Who's to Blame for Botched Facebook IPO?

NEW YORK (TheStreet) -- I was at CNBC in Englewood Cliffs, N.J. last Friday when Facebook(FB_) had its initial public offering.

The tension in the room among producers was palpable as the IPO was delayed for half an hour.

Then, suddenly, it opened. The stock quickly jumped to almost $45. There were whoops and clapping atCNBC. People were excited.

However, within 10 minutes, something strange happened. The stock started to fall. It was one long, continuous slide back down to $38, where the underwriters defended it for the rest of the day.

That day, on business TV, the Facebook blame game started. Whose fault was it?

I couldn't have imagined that outcome a few short hours before. I woke up around 6 a.m. that Friday. When I turned on "Squawk Box," there was a sense of excitement similar to the Superbowl for business media. Later that day, people focused on Nasdaq (NDAQ_)and its technical problems. Next, people started pointing fingers at Morgan Stanley (MS_) for retaining too much control over the offering.

Yet, Morgan Stanley was the lead bank behind the most successful social media in the last two years:LinkedIn (LNKD_).

In contrast to Facebook, which sold 421 million shares in the IPO, LinkedIn sold 7 million shares. Did Michael Grimes give bad advice to Facebook and good advice to LinkedIn?

Unlikely.

If Morgan Stanley wasn't the problem, who was? Facebook management, which is to say, Mark Zuckerberg

Read the full post in TheStreet

Sphere: Related Content

Tech Bubble? No Way

NEW YORK (Real Money>) -- With Facebook's $100 billion initial public offering coming up later this year, many people are asking: Are we living in another tech bubble?

Although there have other companies with frothy IPO valuations such as Linked In (LNKD_)at $9 billion and Groupon(GRPN_) at $11 billion, I would say that those companies are the exceptions and not the rule.

We are definitely not yet in a tech bubble. Here's why:

Read the full post on TheStreet.com

Sphere: Related Content

The Two Companies on Facebook's Menu After IPO: Nokia and Yahoo!

Facebook needs to bulk up to kill Google.  Once they go public, watch for them to seriously consider buying Nokia or Yahoo! -- with a little help from their big brother Microsoft.

Read the full post on Forbes.

Sphere: Related Content

Facebook's $100 Billion Valuation Unrealistic?

For Facebook, which will carry a ticker symbol of FB, to receive a $100 billion valuation when it makes its IPO debut, investors will have to make a lot of assumptions about their future growth.


Read the full TheStreet.com post

Sphere: Related Content

All Social Media Companies are Addicted to Fudging their User Numbers

Facebook is deliberately puffing up its monthly active users by using a broad definition. It's par for the course in the social media world.

Read the full post on Forbes

Sphere: Related Content

Zynga's Market Valuation Has Dropped $13 Billion This Week

Zynga's valuation has dropped 65% in 4 days.  It deserves to keep dropping.

Read the full Forbes post

Sphere: Related Content

The Groupspawn IPO: What Hath It Wrought?

Groupon’s (GRPN) Andrew Mason is wacky.

Even though he killed at the All Things D conference this week, I just don’t get his sense of humor. And I generally don’t like investing in companies led by 30 year olds with no read work experience.

Read the full post on Forbes here.

Sphere: Related Content

China Embraces Its Inner Tech Bubble

There will be a time when the China tech bubble pops - and it will be a severe reckoning - but that day is still likely at least two years away.

Read the full post here at Forbes.

Sphere: Related Content

LinkedIn: Maybe Private Markets Were Right

By Eric Jackson, Senior Contributor05/25/11 - 06:54 AM EDT

NEW YORK (TheStreet) -- There has been endless analysis about what the LinkedIn(LNKD_) IPO means for the company itself and for other tech companies that have yet to conduct IPOs.

There's one area that's been ignored, though, and that is the private market exchanges that now exist for buying and selling private company shares pre-IPO. There are two such exchanges: SecondMarket and SharesPost.

Interest in and media coverage of these exchanges has grown over the past year, as higher-valuation transactions began to occur involving Facebook, Twitter, Zynga, Groupon and LinkedIn.

It became possible for institutional and individual investors within the last couple of years to buy into these private firms' shares before they went public. For employees at these firms looking to sell, these new markets gave them liquidity for their shares.

.......

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

Sphere: Related Content

Can We Stop Saying Silicon Valley Entrepreneurs Don't Want to Go Public Now?

Web companies don't want to IPO these days because Sarbanes-Oxley makes it too cumbersome? I don't buy it. Just watch.

Read the full post here at Forbes.

Sphere: Related Content

Who Cares Where LinkedIn's IPO Was Priced?

By Eric Jackson
RealMoney Contributor
5/23/2011 1:00 PM EDT
Click here for more stories by Eric Jackson

Since LinkedIn's (LNKD - commentary - Trade Now) IPO on Thursday, there's been a lot of chatter about whether the bankers properly priced the deal.

That simple sentence has a lot packed into it -- especially the word "properly."

The stock's offer price was hiked pretty significantly into Thursday's IPO ($42 to $45), and it was priced at the high end of the range. Many people, including me, thought that this IPO price seemed fancifully high.

When the stock immediately doubled on Thursday morning and then, as we approached noon, seemed close to tripling its IPO price, jaws were dropping on Wall Street. Pretty quickly, the armchair bloggers and journalists were asking how the investment banks (Morgan Stanley (MS- commentary - Trade Now) and Bank of America Merrill (BAC - commentary - Trade Now)) could have so mispriced the deal.

Henry Blodget of Business Insider said immediately that the bankers had left $100 million on the table, which investors pocketed instead of LinkedIn. Joe Nocera at The New York Times on Saturday said that this under-pricing by the bankers was a sign that the dangerous ways of dot-com era of the '90s had returned with a vengeance. Josh Brown at the Reformed Broker blog complained that LinkedIn hadn't used a Dutch auction system to price the deal as Google (GOOG - commentary - Trade Now) did (with Morgan Stanley's help, no less) in its 2004 IPO. (In a Dutch auction, bankers solicit bids before the public offering and set the IPO at the highest level at which the stock can be sold.)

Before we shoot the bankers (and I hate to defend them, since they're highly overpaid for what they do), I have to ask, who cares how they priced it?

Was LinkedIn irreparably harmed? Hardly. The company certainly didn't seem to be fuming about the IPO in the hours after the close. All the coverage it was getting from the press was basically crowning it the king of social networking (even though its moonshot IPO is probably going to be less than 10% the size of Facebook's).

LinkedIn raised less than $200 million from the IPO, and it sure looks as though it left money on the table. But management and the board chose to sell only 5.3% of their stock in the IPO. If prices hold up, they will get plenty from future secondary offerings.

...

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

Sphere: Related Content

Jim Cramer is Right that LinkedIn's Underwriters Juiced the IPO

LinkedIn's bankers did try create a feeding frenzy yesterday over shares. Mission accomplished.

Read the full post here at Forbes.

Sphere: Related Content

Cramer on LinkedIn IPO

In case you missed it from earlier today....

Sphere: Related Content

CNBC: LinkedIn IPO Insanity?

How do you stop a bubble? I don't know. That's really for the regulators and the Fed. I don't see this ending soon. We're still in the 3rd inning.

My appearance on CNBC's Closing Bell today:

Sphere: Related Content

Eating Crow - or Resumes -- about LinkedIn IPO

Here I am eating crow with Matt Nesto and Jeff Macke this morning, after saying yesterday that LinkedIn (LNKD) was too expensive at $45:

Sphere: Related Content

LinkedIn Investors Bank On Growth

By Eric Jackson
RealMoney Contributor
5/19/2011 12:15 PM EDT
Click here for more stories by Eric Jackson

I'm amazed that LinkedIn (LNKD - commentary - Trade Now) has more than doubled in value so far today. I wouldn't have bought it at $45 or $35. Congrats to the backers, insiders and institutional flippers.

The best analysis I've seen on why people are buying LinkedIn is from Henry Blodget, who argues that investors are betting LinkedIn is the next OpenTable (OPEN - commentary - Trade Now).

I think he's right. What is the connection?

OpenTable is valued based on the platform that it is growing and the future profits that it will garner from that platform.

The platform is all the restaurants that sign up for the service. Those restaurants pay a set-up fee and an annual fee. The more that sign up, the more profits that flow to the bottom line.

OpenTable currently has 20,000 restaurants signed up. The company is doing about $130 million in annual revenues.

For LinkedIn, the company doesn't have restaurants; it has corporate clients -- headhunters and large companies that constantly need to hire people -- who pay an annual subscription fee.

At the moment, LinkedIn has about 3,900 of these clients. They are going to do about $400 million to 500 million in revenue this year.

Although I've criticized LinkedIn for lacking profitability and having bloated up its sales, product and general and administration costs in the past 12 months, the one area where the business has seen enormous growth is in corporate clients, making up 43% of its current revenue (up from 23% a few years ago). This is great revenue for LinkedIn -- much better than ads on its site and premium subscriptions to individual users to see who looked at their profiles in the last five days.

The folks buying up LinkedIn today think that the company will grow this significantly in the years ahead. Lots of companies out there need to hire folks.

...

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

Sphere: Related Content

Ironfire's Jackson Interview on LinkedIn's IPO

My thoughts on the LinkedIn IPO that will price tonight, from Bloomberg TV earlier today:

Sphere: Related Content

Why You Should Opt Out of the LinkedIn IPO

LinkedIn is the central place to find professional profiles and that could help the company succeed in time. At the moment, though, it's got a problem making money.

Read the full post here at Forbes.

Sphere: Related Content