By Jon Friedman, MarketWatch
Reuters
NEW YORK (MarketWatch) — Admit it, America. Don’t you just love the train wreck also known as the Facebook initial public offering?
You can’t get enough of it, the hand-wringing, the squirming the whole public spectacle of embarrassment.
And here’s why: We all know that you — the heartland, the people we fly over, Main Street — got it right and Wall Street got it wrong.
Wall Street, Silicon Valley and the media all look bad. Each one contributed to the hype.
These days, social-media tools represent a pretty good cross-section of America and allow ordinary people to have an opportunity to express their opinions.
The Pew Research Center’s Project for Excellence in Journalism pointed out on Monday that the social-media behemoth’s May 18 IPO, which placed the worth of Facebook (NASDAQ:FB) at $105 billion, “sparked significant discussion on Twitter, blogs and Facebook itself, with more expressions of skepticism than confidence about the stock’s value.”
Twitter users were the most skeptical of all, as nearly four times as many users said that Facebook was overhyped as said it was worth buying, Pew noted, adding tellingly: “Even on Facebook, the gap was nearly two-to-one.”
There is a lot of pain to go around on this debacle of an IPO. But for once, Main Street is having the last laugh.
I asked veteran Silicon Valley observer Paul Carroll — a former Wall Street Journal tech reporter, a consultant and the co-author of “Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 years” — what he thought of the Facebook flop. (The Wall Street Journal, like MarketWatch, is owned by News Corp.)
“I think it’s a good thing, the only way to kill the hype that goes into some of these goofy IPOs is to make the people pay for getting sucked in. It’s a hard lesson, but next time people might pay more attention,” Carroll said, speaking as if he echoed the view of the heartland.
The Facebook flop — the “Gigli” of IPOs — was drenched in arrogance from the start. For one thing, it was priced way too high, considering that there were so many questions about its bottom line, growth prospects and long-term strategy.
The Nasdaq, where the shares are being traded, couldn’t get out of its own way long enough on May 18 to smoothly execute the trades.
From the start on the debut day of trading, there was chaos in the air. There had already such build-up to the start of trading that the last thing Facebook needed to see were any technical glitches in what should have been the mundane act of executing trades.
Wall Street wasn’t alone in taking a hit on the Facebook IPO. Silicon Valley deserves some blame, too for pushing these crummy investments onto the market. Facebook’s road show merely reaffirmed what a lot of us thought: it is a haven of 25-year-old billionaires, who invent time-suck gadgets.
One more faction should come in for grief as well: the media.
Well, where to begin? America despises my brethren for a good reason: We are the dopes who hyped the Facebook IPO, with our misplaced priorities and panting coverage of such nonsense as whether CEO Mark Zuckerberg’s was out of line to wear his trademark hoodie during the pitch sessions on Wall Street.
Maybe the journalists should have been more concerned about the state of Facebook’s financial data than the fashion whims of a 28-year-old CEO.
As it turned out, Main Street got it right, trumping the professional investors on Wall Street.
MEDIA WEB QUESTION OF THE DAY: Do you blame Wall Street for Facebook’s flop?
