Facebook's failed IPO illustrates the hubris and greed of the bankers that advised the company. Instead of pursuing a sensible investment strategy, they tried to cash in on the public offering of one of the world's most revolutionary companies.
Please forgive me for the blunt use of adjectives, but the Facebook experience leads me to the belief that bankers are stupid. The Facebook IPO was a great, unique, marvelous chance to clean up their image. After all, the most revolutionary website of the last fourteen years (Google was founded in 1998) was up for grabs. Banks could have enjoyed the marketing boost of helping little families own a stake of the blue brand, where everybody – be it the little daughter or even grandpa – joyfully spends large chunks of his or her spare time.
And what did the banks do? They messed it up. They tried to cash in on grandpa and on the little daughter. The price chosen for the shares was too high: It dropped to a low of around 31 dollars after an initial quotation of 38 dollars per share. Some investors also claim that Morgan Stanley (the bank behind the marketing disaster) and Facebook withheld “negative information” that could have likely influenced the stock price. The father of little daughter lost money and now has to bear the insults of grandpa, who calls him a money squanderer.
Bankers should not despise marketing