Tags: ipo | facebook

Companies Put IPOs on Hold After Botched Facebook Deal

Sunday, 17 Jun 2012 07:11 PM

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Companies are putting plans to go public on hold thanks to the botched Facebook initial public offering (IPO), market watchers say.

Technical glitches that disrupted buy and sell orders on the Nasdaq exchange marred the May 18 offering, prompting regulatory probes.

Meanwhile, the share price has fallen well below its initial offering price of $38 per share, as despite Facebook's having 900 million users, monetizing that base may prove to be difficult. Company shares are at about $30 today, and underwriters have been accused of pricing the company too high.

"There has been a near perfect storm hovering over the IPO market driven by regulatory uncertainty following the Facebook debacle, investors that on average have lost money on recent deals, and ongoing global market uncertainty," says Paul Bard, research director at Renaissance Capital, according to CNBC.

"This has put a significant damper on investors’ appetite for risk and will likely result in a very slow period for IPO issuance in the near term."

Not a single offering has been priced in the last four weeks, CNBC adds.

"The key in the next few weeks will be to see how many, if any, companies set price ranges, meaning they are probably preparing to try to go public before the usual August slowdown,” says Francis Gaskins, president of IPODesktop, the network adds.

Aside from complaints the company was priced too high, reports that bearish analyst calls on the social network were given to privy investors have angered retail investors.

"Facebook alone froze the pipeline. It was done so poorly by the underwriters, and there had been so much hype around this deal that it's produced so much angst and fear about the IPO market," says Scott Sweet, managing director of IPO Boutique, according to CNNMoney.

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