Reasons Why The Facebook IPO Failed

Investors were being cautious

Investors are being more cautious than during

the tech bubble of the late 1990s
During the tech bubble venture capitalists had
invested $150 billion in 2 years.
In the last 2 years $60 billion has been invested
which means that there is less money in the
system now
People have learned their lessons and its
preventing a bubble from forming

Its NASDAQs Fault

NASDAQ did not offer the stocks until 11:30am

EST,30 minutes later than planned
The stock exchange didnt finish filling orders for
the stock for about two-and-a-half hours.
The resulting confusion didnt do Facebooks
stock any favors.

Investors Are Wary of Social Media

Stocks

Of the 19 social media IPOs of 2011, 82.4% were

trading below their opening-day prices by years
end
Zynga, the social gaming website which has
strong ties with Facebook has lost around 35%
Online deals firm Groupon slid by 40%
LinkedIn has doubled in a year since its IPO

Its GMs Fault

General Motors Quit placing Ads on Facebook

because they were not getting any sales
Issue is whether Advertisers can sell anything via
Facebook
Serious investors do not see how Facebook can
successfully monetize its large following

Its Overvalued

Facebooks valuation of $100 billion-plus is based

on expectations of future performance.
At its current valuation, Facebook is worth more
than McDonalds.
McDonalds posted $27 billion in revenues last
year and a $5.5 billion profit
Facebook made $1 billion on $3.7 billion in
revenues.

Wait-And-See Attitude

Most investors are waiting until the hype dies

down and then they will assess the stock.
It may continue to be popular but not very
profitable.

Recommendations

Going Public may not be the best option

Getting Acquired or trying to wait out the volatile
period is better

THANK YOU