Kirkpatrick, David, Newsweek
Byline: David Kirkpatrick
The lessons of a roller-coaster IPO.
For a week, the world went Facebook-crazy as the company's initial public offering of its stock turned into a circus of fervor, greed, and--ultimately--alarm. When the stock finally began trading on Friday morning, it opened at $42 a share, $4 above the offering price of $38. But for those who had hoped Facebook would offer a beacon during dark economic times, there was disappointment. The social network's stock ended almost where it had started--at $38.23 a share, and would almost certainly have dropped further if the underwriters--led by Morgan Stanley--hadn't themselves piled in to support the price. Nonetheless, even this disappointing debut left Facebook worth a stunning $104 billion.
What made the IPO such a cultural touchstone? Was it the youth of its 28-year-old CEO Mark Zuckerberg? Or the fact that half of all Americans and 900 million people around the world spend a considerable portion of their lives there? Or was it the clash of generations over how quickly tech is transforming how we live?
In what could be seen as a symbolism-fraught pushback by the old guard against the new, there was news, only three days before the IPO, that General Motors had decided to stop advertising on Facebook. GM said it had concluded that ads on Facebook don't sell enough cars. It was as if the one-time blue-chip sneered at the upstart company like an aristocrat dismissing the prospects of an arriviste debutante. The auto-giant news raised a red flag for many about Facebook's sky-high valuation and cast a pall on the impending IPO. …