TMCnet Feature
June 18, 2012

One-Month Anniversary: Could Facebook Leave Nasdaq for NYSE after Disappointing IPO?

By Ed Silverstein, TMCnet Contributor

There is mounting speculation in the British press that Facebook (News - Alert) – angered by the way the Nasdaq handled its disappointing IPO – could move over to the New York Stock Exchange (NYSE).

Though there’s no formal move in place speculation about an exodus is mounting just one month after the IPO. The rumors, true or not, could create anxiety for Nasdaq given Facebook’s prominence and the potential for other technology companies to follow them over to the NYSE.

Nasdaq considers itself the home exchange for technology companies – especially in the social media sector where Facebook is a top player.

The Independent claims Facebook is “furious” about technical problems the stock faced during the May IPO. Facebook has selected to blame Nasdaq for the technical trading problems, the report added.

“It has even appeared to suggest that the trading glitches contributed to the collapse in the share price since the float,” The Independent reported.

Facebook sold the stock at $38 a share for the IPO – and it was recently selling for $30 a share. That has led to a $20 billion loss from the company's valuation.

The news about Facebook comes as Nasdaq could find itself getting sued by Morgan Stanley for "reputational damage" connected with the IPO. In addition, class action lawsuits by investors are also likely. It was recently reported that over 40 lawsuits were filed in either state or federal court since Facebook’s May 18 IPO, according to CNNMoney.

A month after the IPO, industry analysts and officials still point to the negative impact Facebook’s public offering continues to have on the sector.

"The [Facebook] IPO was a disaster," Geoff Cook, chief operating officer at MeetMe, told USA Today. "It definitely cooled interest in the sector. It changed the tenor of the conversation."

In fact, some 29 companies halted plans for IPOs so far this year, according to news reports – with many of the affected companies in the technology sector. It is also possible some tech companies will opt to have their IPOs at the NYSE rather than Nasdaq – if they have them at all.

"Some people thought the [Facebook] IPO would jump-start the IPO market," Richard Peterson of S&P Capital IQ added in a statement reported by USA Today. "But it's caused just the reverse."

Soon after the stock began trading, news started to leak out that Facebook was not as attractive as some had speculated it would be on its IPO. Institutional investors questioned the price of the stock and whether Facebook could monetize and sell ads, according to TechZone360. In addition, late orders delayed the start of trading on the first day, according to news reports. Some traders also complained about poor communications over their orders. Technical delays may have led to “panicked selling” that first day, too, according to a report from The New York Times.

Meanwhile, Bret Taylor, Facebook’s chief technology officer, is leaving the company and will set up an organization with a senior Google (News - Alert) engineer, according to The Independent. It marks the first major departure of a key Facebook official since the IPO.

Edited by Braden Becker
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