Salome with the Head of John the Baptist, Caravaggio

Careful what you wish for

Sarah Lacy has found the culprit. The guy who broke Facebook. Well, not found found, she’s just reporting on it. Actually, she heard it from the “Valley Elite”. She sat down with the Valley Elite, paid them lunch, asked them how are the kids and what are the plans for this summer. The Valley Elite gave short monosyllabic answers, and just sat there, stabbing at the portobello mushrooms with the fork. Sarah noticed something was wrong and asked what is it, Valley Elite? Aren’t you enjoying the food? But the Valley Elite couldn’t hold it anymore and spilled the beans – It’s that son of a bitch Greifeld. IT’S ALL HIS FAULT.

(The word “clusterfuck” was used. Several times.)

Her theory is that software glitches on the first hours of trading drove down the stock price of Facebook. If you are to believe her, this means if there were no technical issues on IPO day, FB would now be trading at $40 and beyond, because “the allocation was several times oversubscribed at $38 a share, with many institutions willing to go higher”. If the pros, the institutions, were so bullish on the stock, why is it now trading at $27? Because people have lost confidence in Facebook. And “for confidence to be restored, Facebook needs to nail a few quarters, and given reports that the second quarter will be at the low end of analyst estimates, that could be a challenge.” Which means disappointing forecasts about FB’s performance will hurt the stock now, but couldn’t possibly have hurt it on IPO day. That was exclusively Robert Greifeld’s fault. You would think that there were several other issues to blame for this poor IPO performance right? But, actually, as time passes, it becomes clearer that it is very much NASDAQ’s fault, here represented by Robert Greifeld. “Last week it looked like there was enough blame on this IPO to go around. But as more information comes out, it seems to keep coming back to Nasdaq”.

It’s unbelievable how boneheaded the whole thing sounds.

But hey, UBS may have lost $350M on this thing. Maybe we should all be asking for someone’s head on a plate (if you know whose head we should be asking for, feel free to tell me on Twitter).

The comments on the original post are worth reading. There isn’t a single voice that agrees with the thesis presented. Now that’s my definition of clusterfuck.

Update: Roger Ehrenberg’s post, written right before the IPO, is a must read.