So What Happened to the Facebook IPO?

It was billed as the IPO of the century; a once in a lifetime investment opportunity to get in on the ground floor of this social media phenomenon. Nearly two weeks after its initial $38 stock offering, Facebook’s shares are now almost 25% lower. Many experts are calling Facebook’s IPO the worst in a decade. So, what exactly happened here?

It is reported, prior to the initial stock offering, lead underwriter Morgan Stanley and the other IPO underwriters verbally relayed to their big clients (institutional investors) that Facebook was in the midst of a disappointing quarter. Unfortunately, this important piece of information was never told to their financial advisors and individual clients (small investors). Because of this disclosure, institutions had much better information about Facebook’s current state of affairs than small investors did. If this indeed did happen, it is grossly unfair to the uninformed small investor who bought Facebook stock at the IPO price.

Former Wall Street analyst Henry Blodget shares his thoughts and insights about the Facebook IPO in this Business Insider article.

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