Content area
Full Text
Friday, May 18, 2012, should have been a glorious day for Facebook. Poised for an initial public offering that was expected to make history, founder and CEO Mark Zuckerberg rang the Nasdaq trading bell from Facebook's California headquarters.
Then the trading actually commenced, and all hell broke loose. Mass confusion among the banks and brokerages involved--stemming from a Nasdaq technical glitch that delayed the start of trading--caused havoc as customers placed stock orders that didn't go through or were filled at a lower price later that day.
What really happened? Stock market experts say that there was too much overall trading volume for Facebook that day, exacerbated by Nasdaq's technical shortcomings and by a questionable move by Facebook, which two days before the opening bell increased the number of shares offered in the IPO to 421 million from 337 million.
By Tuesday, May 23, Facebook's stock had plunged 18% from its original IPO price--it hovered at about 16% on May 24--and a group of investors were suing Facebook and Morgan Stanley for not disclosing key information about reduced revenue expectations. Headlines like "Facebook Has No Friends" began rearing their ugly...well, you get it.
Who knows, a year from now this botched IPO could be forgotten. Or, this could be a disaster that might damage the social network beyond repair. In any case, this was far from perfect execution. So just what does make a solid IPO from a financial communications standpoint? We talked to IR experts in both corporate and agency settings to find out.
COMMUNICATIONS FUNCTION
Lisa Rose, senior managing director at Dix & Eaton, has handled her share of IPOs. She says early on in the IPO process, what's often...