Nasdaq admits to errors during Facebook’s IPO
THE CHIEF exec of Nasdaq admitted yesterday that technical problems delayed the opening of Facebook’s initial public offering (IPO) last week.
Robert Greifeld said the bungled start was “not our finest hour” after the exchange’s IT system failed to cope with high levels of demand.
Eventually, the $38 shares opened at $42 on Friday and peaked to $43 before closing at $38.37.
While Facebook’s shares fared better than those of rival tech companies – Google, Amazon, LinkedIn, Groupon, Zynga and Yelp all dropped between two and 14 per cent on Friday – many deemed the flotation unimpressive.
The social network’s mega team of 33 underwriters were forced to step in to keep the share price above $38.
According to a recent filing with the SEC, the top five banks on the IPO ended up owning about 13 per cent of the shares.
Lead underwriter Morgan Stanley bought a $6.2bn stake, with JP Morgan and Goldman Sachs buying $3.2bn and $2.4bn respectively.
As a result of the technical glitches, the uber-hyped public offering got off to a tricky start.
Despite joyful cheers from Facebook employees as Mark Zuckerberg rang the opening bell on Friday, the stock did not start trading until about 11.30am.
The SEC has launched an investigation into Nasdaq’s management of the Facebook flotation, and Wall Street has blamed the lacklustre trading on the exchange, on whose systems traders could not see if their purchases were being accepted.
Mark Zuckerberg, who married his long-term girlfriend in a surprise ceremony on Saturday, is now worth $19.2bn in Facebook shares.