The social network company’s shares are down 1.7% at midday to about $17.74, and at one point touched $17.58 — a new personal worst for the stock that sold for $38 when the company went public in May. The drop comes as many Wall Street investors debate a scathing New York Times column by Andrew Ross Sorkin this morning that fingers CFO David Ebersman as the exec who was “more responsible than any other for the staggering mispricing” of the IPO, which resulted in a $50B decline in Facebook’s market value over the last three months. “To put that in perspective, that’s more market value than Lehman Brothers gave up in the entire year before it filed for bankruptcy” in 2008, Sorkin writes. He adds that in addition to the misery that’s created on Wall Street, it is “quickly creating real questions inside the company about its ability to retain and attract talented engineers, the lifeblood of any technology company.” Ebersman also infuriated major investors when he recently visited New York to address their concerns. Several invitations for Friday meetings “were oddly, and somewhat imperiously” sent out the night before. “Given that it was summer, some investors sent their junior analysts,” Sorkin says.
But entrepreneur Mark Cuban says in the Huffington Post that Sorkin’s case against the CFO is “180 degrees wrong.” If Ebersman appeared on ABC’s SharkTank and said “he was able to sell his shares to the public for $38 a share, but turned down the opportunity, I would crush him for being an idiot….As far as traders who bought the stock hoping for a pop. No one cares about them. Seriously. You trade, you know you are going to lose on trades. That is how things work.”


Good to know Cuban’s attitude is “f**k the little guy” because small investors get what they deserve when misled about a company’s financials.
I liked his slipped-in TV show promotion, too.
There’s no debate here; Sorkin doesn’t understand IPOs, didn’t read or understand Facebook’s prospectus, and didn’t chime in with his view until the shares tanked, while Cuban does and did all of those things. So tired of hearing about the “little guy” getting screwed in this – as though the little guy (investors making high 6 figures and up) figured they’d really spin gold this time. There have been plenty of warning signs out there for every single lazy investor buying in at 38, 35, 28, 25, etc. had they bothered to research it or think of Nasdaq as anything more than their slot machine.
The idea that Facebook has thus far been worth anything approaching $38 per shame is laughable. Any analyst who arrived at that evaluation or supported it should be shot. Facebook was and is still an overhyped company, and Zuckerberg is a vastly overrated CEO. Cuban is right when he said the traders who jumped on the IPO got what they deserved. This all should have been obvious under the subject heading ‘Duh’.
Who is arguing that Facebook misled anyone about its financials?
You got to love Mark Cuban! AND, he is absolutely right, it’s the Wall Street deal-makers job to validate the valuation. The CFO should get a bonus for selling high!
1) cuban made his fortune selling a bill of goods to yahoo. broadcast.com for $3 billion. yahoo was stupid enough to buy it and cuban was smart enough to sell ALL of stock at the first possible moment.
2) the point here is not really about the investors (big and small they evaluate risk and take a position). the real issue is talent retention and acquisition — or in other words now worthless employee stock options…
It’s quite simple. Facebook has a P/E ratio of 98.97. Which is high even for a speculative growth stock like Facebook. To give you context, Apple’s P/E is 15.87, they have over 100 BILLION dollars in the bank, and spits out $10 a share as a dividend. Simply put, Facebook still has a LONG way to go before it bottoms out…
So true…and just a matter of time until Zuckerberg is replaced and his title is ‘adjusted’ to something he is qualified for. This stock and company has a long way to fall before it hits bottom.