Facebook IPO and a Tale of Two Cities - Part 2

The Facebook IPO really has also been a Tale of 2 Cities - or rather, one city and the Rest Of World. Lets face it, an IPO of this level of hype that sputters, which still forces the under-writers to step in and buy the shares to keep it at the out-the -gate share price, is a Fail. Yet I see many of the Valleyblogs are still faithfully drinking the Kool Aid, while most everyone else is more sanguine - Techmeme records the roster of Kool Aid drinkers and Uh-Oh sayers:

Everything is Rosy through the Kool Aid Lens

John Paczkowski / AllThingsD: - The Price Is Right: Facebook Closes Near Opening Price
Dan Primack / Fortune: 38 Special: Facebook bankers got it right
Erin Griffith / PandoDaily: No Pop Equals a Flop? Welcome to the Irrational World of Public Markets, Facebook
Don Dodge: - Facebook did a great job with the IPO. 500M shares traded and it closed at $38, where it opened. Fairly priced, optimized proceeds to FB.
Lizette Chapman / Venture Capital Dispatch: Greylock's David Sze: Facebook Has Three Things Great Companies Need
Amit Chowdhry / Pulse2 Technology and Social Media News: Mark Zuckberg: “Our Mission Isn't To Be a Public Company”

Uh Oh

Larry Dignan / CNET: - How Facebook's bankers saved an IPO, kept shares above $38
Kim-Mai Cutler / TechCrunch: - Bankers Got Too Aggressive With Pricing Facebook As They Struggled To Keep Shares Above $38
Wall Street Journal: - Facebook's IPO Sputters
Business Insider - Facebook holds the IPO price after war of $38
Michael Hiltzik / Los Angeles Times: Facebook's epic fail
Los Angeles Times: Facebook IPO falls short of the hype
Reuters: Overhyped? Facebook shares stumble on debut

As you can see (with the interesting exceptions of Forbes & TechCrunch), you can define who says what pretty much by closeness to the Facebook epicentre

Incidentally, quite a few of the stories say "observers expected the shares to rise" - I want to know who those observers were, and what they had been drinking over the last few days! They were clearly not reading the newspapers, blogs or financial magazines outside the Kool Aid bubble! (see Tale of 2 Cities - Part 1)

Longer term, pricng it this high really puts the future Facebook under pressure. I think Brent Hoberman's piece in the Guardian said it best - Facebook was "priced for perfection" - meaning they would have to execute perfectly from now on:

The night we went public and raised £120m, Martha and I were very subdued. It felt as if we had the weight of the world, and our employees, on our shoulders, and that the company was priced for perfection. That was massive pressure. However, now I look at Zuckerberg and see someone who really does have the weight of the world on his shoulders, is only 28, and doesn't have a proper business partner.

I had hoped Facebook would resist the temptation that we also felt, to raise the price too much. In our case I'm not sure the added pressure was worth it, and in theirs they really don't need the extra money. I suspect Zuckerberg will feel that pressure, that his world is surreal. But he will be happy that he has been given this chance to continue to change the world – and follow his passion. And that his creation's future is assured for some time to come.

Update - another SV Pangloss-over on TC on Sunday, my favourite line:

According to the pundits, what really matters is that the stock price didn’t increase in value–or “pop”–post IPO and is being propped up by banks.

Actually, what the (indpendent and knowledgeable) pundits were really noting that what mattered was the underwriting banks were having to come in big time to support the price. Monday should be very interesting....