Facebook Inc (NASDAQ:FB) is still facing a great deal of problems arising from its IPO which took place just one week ago today. The company has been hard hit by allegations of insider trading and lawsuits relating to the IPO as well as a huge loss in confidence from the public. The company is surrounded on three sides by groups that have been angered by the recent goings on with the firm’s stock.
Regulators, investors and the general public have all perceived slight from last week’s offering and all are punishing Facebook now. Reuters reported earlier today that Fidelity Investments is dealing with thousands of complaints from brokerage clients relating to the IPO. It appears that many of the trades were not carried out at the prices investors had tried to buy at.
ValueWalk's Raul Panganiban interviews JP Lee, Product Managers at VanEck, and discusses the video gaming industry. Q4 2020 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview With VanEck's JP Lee ValueWalk's ValueTalks ·
That, clearly a grave problem for any IPO, is not even close to the biggest issue traders had with the IPO of the world’s largest social network. Accusations of improper trading and improper flows of information at Morgan Stanley (NYSE:MS) have caused court proceedings to be brought and congressional hearings look likely.
The Nasdaq exchange has been unable to quickly resolve the problems which surrounded the IPO last week and the huge popularity of the event, even among those who would normally be uninterested in IPOs, has built the trading issues into a public relations nightmare for Facebook.
The loss of confidence in the company relating to these issues could be troublesome in the years ahead if it cannot bury them out of public view. The possible Congressional hearings, planning for which may already be underway, will not play well toward that goal. Mark Zuckerberg, in the weeks after the IPO, answering questions from a congressional committee is not an image likely to be forgotten by the public. It is one more likely to form the backbone of a sequel to The Social Network.
Facebook’s IPO was overvalued before there were any problems with the company. Now there is a great deal of trouble relating to how the firm treated its investors, big guys first, and a public image issue that may be difficult to make disappear.
Facebook’s shares had already fallen by almost 1.5%, as of time of writing, in today’s early morning trading. The stock appears to have support at somewhere arount the $32 per share mark though that could disappear if the problems continue.