1. Discuss at least (2) of the problems the Facebook IPO faced and what effect these problems had on investors who bought the stock.

2. Many experts believe the Facebook IPO violated the Securities Act of 1933; What do you think?? Was any legal action brought against the main players in the IPO?

3. Do a little research... The ride Hailing company, UBER went public last year. Investment bankers calculated the companies valuation at $120 Billion. Nine months later the company's value fell to half that or $69 Billion. Why did investors lose faith in the company during that time? Explain in detail

Facebook's troubled IPO worsens as stock continues to fall By Patrick May pmay@mercurynews.com San Jose Mercury News The biggest and most hyped IPO in tech history is beginning to look like the most troubled. As Facebook's stumbling stock on Tuesday continued to disappoint and even anger investors for the third straight day, critics blasted the company and its underwriters for being greedy in overpricing the initial offering, and federal financial regulators called for a review of the ill-fated IPO. Fallout from Facebook's embarrassing launch unfolded on several fronts, with incredulous investors particularly angered by reports that an analyst at Lead underwriter Morgan Stanley had cut his revenue forecast for Facebook just days before the offering but may have shared that information with only a select group of clients, leaving retail investors in the dark. Nasdaq, meanwhile, admitted publicly that it would have pulled the plug on the botched IPO had it known the extent of technical problems in its system that delayed and disrupted trading Facebook stock buyers fumed at the thought of Morgan Stanley apparently talking out of both sides of its mouth -- first singing Facebook's praises to whip potential investors into a frenzy, then downgrading its revenue outlook even as the public's IPO hype came to a full boil. One mutual fund source told Reuters they had never, in a decade of experience, seen an underwriter revise a company's outlook downward during a pre-IPO roadshow. "The allegations, if true, are a matter of regulatory concern," said Rick Ketchum, chairman of the Financial Industry Regulatory Authority, an independent group that protects investors by making sure the securities industry is operating fairly and honestly. "I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate," Securities and Exchange Commission Chairman Mary Schapiro told reporters as she left a Senate Banking Committee hearing, "but there are issues that we need to look at specifically with respect to Facebook." More problems Problems seemed to mount throughout the day. As the stock closed at $31, more than 18 percent off its Friday launch price of $38, a Facebook investor filed a lawsuit against Nasdaq for the first-day trading glitches, while Massachusetts officials subpoenaed Morgan Stanley over the analyst's discussions with investors. Yet even as the stock sank, a growing chorus of analysts said Tuesday that Facebook was still overpriced, and its share price could continue to falter in the coming days. "It's getting nastier by the day," said Joe Magyer, senior analyst at Motley Fool, an investment advice website. The price slump is being driven by a "combination of Morgan Stanley getting a little too greedy and a botched execution of the IPO by Nasdaq. It's almost becoming a bit of self-fulfilling prophesy. A lot of people bought Facebook to make a quick buck. That didn't happen, and now they're just dumping their shares. "Most of the pre-IPO shares went to the pros," he said, "and any individual who bought in is probably feeling really burned right now." Analyst Brian Weiser, with Pivotal Research Group, said that while Facebook may have a bright future, "the reality is there are lots of risks in this stock that weren't incorporated into the IPO price. Instead, it was priced to perfection. What we're seeing now is a stock coming back to earth, and the market is incorporating those risks into the price. But it's not quite there yet." Valuation 'too rich' Magyer agrees that the stock could fall further. "I'd be interested in Facebook at 20 bucks a share," he said. "It's a great business with a lot of potential, but the valuation is just too rich." Trip Chowdhry, senior analyst for Global Equities Research, said Facebook's management and board of directors deserved much of the blame for the debacle. He said executives refused to answer key questions from analysts before the IPO. And instead of justifying the underwriters' initial valuation of the company with solid fundamentals, they allowed the hype to build, encouraging average investors to scoop up shares without a clear grasp of the risks they were taking. Chowdhry said that while Facebook executives and the venture capitalists who sit on its board benefited from the IPO, it's the company's employees who may be hurt the most. "These people who have sacrificed their personal lives for Facebook and were led to believe their stock would shoot up after the IPO are the ones who really got screwed," he said. "They were given stock at bubbling valuations that could never pan out. "They made a mistake pricing the IPO," Chowdhry said. "Facebook's management was drinking their own Kool-Aid. Everyone believed the hype, but the hype was too strong." Facebook's troubled IPO worsens as stock continues to fall By Patrick May pmay@mercurynews.com San Jose Mercury News The biggest and most hyped IPO in tech history is beginning to look like the most troubled. As Facebook's stumbling stock on Tuesday continued to disappoint and even anger investors for the third straight day, critics blasted the company and its underwriters for being greedy in overpricing the initial offering, and federal financial regulators called for a review of the ill-fated IPO. Fallout from Facebook's embarrassing launch unfolded on several fronts, with incredulous investors particularly angered by reports that an analyst at Lead underwriter Morgan Stanley had cut his revenue forecast for Facebook just days before the offering but may have shared that information with only a select group of clients, leaving retail investors in the dark. Nasdaq, meanwhile, admitted publicly that it would have pulled the plug on the botched IPO had it known the extent of technical problems in its system that delayed and disrupted trading Facebook stock buyers fumed at the thought of Morgan Stanley apparently talking out of both sides of its mouth -- first singing Facebook's praises to whip potential investors into a frenzy, then downgrading its revenue outlook even as the public's IPO hype came to a full boil. One mutual fund source told Reuters they had never, in a decade of experience, seen an underwriter revise a company's outlook downward during a pre-IPO roadshow. "The allegations, if true, are a matter of regulatory concern," said Rick Ketchum, chairman of the Financial Industry Regulatory Authority, an independent group that protects investors by making sure the securities industry is operating fairly and honestly. "I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate," Securities and Exchange Commission Chairman Mary Schapiro told reporters as she left a Senate Banking Committee hearing, "but there are issues that we need to look at specifically with respect to Facebook." More problems Problems seemed to mount throughout the day. As the stock closed at $31, more than 18 percent off its Friday launch price of $38, a Facebook investor filed a lawsuit against Nasdaq for the first-day trading glitches, while Massachusetts officials subpoenaed Morgan Stanley over the analyst's discussions with investors. Yet even as the stock sank, a growing chorus of analysts said Tuesday that Facebook was still overpriced, and its share price could continue to falter in the coming days. "It's getting nastier by the day," said Joe Magyer, senior analyst at Motley Fool, an investment advice website. The price slump is being driven by a "combination of Morgan Stanley getting a little too greedy and a botched execution of the IPO by Nasdaq. It's almost becoming a bit of self-fulfilling prophesy. A lot of people bought Facebook to make a quick buck. That didn't happen, and now they're just dumping their shares. "Most of the pre-IPO shares went to the pros," he said, "and any individual who bought in is probably feeling really burned right now." Analyst Brian Weiser, with Pivotal Research Group, said that while Facebook may have a bright future, "the reality is there are lots of risks in this stock that weren't incorporated into the IPO price. Instead, it was priced to perfection. What we're seeing now is a stock coming back to earth, and the market is incorporating those risks into the price. But it's not quite there yet." Valuation 'too rich' Magyer agrees that the stock could fall further. "I'd be interested in Facebook at 20 bucks a share," he said. "It's a great business with a lot of potential, but the valuation is just too rich." Trip Chowdhry, senior analyst for Global Equities Research, said Facebook's management and board of directors deserved much of the blame for the debacle. He said executives refused to answer key questions from analysts before the IPO. And instead of justifying the underwriters' initial valuation of the company with solid fundamentals, they allowed the hype to build, encouraging average investors to scoop up shares without a clear grasp of the risks they were taking. Chowdhry said that while Facebook executives and the venture capitalists who sit on its board benefited from the IPO, it's the company's employees who may be hurt the most. "These people who have sacrificed their personal lives for Facebook and were led to believe their stock would shoot up after the IPO are the ones who really got screwed," he said. "They were given stock at bubbling valuations that could never pan out. "They made a mistake pricing the IPO," Chowdhry said. "Facebook's management was drinking their own Kool-Aid. Everyone believed the hype, but the hype was too strong