They lined up to get the “opportunity” to be in that exclusive group that would be the first to buy Facebook stock at an initial public offering (IPO) of $38 a share. What a deal! There was much ado about, well, absolutely nothing.
It seems as though a 28-year-old huckster, who had been accused by fellow college student who’d planned Facebook in the dorm room of acing them out of their cooperative creation of the social media giant, took the American investing public for a ride. That has landed the kid genius in a world of legal hurt with some investors.
Since the May 18 offering on the Nasdaq, the stock has performed poorly. In fact, it closed at $31.91 on Friday, May 25, the last day before the Memorial Day holiday.
What had made Mark Zuckerberg a billionaire, seems to have left the company’s stockholders holding the bag. Why? David Ebersman, Facebook’s chief financial officer, made the decision to increase the number of shares that would be sold in Facebook’s IPO three days before the big event, according to Forbes. I guess one could call that greed. His move to enrich the company’s stock turns out to be one of the things that drove General Motors (GM) and other major advertisers to pull back from Facebook.
GM, like many Facebook advertisers, is trying to figure out just how to make a profit from the social media giant. Not convinced that Facebook was a good advertising investment, GM just arbitrarily stopped paying for ads on Facebook.
Once again, the herd mentality of Wall Street is not necessarily the right frame of mind in which to make investment decisions. I guess we all should have learned that following the market’s crash of 2008.