In Facebookland, Friday's initial public offering (IPO) of Facebook was a debacle. NASDAQ - the exchange where Facebook chose to list - said it was 'humbly embarrassed' by its failure to guarantee orderly trading.
Is anyone ever proudly embarrassed?
What a disgraceful performance by the entire investment community in America. Wall Street is a shadow of its former self. It should be able to put on a world-class sideshow to distract people from the reality of how terrible the market is. Yet it managed to bungle a gift-wrapped opportunity to pump shares.
Facebook shares closed their first day of chaotic trading exactly 23 cents higher than the IPO price. The news wires reported that the IPO's underwriters had to intervene late in the day and support the stock to prevent it closing below $38. The company closed with a market cap of $104 billion, or around 122 times trailing 12-month earnings.
The Facebook IPO is a superficial (but entertaining) sideshow to the big story in markets. That's probably fitting. Facebook IS a superficial (but entertaining) sideshow. Bull markets - or would-be bull markets - require a hopeful narrative about the future that people can believe. The trouble today is that very few people believe the immediate future is getting better, or that Facebook's public listing is a sign that the world's debt crisis is over.
Dan Denning
for The Daily Reckoning Australia
From the Archives...
The Physical Gold Market - From the Weak to the Strong
2012-05-18 - Greg Canavan
Why JP Morgan is Playing the Same Old Rigged Game
2012-05-17 - Eric Fry
Why Greece Can't Afford to Stay in the Euro
2012-05-16 - Dan Denning
A Big Oops at JP Morgan!
2012-05-15 - Dan Amoss
Preparing For China's Growth Slowdown With The 'Energy Hub' Portfolio
2012-04-14 - Dan Denning
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by shortchanged on 21 May 2012:
How does it go: great things from little acorns grow, except facebook is not small, is it?, so where to from here?. I have absolutely no interest in facetwitter etc, its just more of 'Bread and Circuses'. So i say to myself what is happening behind the scenes?. I have just read that although Greece is a basket case, Italy is in far worse shape than we have been told. DR of course, although most times a bit previous, is usually on the ball, So i await more DR musings.
Just in case i'm a bit behind the times, we in the state of 'surprise', northern Tasmania, have been without 'phones or internet for three days.