Retail Investors Lose at Least $630 Million in Facebook IPO

May 24, 2012  •  Post A Comment

Retail investors who bought shares in Facebook’s initial public offering have lost at least $630 million, based on the stock’s closing price yesterday, reports Bloomberg.

“It’s disheartening to know that things get over-hyped,” said Ryan Cefalu, who bought shares valued at $4,000 in the IPO. "That’s about a 12th of my annual income — so a month’s salary. I’m trying to do an on-my-own retirement kind of thing.”

Asset managers and hedge funds were able to buy the shares in private trading years before the IPO, while investment banks made money from the offering, the story points out. Smaller investors like Cefalu had to wait for the IPO, which was misjudged in terms of demand and pricing, the article notes.

"Facebook, the biggest technology IPO in history, turned into a quagmire of blame. Buyers of the stock sued the company, Nasdaq OMX Group Inc. and the underwriters, claiming they were misled. The U.S. Securities and Exchange Commission and the brokerage industry’s watchdog both said they may review the offering, and the scrutiny prompted Morgan Stanley, the lead underwriter, to defend its handling of the IPO in a statement," the piece reports.

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