Whose side are you on?
The investors who bought Facebook at the IPO price? The underwriters who sold it to them. Facebook itself, which sold the stock to the underwriters. The early stage investors who typically bought the stock for pennies and sold part of the deal to the underwriters, as well. The CFO at Facebook who told the underwriters business was slowing because the software didn’t work so well on mobile phones. The research analysts who work for the underwriters who got that information and passed it along to their salesmen, who passed it along to at least some of their buyers, who bought the stock anyway. The Wall Street Journal, who published the whole thing before the IPO took place. The Nasdaq stock exchange, which spooked everybody because it couldn’t handle the trading. Or Bill Galvin, Mary Shapiro, and the rest of the Obama People who plan to make sure the culprits pay, whoever they are.
Right now Elizabeth Warren and guardians of the poor downtrodden seem to be on the side of the IPO investors. The people who got in on the offering, who bought at the stated price, and didn’t have to chase the stock in the aftermarket. Those poor souls. The ones who, by and large, planned to flip it to people like you and me at $70 a share a minute later. (The stock came out at $38.) The same guys who had the connections to buy Demandware at $16 and flip it at $30. The same ones who flipped Yelp at $30 after buying at $15. The guys who hardly ever lose, at least on these deals. They have a price to pay, make no mistake. They have to buy the duds, too. And they have to give Goldman Sachs and Morgan Stanley stupid high commissions on their regular business. To get the access.
This time they lost. As Elizabeth Warren says, “Good for you!” They’ll get it back. Or they won’t. Whatever. What the heck does Bill Galvin care about the institutional investment community. They’re the only ones who got in on the deal, except for some high net worth individuals who play the same game but rather than hire someone they do it themselves.
Then again, it is an election year and those campaign contributions are pretty big when they come from Wall Street.