You can not blame the banks for underwriting the stock at their IPO price. You cannot blame the computer system at NASDAQ from malfunctioning. However, you can blame on a company who cannot explain how they will grow revenues. I won't be surprise if Facebook decided to charge a nominal fee to the 900 million user base to create revenue.
(CNBC) Call it the Friday Facebook Fiasco — or a more colorful alliterative of your choice. Regardless, the chaotic opening of the much-hyped social network's stock scared away investors on Monday—and may keep them away.
Talk also lingered over whether Facebook [FB 34.03 -4.2018 (-10.99%)] could monetize its 900-million-strong user base, as well as whether CEO Mark Zuckerberg really cared enough to make sure his shareholders are happy.
Overall, the twin worries of Facebook's pricing combined with the shaky mechanics of its trading to create a pungent air of uncertainty around the company.
As a result, Facebook opened Monday below its $38 Friday open and moved sharply lower through the day.
Now, the stock faces nothing but questions as a market love affair quickly turned to estrangement. Underwriters were left powerless to support the price because the stock opened well below the $38 breakeven level, and rumors swirled that lawsuits would be forthcoming from those who didn't get orders filled properly.
"All the buy-side institutions are shorting it. You can get a borrow on it and everyone's leaning all over it. There's no bottom," Rovelli says. "The next catalyst is going to be earnings, which is three months away. So there's no reason to jump in here. You're catching a falling knife."
In a previous CNBC.com interview, Rovelli had advised investors to stay away from the stock until the company had more visibility on how it would grow revenue.
Without more proof of growth capability, investors decided that perhaps the initial Facebook pricing range, with a low end of $28 a share, was more accurate than the final range.