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While the IPO was bad for investors, it was certainly good (financially) for Facebook. They definitely maximized their earnings from the IPO and Zuckerberg real

by Osiris 14y ago

While the IPO was bad for investors, it was certainly good (financially) for Facebook. They definitely maximized their earnings from the IPO and Zuckerberg really made out well getting just under $38/share for his $1.1bn in shares. In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did.

badusername 14y ago
I assume it was financially healthy for a very small group of people within Facebook. Most of the employees would be on lockdown before they can sell their stocks on the public market, no?
- ceejayoz 14y ago
  Facebook, the company, got a lot of money out of the IPO, not Facebook's individual employee holdings.
  - jonknee 14y ago
    Insiders got even more out of the IPO than the company did.
- ddet 14y ago
  I am assuming they have to wait 6 months, by then FB will not be worth much compared to their strike price.
  - cjrp 14y ago
    3 months - http://blogs.wsj.com/digits/2012/05/24/facebook-lock-up-expiration-not-seen-as-a-worry/ http://blogs.wsj.com/digits/2012/05/24/facebook-lock-up-expi...
    - muyuu 14y ago
      At this rate these 3 months will feel very long and they will be pretty much "a worry" for those affected.
    - zeroonetwothree 14y ago
      It's 6 months for most employees.
gamble 14y ago
The early investors made out like kings, but I doubt Facebook's employees are in a cheery mood as they watch their options sink underwater and their vested paper wealth dissipate while waiting for the lockup period to end.
- birken 14y ago
  Isn't that the fault of the private investors for overvaluing Facebook? Presumably all granted options had a strike based based on the current private valuation, which clearly the public market doesn't agree with (without judgement as to whether the public market is right or wrong).
  - jcdavis 14y ago
    From what I understand (not an FB employee, but know several) the stock grants in the last ~3 years have been RSUs not options, which at least means they can't be underwater
  - gamble 14y ago
    Yep, but it's still a problem for the company. Facebook has been on a hiring spree, backed by an implicit promise that anyone in before the IPO would be practically guaranteed to make a buck. If the IPO is still a bust by the time the lockup expires in 3-6 months, it's going to be an HR problem. Of course, it depends on how Facebook actually structures its compensation packages. RSU are more popular with most companies these days than stock options, so they may just be looking forward to a smaller payday than worthless options.
- bdr 14y ago
  I'm skeptical that FB would be higher today if it had IPOd lower.
  - dredmorbius 14y ago
    It would be higher relative to the IPO price. Among other things, this means that employee options would still be above water. Rather more motivating than underwater options after years of death-march hours.
jonknee 14y ago
> In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did. Google priced their shares based on an auction, I'd say it was priced right. It was also much smaller because it wasn't a bunch of insiders trying to dump their shares at an inflated value. Google sold 19.6M shares, 14.1M of them were from corporate. There were 271M shares in total, so only a very small amount of the company was transferred. In contrast for FB, there are 2.14B total shares and the IPO was for 421.2M of them, a much larger percentage of the company. In addition, insiders made up 241M of those shares sold, which is actually the majority of the IPO.
- asdf333 14y ago
  While this is anecdotal, some ibanking friends told me that alot of the traditional wall street banks 'boycotted' google for going w/ a smaller player who did a non-traditional format (auctions) that threatened their business model and that resulted in lower demand (and lower price) for their shares at IPO than would have otherwise been the case.
  - baq 14y ago
    another win for the efficient market hypothesis. /s
tomkarlo 14y ago
The game is not as simple as maximizing the value of just the shares being sold on day 1. Post-IPO, a company's shareholders are largely the same as pre-IPO... the value they achieve for their shares in will be determined over a much longer time frame. Reputation / performance matters.

by Osiris 14y ago

badusername 14y ago

I assume it was financially healthy for a very small group of people within Facebook. Most of the employees would be on lockdown before they can sell their stocks on the public market, no?

ceejayoz 14y ago
Facebook, the company, got a lot of money out of the IPO, not Facebook's individual employee holdings.
- jonknee 14y ago
  Insiders got even more out of the IPO than the company did.
ddet 14y ago
I am assuming they have to wait 6 months, by then FB will not be worth much compared to their strike price.
- cjrp 14y ago
  3 months - http://blogs.wsj.com/digits/2012/05/24/facebook-lock-up-expiration-not-seen-as-a-worry/ http://blogs.wsj.com/digits/2012/05/24/facebook-lock-up-expi...
  - muyuu 14y ago
    At this rate these 3 months will feel very long and they will be pretty much "a worry" for those affected.
  - zeroonetwothree 14y ago
    It's 6 months for most employees.

gamble 14y ago

The early investors made out like kings, but I doubt Facebook's employees are in a cheery mood as they watch their options sink underwater and their vested paper wealth dissipate while waiting for the lockup period to end.

birken 14y ago
Isn't that the fault of the private investors for overvaluing Facebook? Presumably all granted options had a strike based based on the current private valuation, which clearly the public market doesn't agree with (without judgement as to whether the public market is right or wrong).
- jcdavis 14y ago
  From what I understand (not an FB employee, but know several) the stock grants in the last ~3 years have been RSUs not options, which at least means they can't be underwater
- gamble 14y ago
  Yep, but it's still a problem for the company. Facebook has been on a hiring spree, backed by an implicit promise that anyone in before the IPO would be practically guaranteed to make a buck. If the IPO is still a bust by the time the lockup expires in 3-6 months, it's going to be an HR problem. Of course, it depends on how Facebook actually structures its compensation packages. RSU are more popular with most companies these days than stock options, so they may just be looking forward to a smaller payday than worthless options.
bdr 14y ago
I'm skeptical that FB would be higher today if it had IPOd lower.
- dredmorbius 14y ago
  It would be higher relative to the IPO price. Among other things, this means that employee options would still be above water. Rather more motivating than underwater options after years of death-march hours.

jonknee 14y ago

> In contrast to the Google IPO in which the stock skyrocketed on the first day and really took off after that. Google may have been able to extract quite a bit from their IPO than they did. Google priced their shares based on an auction, I'd say it was priced right. It was also much smaller because it wasn't a bunch of insiders trying to dump their shares at an inflated value. Google sold 19.6M shares, 14.1M of them were from corporate. There were 271M shares in total, so only a very small amount of the company was transferred. In contrast for FB, there are 2.14B total shares and the IPO was for 421.2M of them, a much larger percentage of the company. In addition, insiders made up 241M of those shares sold, which is actually the majority of the IPO.

asdf333 14y ago
While this is anecdotal, some ibanking friends told me that alot of the traditional wall street banks 'boycotted' google for going w/ a smaller player who did a non-traditional format (auctions) that threatened their business model and that resulted in lower demand (and lower price) for their shares at IPO than would have otherwise been the case.
- baq 14y ago
  another win for the efficient market hypothesis. /s

tomkarlo 14y ago

The game is not as simple as maximizing the value of just the shares being sold on day 1. Post-IPO, a company's shareholders are largely the same as pre-IPO... the value they achieve for their shares in will be determined over a much longer time frame. Reputation / performance matters.