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May 30, 2021

Facebook's disastrous IPO is the worst in a decade

You don’t need a Yale MBA to interpret Facebook’s stock chart, which might make RIM appear like the next hot thing on Wall Street.

Though what you might not realize is that Facebook’s IPO earlier this month, the most hyped of hyped public offerings, may just be among history’s worst.

According to the chart shown below, when compared against the ten largest IPOs of the past decade, Facebook’s return after five trading days was so lousy it holds one historical distinction.

It’s the poorest performing company IPO of the past ten years.

How did we get here? Indeed, all systems seemed a go for Facebook ahead of its market offering. It raised more than $16 billion in funding when it went public, a record for tech companies.

*Bing: How to predict a stock’s performance

But Facebook’s quick and succinct downfall can also lay claim to another superlative.

Check out the chart to the side, courtesy Bloomberg. After five trading days, Facebook fell 13 per cent in worth, more than the decade’s previous worst IPO, that of derivatives broker MF Global, in 2007.

Now, after its devastating five day trading period is up, Facebook – sold first at $38 a share and going mid-day Wednesday for just shy of $29 per unit – has history to face.

Of the previous three worst-performing IPOs of the past decade, two have been long-term disasters. Asset management firm Blackstone Group, which hit the market at over $35 per share in 2007, now goes for barely $12, and MF Global collapsed into itself, succumbing to bad debt and going belly-up in 2011.

Yet there is hope. American bank holding company CIT Group sputtered out of the gate after going public late in 2009, losing value over its first five trading days. Today, though, CIT Group’s stock is up about four net dollars from where it began in ’09. Perhaps Facebook’s doom is not set in precedent, after all.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...