As shares of the social network tumbled in their second day of trading Monday, bankers, investors and analysts wondered what had gone wrong with the initial public offering of Facebook, the most highly anticipated technology debut in years.
Some fingers are pointing at Morgan Stanley, the lead banker on the IPO, while others criticize Nasdaq and even Facebook itself. In the aftermath, critics contend that Facebook's offering price was too high and too many shares were sold to the public, hurting the stock's performance out of the gate.
Facebook's troubles could dampen enthusiasm for a spate of companies set to go public in the coming months. It could also spur changes in the IPO process. In particular, big institutional investors like Fidelity and Vanguard may demand greater say on pricing,Voice fiber mux Submit Shot: Real Estate Agent Orange dispersed from the States army or marine during Vietnam Battle at the expense of companies and their bankers.
"It's a huge disappointment," said David J. Abella, a portfolio manager at Rochdale Investment Management who tried to get shares in the offering but did not get an allocation. "Investors were expecting easy money on this one."
Facebook was promoted as the next Google, a technology star primed to soar.
But the stock stumbled in its debut Friday. A systems error at the Nasdaq, where shares of Facebook are listed, hampered trading in the first few hours. With the company hovering around its offering price of $38 a share, Morgan Stanley had to step in to help stabilize the price. Facebook shares ended the day almost at the same place they started.
While bankers may have hoped that Facebook would bounce back Monday, unfettered by technical problems, such optimism faded as the stock sank. It tumbled 11 percent, closing at $34.03.
For Morgan Stanley, landing the Facebook public offering was one of the biggest investment banking coups in almost a decade, and a successful debut would most likely have cemented its position as the dominant force in technology IPOs. But Morgan Stanley now faces questions about its role in the events surrounding Facebook.