May 18 feels like a long time ago. That morning, everyone who cares about these things was locked onto their screens watching Facebook price its IPO at $38 a share. By the end of the day, the stock closed at $38.23. Technical victory, right? Except the whole thing was basically a marketing failure dressed up as a win, and the last three weeks have been brutal proof of that.
Here's what we've gotten: endless recriminations, congressional scrutiny, lawsuits being prepped like sandwiches at a deli counter, and a stock that's currently trading around $31. Do the math yourself. Facebook lost 20% of its value in three weeks, and the thing that makes this so embarrassing is that none of this should have been a surprise to anyone underwriting the deal.
The IPO was supposed to be the coronation moment. A $104 billion valuation. Mark Zuckerberg getting all the way there at 28 years old. And instead we got the NASDAQ's worst opening-day performance in years, a glitchy trading system that nobody can stop talking about, and serious questions about whether the underwriters—JP Morgan, Goldman Sachs, Morgan Stanley—actually knew what they were doing, or if they were just cooking the numbers to close the deal.
What irritates me most is the narrative that keeps surfacing: that this is somehow about Facebook's business being weaker than expected. It's not. The company has nine hundred million users. Nine hundred million. They're printing money. Every quarter shows growth. The problem isn't Facebook. The problem is that someone decided to value it at a number that made no sense, and when you base an IPO on bad math, bad math follows you.
I watched the NASDAQ issue flow out in real-time. Delays opening the stock. Trading glitches. Systems that couldn't handle the volume. You'd think the exchange handling one of the biggest IPOs in history would have maybe stress-tested their servers, but apparently that's just wishful thinking. The technical failures meant a lot of regular people who wanted to buy at the open couldn't actually buy at the open, which then compounded all the other problems.
What gets me is how transparent all of this was. The valuation never made sense. Tech companies are valuable, sure, but you don't just wave a hand and declare something worth $104 billion without backing that up with something resembling actual math. People have been pointing out for months that the P/E ratios on tech IPOs have been insane. This was always going to correct. The only question was how hard it would correct, and we're still finding out.
The lawsuits are going to be messy. The investors who lost money want someone to blame, and they'll probably get to pick from a line of people who bungled this. The underwriters are going to fight it. Congress is going to hold some hearings where people ask questions they don't understand to witnesses who won't give straight answers. Nothing will really change.
Meanwhile, Facebook itself is fine. The company is still generating money. Revenue is up. Users aren't leaving. It's profitable. But that doesn't matter right now because the stock market has decided the price they agreed to was imaginary, and reality has a way of correcting imaginary things, usually faster than anyone expects.
Three weeks ago everyone was talking about how this proved that tech was back, that the next boom was here. Now everyone's asking if we learned anything from 2000. I'm betting we haven't.