Monday, May 21, 2012
Facebook is in a danger zone as a newly floated public company. Its shares barely rose above offering price on Friday, and they were briefly below offering price in European trading. What this means is a large corp of disappointed shareholders who now will be staring at Facebook to see if it can monetize its site to reach its initial valuation. It is a public relations pickle for the company and a morning-after hangover for the investment community. There will be recrimination if the stock stays flat or drops below offering price in the US. The investment banks will be accused of pricing the stock wrongly. Critics will point to yet another tech bubble that has burst. Smart investors will stay away until Facebook has several operating quarters under its belt. Those of us who felt that hysteria was driving the market will be smug. On the other hand, if the stock takes off today and climbs into the low 50s, all will be well. No wonder that going public is emotionally draining.