Did you expect a different outcome based on "information publicly available"? All you had to do was a little homework.
For those who saw the movie "The Social Network," remember how Facebook came to be: Mark Zuckerberg seeking revenge after being dumped by his "girlfriend." And do you remember how he treated the friends who started the business with him (co-founder Eduardo Saverin), or what happened to the allegedly original intellectual creators of the idea (the Winklevoss brothers). Do you remember the slogan for the movie? "You don't get to 500 million friends without making a few enemies."
As for the now-acclaimed privileged information that the company's revenues would be lower, well that was stated in a public document presented on May 9th, almost two weeks before the IPO, when Facebook admitted that numbers from the mobile business had not been proven. But you still wanted in!
To say, after the fact, that some of the Underwriters gave the information to a "select group of their clients" is a bit insulting, as they would stand to lose much more by doing so than by just telling everybody. After all, some of them are in enough trouble and would much prefer to start over with a clean slate than to swim in murky waters.
But
before you start “unliking” Facebook, think, don’t react. Back in 2004 when
Google did their IPO, most could not believe that the company would produce the
numbers they have generated so far, and that took the company from an IPO price
of $85 to around $600 today. Do you really think that Zuckerberg and his team
took the company to where it is now, and they don’t have an idea on how to be
creative? Do you think they lack a strong entrepreneurial spirit that will
allow them to develop new revenue generating products and services? With all
the money raised during the IPO, couldn’t the company go on a shopping spree
and purchase business that would help them achieve great financial numbers? Google
did it, when they came out with Google Maps, and then a Smart Phone, and so
many other great ideas. Aren’t the
people that run Facebook very creative as well?
And to
this date, Facebook is yet to enter China. Imagine the market potential when
that happens.
Don’t
forget that a great number of shares are in the hands of Zuckerberg and his
team and that most employees have stock options that can be exercised in
November. Would they want their fortunes ruined by a bad deal?
Last,
all IPO’s are risky and your Financial Adviser should have told you so. If your
Investor Profile did not fit this type of investment, you should have not
gotten into it. However, if you are among the “greedy bunch” and now own a
piece of Facebook, lick your wounds, suck it up, be a grown up and most
important of all: be patient and have a little faith in the American
Entrepreneurial spirit, it’s what makes this country great!
For
disclosure purposes, FINSER holds a position on Facebook
