In Facebookland, Friday’s initial public offering (IPO) of Facebook was a debacle. NASDAQ – the exchange where Facebook chose to list – said it was ‘humbly embarrassed’ by its failure to guarantee orderly trading.
Is anyone ever proudly embarrassed?
What a disgraceful performance by the entire investment community in America. Wall Street is a shadow of its former self. It should be able to put on a world-class sideshow to distract people from the reality of how terrible the market is. Yet it managed to bungle a gift-wrapped opportunity to pump shares.
Facebook shares closed their first day of chaotic trading exactly 23 cents higher than the IPO price. The news wires reported that the IPO’s underwriters had to intervene late in the day and support the stock to prevent it closing below $38. The company closed with a market cap of $104 billion, or around 122 times trailing 12-month earnings.
The Facebook IPO is a superficial (but entertaining) sideshow to the big story in markets. That’s probably fitting. Facebook IS a superficial (but entertaining) sideshow. Bull markets – or would-be bull markets – require a hopeful narrative about the future that people can believe. The trouble today is that very few people believe the immediate future is getting better, or that Facebook’s public listing is a sign that the world’s debt crisis is over.
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