Few have seen the pratfalls and problems with a initial public offering in the technology sector like Mark Zuckerberg. It’s for this reason that Zuckerberg, in a rare display of humility, seems happy to share a bit of advice with Twitter as they plan to go public early next year.
Facebook’s troubles with underwriters
Beyond the troubles Facebook Inc (NASDAQ:FB) experienced with its underwriters, and a scandal that was never really labeled the scandal that it truly was, Facebook’s stock tanked out of the gate.
In an IPO that was referred to by many in the media as a “cultural milestone,” the offering was plagued by a number of problems immediately. Firstly, the NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) suffered a computer malfunction during the opening hours, leading to tens of millions of dollars in trades being placed incorrectly. Underwriter Morgan Stanley (NYSE:MS) then compounded the problem, with many suggesting that the initial price was both too high and that the company had issued too many shares. Lastly, a number of Facebook executives were accused of alerting industry insiders to Facebook Inc (NASDAQ:FB)’s earnings before they were publicly reported. Each of these entities still face litigation over this matter.
Welcome to our latest issue of issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Andurand's oil trading profits surge, Bridgewater profits from credit, and Tiger Cub Hedge Fund shuts down. Q1 2022 hedge fund letters, conferences Read More
Zuckerberg resisted going public
In less than a month, the stock had lost over a quarter of its value and nearly half in the first three months following the initial offering. While this massive offering is finally coming good for many investors, it took quite some time—nearly as much time as Zuckerberg resisted going public.
Zuckerberg’s advice to Twitter? Don’t worry about it. Don’t be afraid.
“I’ve been very outspoken about staying private as long as possible,” Zuckerberg said in an interview at the TechCrunch Disrupt conference on Wednesday. “But in retrospect, I was too afraid of going public. I don’t think it’s necessary to do that.”
Zuckerberg’s offer refusal reason
That said, Zuckerberg did well to wait. The offers he refused would have cost him billions had he decided either to sell or go public earlier, especially since Facebook Inc (NASDAQ:FB) would have gone public prior to seeing the revenue it receives from mobile advertising.
“Having gone through a terrible first year, it made our company a lot stronger,” Zuckerberg said.
“As long as Twitter … focuses on what they’re doing, I think it’s wonderful, it’s great.”
“I’m kind of the person you would want to ask last on how to make a smooth IPO,” Zuckerberg said.