To say that Facebook's debut as a public company was bungled is something like saying Facebook is a website you might have heard of.
Either way, a colossal understatement.
The response from small-time investors has been equal parts frustration, confusion and bitterness. Fed up, some are dumping their shares and accepting the losses. Others, while miffed, are holding on and hoping to ride the stock's eventual success.
Some blame themselves for embracing the hype over a company whose underlying value likely didn't merit the price at which it went public. But many accuse Facebook and its underwriting banks of setting the price too high and for trying to sell too many shares.
Others are pointing fingers at the Nasdaq stock market for botching buy and sell orders on opening day. Or they're angry over brokers who pushed them to buy.
And others are irked over reports that Morgan Stanley, which guided Facebook through its public debut, told only some select clients of an analyst's negative report about Facebook before its stock began trading May 18.
Michael Hines had felt uneasy about Facebook. He thought the shares were priced too high, and the excitement overblown. Yet when the chance arose to buy into the company's $38-a-share initial public offering, he seized it."I figured: Nothing ventured, nothing gained," said Hines, 61, a retiree and private investor in Boston.
Now, he wishes he'd listened to his misgivings. Instead, Hines watched with dismay as the stock languished on its first day, then slid on its second. On Tuesday, determined to unburden himself of a nagging headache, he sold his shares at $32.76, taking a loss on his investment. He declined to say how many shares he'd bought.
His son, Brad, also bought shares on the first day, at about $40.50, and was also irritated. However, he is keeping his shares and says he might even buy more if the stock keeps falling.
As the lead underwriter for Facebook's IPO, Morgan Stanley was expected to set shares at the highest price it thinks the market will bear. But investors have also come to expect that an initial share price will be low enough so the stock can climb on the first day, when interest typically peaks. U.S. companies that have gone public this year have returned an average of 16 percent on their first day, according to Renaissance Capital.
Among those who blame their brokers is Joshua Freeman, who said he bought 200 shares in the IPO after his broker at Morgan Stanley Smith Barney asked if he wanted in.
"For him to call me and solicit me, and then for things to go so spectacularly stupidly, why am I paying him 1 percent of my money under management?" said Freeman, 51, an information technology professional in New York.
Morgan Stanley disputes the allegations. "We have clearly put clients' interests first by correcting pricing on some trades that were mispriced because of trading glitches beyond our control," it said in a statement.
Before Facebook's public debut, some investors were considering what to do if the stock price doubled the first day. Instead, it closed a paltry 23 cents higher. It tumbled $7.23 the next two days. A week later, it still hasn't begun to recover. It closed Friday at 31.91, down 3.4 percent on the day and 16 percent below its initial price.
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