Facebook recently concluded its much hyped Initial Public Offering ( IPO) . Its shares were issued at 38 dollars per share and were to be listed on Nasdaq ( an US Stock Exchange). This gave Facebook a rich valuation of 104 billion dollars.
. Share prices of Facebook decreased once trading commenced on Nasdaq.
Investors suffered huge losses to the tune of 19%. Falling below the offer price so quickly is considered very disappointing for a newly listed stock.
. High valuations, high number of shares, technical glitches on Nasdaq and finally lower revenue forecasts are the main reasons for this fall. In fact many analysts believe that in case shares were issued at about $ 25 per share, all investors would have gained.
. All Investors including retail investors who purchased the shares at 38 dollars per share have suffered heavily. Once again investors are attributing their losses to poor disclosures and greed of the bankers who managed Facebooks issue.
. It is pertinent to note that all the bankers who managed Facebooks issue have earned 176 million dollars in fees. Also all investors who purchased Facebooks shares earlier at significantly lower prices have made money. This includes Goldman Sachs one of the bankers, which raised 235 million dollars after selling its Facebook shares at a valuation of more than twice the 50 billion levels at which the firm made its December 2010 investment. The funds that Goldman manages for its clients raised a further 855 million.
. At least 3 regulatory enquiries are underway and two class action legal suits have already been filed alleging that Facebook and investment bankers misled investors.
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