The fallout from Facebook’s initial public offering earlier this month continues to play out in public markets and the media, but according to many in the tech investor community, negative aspects of the social network’s stock market debut may not have really been the fault of the company or even the bankers who managed it.
Other venture capitalists have already come out in defense of the company and its IPO, but the latest big name to offer this opinion is Mary Meeker. In an on-stage conversation at the D10 Conference in Southern California where she presented her latest report on the state of the Internet, the Kleiner Perkins partner and longtime Wall Street analyst was asked what she would have done differently about the Facebook IPO had she been involved. In a detailed answer, she essentially said that she wouldn’t — because the situation was so completely unique.
“Facebook shares were trading at $104 billion on the private market,” she said regarding the stock’s initial pricing, adding that the Facebook IPO was the largest in terms of market cap “in the history of probably the world, and the United States for sure.” Facebook’s stock had more trading volume on its first day than any other IPO in history, she said, and on its first day of trading it alone traded more shares than the average daily trading volumes typically seen by both the New York Stock Exchange and the NASDAQ.
“This IPO was a financial share tsunami,” Meeker said. “This is hard stuff… have you ever been in a tsunami or a hurricane?”
She noted that since the NASDAQ exchange had real difficulties in processing all this input, glitches and backups occurred on that first day, which in turn scared off many investors. Those early blows had real effects, she said: “Confidence and momentum in markets is so important.”
All this is to say that the bankers involved in pricing and managing the Facebook IPO did their jobs as well as possible, according to Meeker. “These people are very good at what they do,” she said, continuing later that “It was one of these things where, we’ve never seen anything like it before, and I have sympathy for the situation… the bankers did the best they could with available information they had.”
As far as Facebook as a company, Meeker said that while she can’t give specific financial advice, she suggested that while right now might be the best time to buy its stock because of the general tumult surrounding it, overall Facebook is not going anywhere. “This is a great company, and it will do very well over time,” she said. “It’s precarious to buy and sell and do anything right now, and we have to wait for it to settle in.”
Mary Meeker has joined the Kleiner Perkins Caufield & Byers as a partner. Previously she joined Morgan Stanley in 1991 as the Firm’s PC Software/Hardware & New Media analyst. Earlier, she served as a Technology Research Analyst at Cowen and at Solomon Brothers. She received an MBA in Finance from Cornell University in Ithaca, New York (1986), and a BA in psychology from DePauw University, in Greencastle, Indiana (1981) . Meeker’s work has been recognized in various Wall Street Analyst...
Facebook is the world’s largest social network, with over 1 billion monthly active users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz, Chris Hughes, and Eduardo Saverin to help build Facebook, and within four months, Facebook added 30 more college networks. The original...