So how many Facebook shares did you snap up in the great IPO yesterday?

The Facebook boys and girls ring the opening bell for yesterday's Nasdaq jamboree from their headquarters in Menlo Park, CA. True, it didn't turn out to be the opening bell for Facebook's IPO exactly, but maybe the SEC will get to the bottom of that little glitch.

by Ken

It's not shame to admit it that you just couldn't resist shelling out some of your hard-earned simoleons for some of that prized Facebook paper. Or not much of a shame anyways. Who doesn't want to be part of such an enterprise?

The Washington Post's Hayley Tsukayama reports:

Many in New York and Silicon Valley had called Facebook's stock sale on the Nasdaq the initial public offering of the year. The size was enormous at $16 billion, the third largest in U.S. history. And the images of newly minted billionaires Zuckerberg and his senior executive team hugging and high-fiving filled cable television shows screens early in the morning before the markets opened. Crowds gathered around Nasdaq's glass-enclosed showroom in Times Square to watch the first trade of the stock symbol “FB.”

Okay, there was that nasty glitch. No, I'm not referring to that awkward period in Nasdaq-land when "for the first two hours of regular trading, nothing happened to the share price, or the "chaos [that] ensued" when trading finally began, at 11:30am, and:

Traders couldn’t get basic information such as the stock price or even whether their requests for shares were going through Nasdaq's systems, industry officials with knowledge of the matter said. The stock gyrated wildly. Some investors ran for the exits, selling off or canceling what they had ordered, said the officials, who spoke on condition of anonymity because they were not authorized to talk about these events.

FB tumbled and hit its offering price of $38.

Oops! (The SEC plans to look into this, the head on the WaPo report notes.)

I heard some commentator commentate that the fact that the stock wound up just about where it began shows that the folks who set the initial offering price had, you know, nailed it. Well, I'm no expert in these matters, but I don't think that's necessarily what happened. Back to Hayley Tsukayama:

The shares almost certainly would have gone lower, except Facebook's banks, which had put the deal together, stepped in to prop up the share price. That may have saved Facebook, the banks and Nasdaq from an embarrassing loss on the first day of trading. The practice is legal, but unusual for such a celebrated stock offering.

Throughout the day, the banks -- which included Morgan Stanley, JPMorgan Chase and Goldman Sachs -- had to bail out the stock several times, the people familiar with the matter said.

By the close of regular trading, the stock had barely scraped out a gain of 23 cents.

Oops!

The day before the great day, the NYT's Nathaniel Popper had reported on DealBook ("For Average Investors, Long Odds on a Big Facebook Payday"):

Facebook shares will be tempting to buy when they start trading on Friday. The company has hefty profit margins, a household name and a shot at becoming the primary gateway to the Internet for much of the planet.

But if history offers any lesson, average investors face steep odds if they hope to make big money in a much-hyped stock like Facebook.

Sure, Facebook could be the next Google, whose shares now trade at more than six times their offering price. But it could also suffer the fate of Zynga, Groupon, Pandora and a host of other start-ups that came out of the gate strong, then quickly fell back.
Even after Facebook supersized its offering with plans to dole out more shares to the public, most retail investors will have a hard time getting shares in the social networking company at a reasonable price in its first days of trading.

Facebook's I.P.O. values the company at more than $104 billion. And the mania surrounding the offering means Facebook shares will almost certainly rise on the first day of trading on Friday, the so-called one-day pop that is common for Internet offerings. At either level, Facebook's price is likely to assume a growth rate that few companies have managed to sustain.

New investors, in part, are buying their shares from current owners who are taking some of their money off the table, a sign that the easy profits may have been made. Goldman Sachs, the PayPal co-founder Peter Thiel, and the venture capital firms DST Global and Accel Partners are all selling shares in the offering.

"It is a popular company, but it is still a highly speculative stock," said Paul Brigandi, a senior vice president with the fund manager Direxion. "Outside investors should be cautious. It doesn't fit into everyone’s risk profile." . . .

So after that heady first day, with the new stock's (artificially propped-up) 23-cent-per-share flight into the financial stratosphere, future glory is less than fully assured.

Unfortunately for investors, the first-day frenzy is not often sustained. In the technology bubble of the late 1990s, dozens of companies, Pets.com and Webvan among them, soared before crashing down.

This was anticipated in a pre-IPO Borowitz Report that channeled master entrepreneur Zuckerberg in the form of a letter to potential investors based on the premise: "For years, you’ve wasted your time on Facebook. Now here’s your chance to waste your money on it, too." The channeled Mark understood that such would-be investors would want to know: "How will Facebook be any different from the dot-com bubble of the early 2000’s?"

For one thing, those bad dot-com stocks were all speculation and hype, and weren’t based on real businesses. Facebook, on the other hand, is based on a solid foundation of angry birds and imaginary sheep.

Second, Facebook is the most successful social network in the world, enabling millions to share information of no interest with people they barely know.

Third, every time someone clicks on a Facebook ad, Facebook makes money. And while no one has ever done this on purpose, millions have done it by mistake while drunk. We totally stole this idea from iTunes.

Finally, if you invest in Facebook, you’ll be far from alone. As a result of using Facebook for the past few years, over 900 million people in the world have suffered mild to moderate brain damage, impairing their ability to make reasoned judgments. These will be your fellow Facebook investors.

This is satire, of course. Even I might not go absolutely this far.

Some readers will recall that I'm not what you'd call a Facebook person. Notably, I'm still waiting for the authorities to deal with Zuckerberg & Co. about those phony-baloney e-mails I get every week claiming fraudulently that I have unexamined "notifications," when week after week it turns out that I have no notifications, information that the site coughs up only under prolonged scrutiny. I'm not saying I want notifications, just that I'm tired of being misinformed about same. Is my time and attention truly worth nothing? (Maybe better not to answer that.)

I know that many people think Facebook is not only the universal meeting place of the present but our portal to the future, whereas I find myself more in tune with Seinfeld's Kramer when he pronounced the Dewey Decimal System "a scam." I can't help wondering whether Facebook isn't more like the new MySpace, or maybe AOL. (But then, what do I know? I still use AOL as my principal e-mail provider. I'm not saying it's a good e-mail provider, but are the others really much better? And my mind reels at the thought of changing my e-mail address.)

Nevertheless, even I will note that Facebook has two unquestionable uses:

(1) For people who have too much free time on their hands, it can somehow soak it all up -- and more. (How it accomplishes this is a mystery to me, but the empirical evidence seems pretty strong.)

(2) Since most everybody is on it, it provides a previously unimagined way of refinding people you've lost track of in your life's path. (Remember, though, that if track has been lost, the chances are pretty overwhelming -- again, confirmed by empirical evidence -- that not matter what they may say on reestablishing of contact, they don't have a whole lot of interest in being refound.)

There's no question that Facebook insiders made out like bandits yesterday. In the Borowitz Report-channeled letter, the phantom Mark Zuckerberg concluded:

With your help, if all goes as planned tomorrow, Facebook’s IPO will net $100 billion. To put that number in context, it would take JP Morgan four or five trades to lose that much money.

One last thing: what will, I, Mark Zuckerberg, do with the $18 billion I’m expected to earn from Facebook’s IPO? Well, I’m considering buying Greece, but that would still leave me with $18 billion. LOL.

Friend me,

Mark

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