Checkered IPO doesn’t define Facebook

Marketplace Contributor May 22, 2012

Checkered IPO doesn’t define Facebook

Marketplace Contributor May 22, 2012

Kai Ryssdal: We’re gonna start with some more about the Facebook IPO today.

Actually, wait. You know what? We’re not.

You’ve heard about nothing else for days. Facebook, the IPO, was a mess. But how does it all actually affect Facebook the company?

Our New York bureau chief Heidi Moore reports.

Heidi Moore: Wall Street giveth, and Wall Street taketh away. This week, the stock market subtracted about $20 billion from the value of Facebook.

Paul Argenti: So this dissatisfied those who wanted to make a fortune in a few days. Too bad. It doesn’t mean it’s not a great company.

That’s Paul Argenti, a business professor at Dartmouth. He’s a bit exasperated with the obsessive postmortems on Facebook’s IPO.

Argenti: The IPO might have been overpriced, and they might have been a little greedy, thinking that they could do so well. I don’t think it’s going to stop them from implementing their strategic plan over the longer run.

That plan includes acquisitions like Instagram and figuring out how to make money from  smartphone users. Facebook just added $7 billion to its war chest that can help feed investors appetites. The market always wants higher profits, lower expenses, dominant market share — every three months. Or else their stock price gets it.

Peter Falvey is an investment banker at Revolution Partners who’s advised dozens of companies on going public. He says Facebook’s IPO has nothing to do with its business.

Peter Falvey: The IPO is a parlor game as much it is relevant to where they’re going to be in the next three, five, 10 years.

Remember, investors doubted young Google and young Amazon. Anyway, a wildly successful IPO can also be a curse. Duncan Davidson is a venture capitalist who took a tech company public during the dot-com boom.

Duncan Davidson: We went public at $18, we went to $135 in three weeks. No one inside the company was working! They were all checking Yahoo! for the ticker price.

Davidson has some advice for Facebook: don’t forget it’s just paper money.

In New York, I’m Heidi Moore for Marketplace.

Ryssdal: Facebook shares today, by the way? Down another 8.5 percent, almost $3. Closed just over $31 a share.

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