Facebook’s mixed stock market listing may lead to other IPO’s being delayed
June 01st, 2012 - 10:20 am ET by C. D.
There is a before and after for Facebook’s stock market listing. The difficult beginning for the social network has led to other hopeful IPO’s running scared from the public markets.
It should have been a listing with a lot of fanfare, but it has turned out to be a particularly difficult moment. Facebook’s stock market listing hasn’t really lived up to its promise of setting the stock market on fire with a large number of investors now already in the red.
Some are asking for explanations from the investment banks that underwrote the IPO and then dumped in the first half an hour after the stock went public. It was during this time that traders didn’t have visibility about what was really happening with the shares changing hands – a fact that is now being investigated.
With the shares dropping below 30 dollars, a long way from the 38 dollar list price, other companies that were looking to list on the stock market by following in Facebook’s footsteps are now thinking twice about approaching the market.
Between the concerns linked to the European economic situation and this disappointing debut for the social network, it would appear that the time isn’t right for IPO’s. Bloomberg reports that their IPO indicator dropped 15% in May, with companies thinking twice about going through with their listings.
The Russian social network VKontakte has taken a break with their project, along with other companies like Kayak Software (online holidays) and Graff Diamonds (jeweller). Facebook’s failure has created a feeling that it is no longer lucrative to list on the stock market.
Close to fifteen IPO’s have been delayed, or even abandoned in the case of VKontakte. Since Facebook’s listing on the 17th of May, no one is interested in attempting a listing. This could be the end of the speculative bubble carried by overestimated valuations.