I'd like for someone to explain precisely what Facebook should have done to ensure a big pop. Value the shares at $5? What if their internal projections indicated the company was worth more than that? Picking an artificially low strike price for the options probably would have resulted in people going to jail, not to mention all the employees owing taxes on the difference.
You assume that the number of shares being offered was static, hence the price drop by half.
More realistically, Facebook should have sold less shares, which would have kept the price at that target. But I guess it couldn't sell less: they had a bucketload of people who wanted to sell, and all the biggest potential buyers had already bought... Lesson learned: don't get talked into secondary market abuse...
Maybe I've had too much coffee so I'm not understanding your comment, but market cap is based on total outstanding shares, whether they were being sold on the market or not. 10 stocks issued total, company's value doesn't inherently change based on whether 5 stocks are sold in public vs 10 vs 1.
Sure I get the supply and demand thing you're trying to articulate, but the reality is that I as an investor am concerned that FB is overvalued at 100B marketcap, whether the shares are sold at $1 or $10000.
...not sure you understand how market cap is calculated. The float (# of shares available to the public) can vary, but the total # of shares, in the absence of a split/new issue/retire, will remain static.
How about a time machine to take all the retail investors back to 1999? Back then everyone just piled in their orders without thinking twice. This attitude is what Wall Street was hoping would return.
