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Tags: Facebook | IPO | Hold | fail

Experts: Poor Facebook Showing Puts Other IPOs on Hold

Thursday, 31 May 2012 11:21 AM EDT

Companies are putting off going public thanks to the heavy losses Facebook shares have taken since going public on May 18, experts say.

The social network's stock, initially priced at $38 a share, is trading about $10 lower on concerns that despite having 900 million users, monetizing that base and generating revenue will prove to be challenging.

While Facebook's income issues may be company specific, firms are putting off going public anyway, especially with portions of the European economy teetering on the brink of collapse and sending shockwaves to markets everywhere.

"The current market is on hold," James Krapfel, an analyst with Morningstar Research, tells the New York Times.

"It’s pretty ugly out there," another senior banker tells the Times.
In 2012 so far, 73 companies have raised $29.1 billion going public, the New York Times adds, citing Thomson Reuters data.

Facebook accounts for more than half of that with its $16 billion offering, making 2012 one of the worst years for IPOs since 2007.

Nasdaq technical glitches marred the Facebook IPO, and underwriter Morgan Stanley and others are battling accusations that revised Facebook income estimates were not made available to all investors, while the share price was set too high.

Morgan Stanley CEO James Gorman reportedly told an internal staff meeting that the bank had worked "100 percent within the rules," sources tell the AFP newswire, adding Facebook's Chief Operating Officer Sheryl Sandberg told Gorman the company was satisfied with the handling of the offering.

Macroeconomic factors are to blame for slumping share prices as well.

"You don't control Nasdaq and you don't control Greece and the environment," Gorman said, the AFP adds.

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Thursday, 31 May 2012 11:21 AM
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