Now members of Congress want to know why Facebook IPO was a train wreck
Necessary intervention by the government in an out of control financial disaster? Crass opportunism by DC fatcats looking to make political capital off someone’s misfortune? Not mine to say. Regardless, members of Congress are calling for an inquiry over the whole Facebook IPO ick.
Lawmakers want to know whether institutional investors got a sneak peek at an updated analysis, written just before the initial public offering, that gave a more pessimistic assessment of Facebook’s future revenues. It’s that analysis that might have caused the hotly anticipated stock to tumble out of the gate, losing more than a quarter of its value in its first two days on the open market.
The word going around is that someone within Facebook did indeed tip off investment houses that the stock was overvalued, says the NYT:
In the days leading up to Facebook’s debut, analysts at several banks ratcheted down their growth estimates for the social network. The move came after the company told them that quarterly and annual revenue would be on the softer side, said people briefed on the matter who spoke on the condition of anonymity because they were not authorized to discuss the issue publicly.