Lessons learned from the Facebook IPO

Unless you live in a cave, you’ve heard about Facebook’s IPO on May 18th. To say there’s been a lot of controversy surrounding this is an understatement.

The facts:

• May 18th stock valued at $38.00 per share
• May 18th Market Value = $100 billion. (yes, that’s a billion, not a million!) This was the second largest initial public offering in history, second only to Visa.
• In first 30 seconds of initial offering,  82 million shares were traded.

Due to a technical glitch, NASDAQ was not able to confirm some trades for several days.

What can we learn from this event? Other than wishing we had been born Mark Zuckerberg so we could become billionaires?

1. Be prepared.

I doubt we will ever know exactly what happened with NASDAQ. Several legal experts have said that the lawsuits filed against NASDAQ have the best chance of winning. Systems fail, but why did it happen at exactly the time when Facebook’s IPO was set to go live? Does the term ‘stress testing’ mean anything to the technical folks at NASDAQ? I wonder if it was more of a human error that caused the technical glitch?

2. Expect the unexpected.

Facebook has been in the news a lot over the years. Did people really think that the second biggest IPO in history would go smoothly?

3. Don’t even try to beat the market.

Wall Street investment bankers get paid millions of dollars to anaylze the market. What makes you think you can do any better? And, in spite of all the regulations, there’s lots of insider information going around. The average investor is not privvy to this.

So what do you think? Have you learned anything from the Facebook IPO?

Photo is courtesy of Donkey Hotey’s Flickr Photostream.