Former Morgan Stanley Internet analyst, and current Kleiner Perkins partner Mary Meeker blames NASDAQ.
Speaking at the AllThingsD conference she said the big problem was that NASDAQ got overwhelmed by orders. Then traders weren’t sure if they had the shares or not. They got spooked and stopped buying.
Once the stock started cratering, it was curtains for Facebook, says Meeker.
This has become a relatively standard line of thinking on the IPO. On the first day of trading, it makes sense, but we’re over a week removed from the IPO. The kinks have been ironed out.
The real problem is that Facebook’s business doesn’t appear to justify a hefty valuation. Should Facebook trade at 60X next year’s EPS versus Apple at 10X? Does that make sense?
She added, “This is a great company,” and “it will do well over time.” She thinks the $38 IPO price wasn’t a mistake because it’s not like Facebook, or its bankers were operating in a “black box.” They had constant information on demand for the stock and pricing.
Facebook had an opportunity to raise $16 billion in one fell swoop. Its biggest rivals, Google, Microsoft, and Apple, all have piles of cash. If it’s going to compete with them, then it needs a healthy war chest too, said Meeker.
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