Facebook’s IPO: flop or not?

It was the most buzzed about tech IPO since Google went public in 2004. But in the end, Facebook fell flat in its market debut, and the hype quickly turned into criticism from angry investors and shareholder attorneys. “The Facebook IPO is shaping up as one of the biggest opening flops in stock market history,” wrote Forbes contributor Richard Barrington. Now the company faces a civil lawsuit and federal regulator scrutiny, and its shares continue to drop. So what went wrong? Industry watchers pointed to a slew of factors, from Mark Zuckerman donning his signature hoodie at the company IPO roadshow to underwriters allegedly warning top investors that Facebook’s financial forecasts had been overestimated. “By the time Facebook’s stock started trading on the public market, insiders—the company’s founders, employees and venture-capitalist backers—had bagged most, if not all, of the company’s value for themselves,” the New Yorker’s John Cassidy explained.

But not everyone agreed that it was a flop. “Overlooked is that Facebook decided to make its entrance into a U.S. IPO market in the dumps,” wrote the Wall Street Journal’s David Weidner. “When it comes to the U.S. market for initial public offerings … Facebook was just a high-profile flop in a series of lesser-known flops.” Still others said that the IPO could even be called a success. The IPO wasn’t mispriced—it maximized benefit to the company, argued Slate’s Eliot Spitzer. “That is, of course, the purpose of the IPO. That is what Facebook did,” he wrote. Forbes contributor Tim Worstall agreed. “Morgan Stanley’s done just what they were being paid to do: so why is everyone shouting at them?” he asked. “The entirety of capitalism is, after all, based on the idea of caveat emptor, is it not?” But the company’s primary task at hand will be how it can build and maintain a profitable business. “Although Wall Street may see it differently, Facebook’s main task is not about making a quick buck,” wrote San Jose Mercury News’ Larry Magid. “It’s about slowly and methodically building a sustainable business that’s both financially profitable and socially useful, long into the future.”

• Inside Job: Facebook’s IPO Shows System Is Broken (The New Yorker)

• Here’s The Inside Story Of What Happened On The Facebook IPO (Business Insider)

• Facebook IPO Facts, Fiction and Flops (Wall Street Journal)

• How Facebook’s Zucked-up IPO just killed the tech bubble (CNET News)

• Facebook IPO Scrutiny Grows as Morgan Stanley Defends Role (Ad Age)

• Facebook I.P.O. Raises Regulatory Concerns (NY Times)

• Facebook IPO: Overhyped or oversold? (ZDNet)

• The Incredible Success of the Facebook IPO (Forbes)

• Facebook’s Brilliant Disaster (NY Times)

• Facebook Fed The ‘Ignorant’ Masses An IPO Lite (Forbes)

• Facebook’s IPO Wasn’t Mispriced (Slate)

• Facebook IPO hype misses the point (San Jose Mercury News)