Perry Glasser

Archive for May, 2012|Monthly archive page


In Business, Finance on May 23, 2012 at 1:23 pm

Mark Zuckerberg

Facebook’s IPO is so mishandled, Wizards forget to screw Citizens!

The Facebook IPO was a series of blunders that left underwriters and venture cap investors holding a very malodorous bag.

Dollar$ urges you not to weep.

You have to understand how it works.

Some people own racehorses and some people bet on racehorses. Wizards not only bet, they also own the racecourse. Whenever they can, they make sure the horse on which they are wagering has the inside track, is carrying less weight, and is gifted with a magical jockey.

The name of the racecourse is NASDAQ.

You can start a business in your Harvard dormitory room, but after expanding to a few million subscribers, you need money to grow any larger. Zuckerberg is a lot of things, but none of them is stupid, so without giving up much control he and his inner circle took on partners. A few million dollars here, a few million there, it all works out since venture capitalists are inside investors  who share the large risks of any new company by accepting a percentage of the business.

Zuckerberg and Co. has been limping along on money borrowed from venture capitalists, those Wizards who inhabit the upper stratosphere in such firms as Goldman-Sachs, Morgan Stanley, and a host of other banks that are not regulated by the banking laws because Ronald Reagan had friends who needed to make more money.

Investment bankers are not in it for the long haul. They do not want to own a racehorse. When the race is done, they want to cash out, and that means they require Citizens to buy in at whatever inflated price the Wizards think can be hyped. That is the Initial Public Offering, the IPO in Wizard-Speak.

The art of bringing a company to market lies in determining how many shares can be issued to the public and at what price. You’ll recall months of speculation: What is Facebook worth?

Investment bankers are NOT look for a fair price. In fact, they want a price slightly BELOW fair, because in that way the price will be bid up, the earliest buyers will make profits almost instantly, and buying hysteria will ensue. It we throw a bleeding racehorse into a shark tank, the resulting feeding frenzy will get us one last quick dollar from the poor nag.

Wall Street Prognosticator

Investment bankers want market hysteria, with potential buyers—Citizens—selling their children into slavery, hocking the family jewels, and cashing out the college fund for a shot at buying these shares. Since Citizens do not have massive Cray computers trading on algorithms at the speed of light, their wallets may be emptied efficiently.

Alas, the Solons of NASDAQ blew it. Never mind that they issued too many shares and left Facebook a glut on the market, never mind that the first trades in Facebook were delayed, it seems they also screwed up any number of sales that never went through.

Think of the Citizen luck! You put in an order that would have resulted in a 15 percent loss in 2 days—but they forgot to take your money!

O woe!