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This time the expected frenzy didn?t materialize. What accounts for the disappointing showing? A few things come to mind. Among the downsides of becoming a public company is that your dirty laundry gets a public airing. In the run-up to the IPO, Facebook?s linens were out on the clothesline for all to see.
There was broad coverage of the company?s slowing growth, and its difficulty in placing advertising on mobile devices, through which more than half its users access the website. It didn?t help that General Motors announced just days before the offering date that it was withdrawing all its paid advertising from Facebook out of doubts that the site is an effective advertising medium.
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Another telling signal... 25% increase in shares for sale days before the IPO.