Facebook stock price in secondary market

Posted: El Miho Date: 21.07.2017

Facebook shares continue to plunge from their IPO price.

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Worse, this stock seems capable of going lower. But even that could be overly optimistic.

Facebook Stock Woes Hurt Market’s View of Other New Tech Companies

The scary thing is, if Facebook shares carried the same price-earnings ratio that Apple and Google carry, the stock would trade in the single digits. Apple is growing faster than Facebook, despite being 30 times its size. Meanwhile, the finger-pointing and recriminations continue over the way the IPO was handled. Clearly, Facebook and its lead underwriter, Morgan Stanley, priced the shares too high and flooded the market with too many of them.

Morgan Stanley blames the NASDAQ exchange, whose computers failed on the day of the IPO, sending buyers into a panic, which caused the share price to fall. But another issue is that in the days leading up to the IPO, Facebook warned Wall Street analysts that its business had weakened in the second quarter.

Are secondary markets to blame in Facebook IPO failure? | ZDNet

Start and finish your day with the top stories from The Daily Beast. A speedy, smart summary of all the news you need to know and nothing you don't. The analysts warned some of their clients, who backed away from the deal. Everybody else remained in the dark and rushed into the IPO, only to get wiped out. Morgan Stanley claims it followed the letter of the law.

facebook stock price in secondary market

Market regulators and congressional committees are also looking into the offering. Whether anyone broke the law remains to be seen. But the whole thing still stinks, and will no doubt give retail investors yet another reason to be wary of the stock market. The good thing about an auction is that it relieves bankers of the tricky chore of trying to figure out how to price the shares. In a traditional IPO, a banker like Morgan Stanley has to gauge demand from investors and try to get the best possible price for the shares of the company.

But nobody likes to see a stock go reeling downward as soon as it hits the market.

Using an auction may not be right for every company, but for Facebook it would have been a great idea, says Lise Buyer, a former Wall Street analyst and now CEO of Class V Group, a consultancy that advises companies that are trying to raise money through an IPO.

Fallout from the Facebook disaster is hurting other tech companies. Some are holding off on plans to do IPOs because of the Facebook fiasco. They include Kayak, an online travel broker, and VKontakte, a social-networking site in Russia.

But there are still a lot of newly public tech companies carrying ridiculous nose-bleed valuations. But they are expected to make a profit in Pandora trades at times its projected earnings for Yelp trades at times its earnings.

facebook stock price in secondary market

For comparison, Apple—arguably the greatest tech company of all time—trades at 12 times its projected fiscal year earnings and 11 times its projected fiscal year earnings. Nevertheless, some people in Silicon Valley will tell you that the crazy valuations on these newly public companies make perfect sense.

In the case of Facebook, investors in the public markets are finally showing some sense and not falling for the hype from Silicon Valley. But how long until the public markets apply this same cruel logic to the other overpriced stocks that venture capitalists and investment bankers have foisted upon them?

Dan Lyons is technology editor at Newsweek and the creator of Fake Steve Jobs, the persona behind the notorious tech blog The Secret Diary of Steve Jobs. Before joining Newsweek, Lyons spent 10 years at Forbes. Drink and Food Eat. Tech The Future Is Here. Follow The Daily Beast on Twitter.

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FB Stock Price - Facebook Inc. Cl A Stock Quote (U.S.: Nasdaq) - MarketWatch

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facebook stock price in secondary market

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