody looks good.”
And oh yes, Facebook is being sued by its shareholders for the way Morgan Stanley marketed the IPO process pre-offering. Even Zuckerberg’s a defendant in that.
There’s a definite sense of Schadenfreude out there. Comedian Andy Borowitz, for example, poked fun at the hoodie king with a mock letter from Zuck to potential investors, in which he points out how very different Facebook’s monster IPO is (as in not at all) from the early 2000’s dot-com bubble: “For one thing, those bad dot-com stocks were all speculation and hype, and weren’t based on real businesses. Facebook, on the other hand, is based on a solid foundation of angry birds and imaginary sheep.”
The upshot: If Facebook wants to help save itself, it needs to clean the yolk off its face (please forgive me, I can’t help myself) and start courting businesses and marketers even more aggressively. As David Berkowitz, 360i‘s VP of emerging media put it to Direct Marketing News last week: “That’s where the money is coming from.”
Allison Schiff is web editor at Direct Marketing News.