[powera]

This guy is a moron. Anybody who believes the stock would be at $70 if "the market" worked better doesn't understand how markets work in theory or practice. If there are people who really believe the stock is worth $70, there would have been buyers the past two days. Expecting "hype" around the IPO to support ONE HUNDRED BILLION dollars of extra valuation is beyond stupid.

[mbreese]

There very well may have been buyers on Friday who thought the stock was worth $70. If the market had been able to handle the volume, then we may very well be seeing FB at $70 today. However, since we know that the market couldn't handle the volume, it most certainly did affect the share price on Friday. Now, you let people sit and think about this over the weekend and they may have different feelings about that supposed $70 valuation.

Next, if you assume his story about selling on Monday was true, you have additional downward pressure put on FB as a result of NASDAQ itself. So much so that it closes at $34, eroding everyone's confidence in the $70 valuation that they had in their minds on Friday.

Markets only work if they operate efficiently (can handle the volume). When they don't work efficiently, they become harder to predict. And if an investor can't even be sure of what their position is, they can't participate in the market at all. It isn't at all out of the question that glitches in NASDAQ could have caused FB shares to plumet. It most certainly took away any possibility of an IPO bump.

The real question this beings up is what did NASDAQ know, and when did they know it. If they knew their system wasn't going to be able to handle the volume, as bad as that might have been for them, they should have aborted the IPO (if that's at all possible).

[jlarocco]

Well, honestly we'll never know for sure, but if a weekend of "thinking it over" cuts the price in half, did it really deserve the $70 valuation? After the hype, people are going to think it over at some point, right? Maybe it's better that it happened right off the bat.

[sneak]

> Well, honestly we'll never know for sure, but if a weekend of "thinking it over" cuts the price in half, did it really deserve the $70 valuation?

You are confusing "should" with "is". Don't do that.

[rondon1]

During the dot-com bubble there were IPOs where the P/E was far beyond 100. So it isn't totally crazy to think the market could whip people into a frenzy over the idea that 'they are getting in on the ground floor of the next google' What is crazy is to think that NASDAQ hasn't fixed it by now. If there were a lot of people out there who wanted to get in on the next big thing they would have put in market orders and those orders would have been filled by now.

[hef19898]

My opinion is that if people at stock exchanges thought things over for two days a lot of things would be different...

[tomkarlo]

You don't get a valuation because you "deserve" it. You get it because that's the highest price someone is willing to pay, and someone is willing to sell to them at that level. A day-trader doesn't care if that's connected to the fundamentals of the business - they're just trying to play the rise and fall.

[nl]

Using words like "moron" is pretty strong. There are a large number of historical precedents to back up that belief.

Ignoring well-known examples like Amazon (which even today trades well above where it "should"[1]), there are other examples like "The Globe", which had a first-day gain of 249%[2]

More recently, Splunk popped 83%[3].

He addressed the there would have been buyers the past two days thing, too: It never stood a shot. If there was any enthusiasm for this deal, that got wiped out. Think about a guy who was going to put five grand on this. You go to Vegas and put $5,000 on the roulette wheel and it breaks, it's like, hold on, I'm not going to do that. Suddenly you're like this is Wall Street and I hate Wall Street.

[1] http://finance.yahoo.com/q?s=AMZN - AMZN has a P/E ratio of 177. Compare that to EBAY: 15, GOOG: 18

[2] http://news.cnet.com/2100-1023-217913.html

[3] http://online.wsj.com/article/BT-CO-20120419-713258.html

[samstave]

I am imagining this "hedge fund manager" as some guy who had a fair amount of wealth - but a greater, wealthier, social network. He spent some time pulling from this network to develop a fund, which he would manage to make all his friends rich, himself even richer.

He has been frothing for this opportunity, ever since he missed the Google boat. At the time of the goog ipo, he was a lowly broker with little funds to leverage.

Since then he has been viciously ambitious. He has built a name for himself and a powerful, if flawed, circle of acquaintances.

He was successful in frothing up his circle, convincing them that he could make an FB focused super fund and make them a killing!

He gathered up $200MM from his network and put a crazy bet on the stock.

He lost - all his credibility gone, a loss which was thought to be a sure thing. He is ruined!

Especially since now that the loss is here - it will be revealed that he committed many millions to purchases on this expected cash cow!

His bills are due, and he owes $30MM TOMORROW for everything he used funds from his network's input to pre-buy!

HE IS FUCKED!

But, he has a really nice yacht to attempt to flee to Bermuda on...