In case you have a deaf ear to the world’s biggest social networking company, on Friday, May 18, 2012, Facebook had it’s initial public offering on the NASDAQ stock exchange.
Starting at a comfortable $38, the stock took an early tumble by the end of the day as a deluge of buyers followed the major investment companies into the stock. Whether Facebook was worth $100 billion or not didn’t matter – this was as sexy as Wall Street could come outside of Armani suits and Ferragamo shoes. A web company, many believed, that could rival Google as the greatest web IPO of all time.
Naturally there seems to be a gross miscalculation in both value and necessity. The Nasdaq Exchange had “auction software problems” early on, delaying the debut, preventing a fair playing field on trading, and confused the hell out of every clueless investor. Furthermore, the IPO was supposed to be supplemented by Wall Street’s largest companies/crooks: Goldman Sachs, Morgan Stanley and Bank of America had projected a high revenue growth which would have led to massive investment from both firms. By the end of the day they had all lowered their expectations. The stock began to plummet. Regulators have stepped in and brought legal action to Morgan Stanley for possibly deceiving their customers. By tuesday the stock lost 18% of its issuing price, dropping to $31.
Mere hours before their debut on Wall Street, Facebook was sued to the tune of $15 billion due to privacy issues. Not small ones. The case involves tracking browser activity after the Facebook user had logged off the site, and with only twenty known plaintiffs, it is only a matter of time before more people are added to the case. You might be a part of it yet, so check your cookies before you wipe them clean. With over 800 million users, $15 billion looks like a conservative number when each violation constitutes a $100 fine per day (as per the US Wiretap Act). Facebook isn’t the only company to do this. But the lawsuit on the day of your company going to public is more than a wet blanket – it is a fart in that blanket as well.
Ok, that sounds pretty gloomy and ridiculous. Almost too impossible to believe. You might be saying, “Alec, this is all legal jargon, financial bullshit, and a bunch of big words that don’t mean very much to me. These guys are making a ton of money, they made an app, my photos are everywhere, that’s awesome. And they are giving a middle finger to the man in the process! And these bankers are losing money! How cool is that?”
I haven’t said it yet, well, let me make this very clear: this is a company that appropriates your information in the name of “sharing” and “friendship,” made more than 1,000 people millionaires, has been sued for using your information improperly, and has made the 1% crowd that.much.richer. Your every photo, status update, “poke” and what have you has made them money. And if anything, this should reveal the depths of the financial misery of the US banking and regulatory system, the same one that is oppressing each of you (YES YOU) each day.
The two main backers of this IPO – those who provided the high valuation, made the high bets, and drove the price to an absurdly high level, are the same ones that have bet against the US economy and citizen. Goldman Sachs has been bailed out by the Federal Government over 46 times in its history. During the financial meltdown of 2008, the company received close to $782 billion in bailout money, yet in 2009 posted its BEST YEAR EVER. Bonuses for all!!!!!!! This, of course, is the same company that produced such financial luminaries and golden-toilet-paper kings as the disgraced Jon Corzine, self-serving Henry Paulson, and other financial “geniuses.” Morgan Stanley’s track record is not much better. I hate citing Wikipedia, but one can only look at the controversies and payouts section to see how much they “get it wrong” on a yearly basis.
Several months ago I interviewed Hugh Howey, a science fiction writer who has basically gone from DIY author to star-in-the making. If you STILL haven’t read Wool, do it. In our interview, Howey discussed the ethical considerations of science fiction and how the moral / ethical values new technology. As evidenced from what I have described above, it is clear that both Wall Street AND Big Banking have ignored the lessons of past web IPOs. Let’s be honest: a poor person of any country could NEVER have bought a single share of Facebook stock, even if they wanted to. The holier-than-thou financial system, who defines success on profit lines alone, has only enhanced their reputation as the snake-oil-salesmen of our generation. The Masters in Business Administration used to be a degree to accelerate small and large businesses; now, it is a symbol of corruption and an easy way to define a person as a selfish asshole who will fire half your company to get higher dividends for one quarter. Why? Cause it’s worth it. Where are the ethics? Where are the morals? Where are the values? This is not America!
While Facebook did a good job of giving the man the finger, they also gave their consumer the finger as well. Hey, I would have bought the stock if I was given the knowledge they gave their buddies at Goldman/Morgan! And I would have sold it too! I guess this is what Harvard got them: an allegiance with the very bankers that the company resisted in the first place. No published reports about what makes the company tick, just telling their buddies what the reality is, how to place the bets, and then tank the company in the process. These people are making millions by purposely doing their job wrong, breaking laws and playing by “Don’t ask for permission, ask for forgiveness.” All off a company that wants me to talk to my friends about my favorite movies, play games during work, and pretend all my ex-girlfriends never happened.
Well I’m wrong. I guess this is America.