the strangest stuff about the Facebook IPO

Looking back on the FB IPO, I find several aspects of it strange. I don’t just mean that it was horribly bungled by the underwriters–and to an extent that almost defies comprehension. There’s more:

the last-minute prospectus additions

They concern the effect of increased mobile usage on FB results in the US. This trend appears to have been evident for a long time. It’s certainly material. At All Things D, Mary Meeker (more on her presentation in another post), the former Morgan Stanley internet analyst–she and Henry Blodget were the uncrowned Wall Street royalty of the late Nineties internet mania, said about half of US FB users do so via the less-lucrative mobile route. If so, why the only passing mention in the original prospectus?

subsequent rumor mill fodder

Over the past couple of weeks, stories have emerged that FB is going to:
–create its own branded cellphone
–acquire the Scandinavian browser company, Opera, and
–buy Research in Motion.
Who knows whether any of this is true. But if FB has plans on any of these fronts that are any more than idle musings, there should have been some mention in the prospectus.

no demographic information

Clearly, FB has transcended its original purpose of allowing college classmates to learn about each other more quickly. I’d be interested in knowing, for example, if the heaviest users are high school and college students–and if usage falls off sharply as they leave school and begin working. FB must know stuff like this. But, again, nothing in the prospectus.

the attitude of Morgan Stanley

The CEO is reported to have said in a cable TV interview that retail investors were “naive” and had participated in the IPO “under false pretenses,” if they expected FB shares to go up after the IPO. FB shares have set a world record for loss of market value by an IPO after its debut. That’s not normal. Arguing that investors should recognize that they are sheep to be fleeced whenever wool is needed–even if that’s what he really thinks–isn’t a great way to get new customers, or to keep current ones. He might have said he didn’t mean for this to happen and he was sorry.

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