Last Friday, I spoke with Espen Robak, the president of Pluris Valuation Advisors and an expert on valuing large private companies, just minutes before Facebook's stock was scheduled to trade publicly for the first time ever.
You know what happened next: Glitch, snitch, and flop went the IPO. What the heck happened? I caught up with Robak for the post-mortem of the public offering. Here's an edited transcript:
Well, that was disappointing. Has the Facebook IPO fallout shocked you?
I wouldn't say I'm terribly surprised. This was always an uncertain valuation and an uncertain investment. And the stock price hasn't really moved that much, when you think about how much of a crap-shoot this valuation was going to be. That would be my take.
That's a pretty calm reaction for the biggest tech IPO of all time falling 25 percent from its opening price!
Well, obviously, most people were assuming that Morgan Stanley and Facebook would have managed the IPO price to produce much more of a pop for it to continue trading up. But this is not easy to guess. You look at what happened to LinkedIn, which popped more than 100%, and that was clearly a substantial undervaluation.
You said Friday that private Facebook stock was trading in the low 40s in the secondary market, and that those investors probably expected the stock to be in the low-50s in six months. Explain that again to me.