Facebook said its initial public offering was fairly valued, according to a back-and-forth correspondence with regulators ahead of its IPO.
In documents released by the SEC Friday, Facebook (FB) said the difference between the company's fair value of $30.89 a share on Jan. 31 and the midpoint of its offering wasn't "meaningfully different."
In 2011, Facebook's fair value estimates went from $25.54 in March, to $30.07 in September before dropping back to $29.73 by the end of the year. The company said the fluctuations were due to "external events," including media reports on the timing of its IPO, investor speculation about its finances, and the same economic worries that affected the broader market.
Facebook originally set a price range of $28-$35 a share but a few weeks later, the company upped that to $34-$38 a share. It finally priced its IPO on May 17 at $38. Demand for the stock was said to be heavy, and investors were eager for Facebook to surge in its market debut.
But the next morning, everything that could go wrong did. Nasdaq (NDAQ) got overwhelmed by the volume of orders, delaying the opening by nearly 30 minutes and causing many small investors to get stuck with shares they didn't want. The lucky investors simply missed out on shares that, in hindsight, they would not wind up wanting.
The stock briefly popped as high as $45. But the stock quickly pulled back and even threatened to close its first day of trading below the offering price. Since then, the stock has fallen more than 25% from the $38 IPO price. Facebook, lead underwriter Morgan Stanley (MS) and Nasdaq have all come under fire for the botched debut.
Morgan Stanley's CEO, James Gorman, has been unapologetic. "It was one of the most volatile openings to an IPO ever," Gorman told CNBC's Maria Bartiromo last month. "It's also one of the largest, and [a company] that touches 900 million users. It's got hype in every direction."
And Nasdaq has offered a paltry $40 million to compensate trading firms for losses caused by the glitches that delayed Facebook's debut. But that won't help the smaller investors, many of whom are still trying to recoup their losses.
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