Woe, woe and thrice woe unto the capitalist system: for Facebook's IPO has been a failure.
Mere months after they floated the thing off, the share price is under half what it was and this is indeed, as those like
The Guardian tell us, a large and serious problem, prompting headlines such as:
Why has Facebook's stock market flotation been such a disaster?
At which point I say: 'Pish', and possibly even 'Rubbish, you fools'. For in my part of the capitalist universe, selling something this week for more than you can sell it next is regarded as a success. But given that everyone tells us that the Facebook flotation has indeed been a failure it's worth running through the reasons why it isn't.
There are a number of possible reasons why a company might float. The most obvious being that they'd like to get some money – INTO the firm that is – sell some new shares in the company and nicely boost the amount of capital which is available to it. This could be because the firm wishes to develop further, invest in current or new lines of business. It is equally possible that the major shareholder wants to cash in a bit and go buy that Gulfstream. Might be that other original investors would like to get out. How and whether firms float onto a public market are driven by which of these reasons are most important.
