WHY FACEBOOK'S IPO POP FIZZLED: Nasdaq Wasn't Telling Desks If They Got Their Stock

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Photo: milkmit/Dylan Love

Facebook’s IPO, priced at $38, only managed to pop to $45 and then sank back to $38.This was surprising.

What happened?

A theory from a source close to FB’s IPO bankers: The volume that caused NASDAQ to delay the IPO for more than a half hour, also prevented Nasdaq from informing big bank trading desks whether or not their trades on Facebook had gone through.

This left trading desks in a position where “you don’t know whether you bought it, and you think you did at $42 but you’re not sure,” says our source.

That “uncertainty” combined with a huge amount of stock supply led to a “wave” that brought the stock back down to $38.

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