How Nasdaq Screwed Up the Facebook IPO

hat a disaster.

After a lot of “we are ready for the onslaught” preening, the Nasdaq stock exchange fell apart from the minute Facebook (FB) was released for trading.

In anticipation of heavy volume, the exchange had planned to open the stock at 11 a.m., 90 minutes after the opening bell. Trading didn’t begin until 11:30, though, with the shares opening at $42, 10.5 percent above the pricing of the initial public offering. Respectable. More than 82 million shares traded hands at the open. But one-half hour into trading, the stock slid back to $38. Word is, underwriters Morgan Stanley (MS), Goldman Sachs (GS), and J.P. Morgan (JPM) stepped in to support the price of the struggling stock.

And then the complaints began rolling in for the $16 billion deal, the largest high tech deal ever and second largest IPO.

“I put in a market sell order at $42/share. It took 20 minutes to execute,” says Jason Napodano, a biotech stock analyst. Usually a market order takes about two seconds. He still doesn’t know what price he sold at. Maybe $39. Maybe higher. His E*Trade (ETFC) broker will let him know. Napodano says he had requested 1,000 shares in the IPO, but got only 100. Initially, he was disappointed about that. After Friday’s mess, less so. He’s celebrating his big $75 profit by taking the family out for pizza. Or maybe Sizzler, if he gets a better price.

Another big trader complained that after a couple of hours, Fidelity still had his order for shares listed as “pending.” E*trade and Fidelity hadn’t responded yet to requests for comment.

“Do I own $FB or not?” asked Ewell Smith of Powell, Ohio on StockTwits, a Twitter platform for investors. He, too, had placed a market order to buy the stock. It took more than an hour for his order to be filled by Scottrade. In the end, Smith bought 35 shares, hoping to build his position up to 100 or 200. With hot stocks, market orders can be dangerous. And most pros advise investors put limits on how much they are willing to pay or sell at to protect themselves.

Smith got nervous when his order wasn’t executed right away: “My fear was that the price would go up and the execution would happen at that higher price and then later in the day I could be sitting on stock that executed at say… $60 and but then had fallen back to 38.” In the end, his buy order got filled at $40.31, the price at about the time he submitted it. “I had never seen that happen before except in some penny stock trading and this was a highly publicized and supposedly legit Nasdaq stock.”

In a statement, Scottrade said that it had opened more than four times the normal amount of new accounts, plus trading volumes were 70.6 percent higher than typical monthly volumes. “Facebook orders entered prior to its opening were executed and have been reported back to our clients. We have not yet received all reports from Nasdaq for limit orders. The pending order statuses some clients are seeing that were impacted by the Nasdaq delays are currently being resolved.”

Even once those issues are resolved, Nasdaq will have plenty of questions to answer. As Bloomberg TV anchor Matt Miller noted during a rant from the floor of the New York Stock Exchange, Barclay’s had handled 600 million shares at the close effortlessly – about the volume of Facebook all day. Bet the NYSE is lapping up that video. Hooray for open outcry!

Nasdaq hasn’t responded yet to a request for comment. I guess you could say it’s pending.

In the end, it was a day in which almost no one was happy. You can only imagine what the investors who bought Facebook shares for $40 or $45 in the pre-IPO private markets are feeling.

And then there are the Morgan Stanley brokers. According to The Wall Street Journal, Morgan Stanley as lead underwriter took down the biggest percentage of the 421 million shares sold – 38 percent. One Morgan Stanley producer griped that he spent all week negotiating Facebook allotments with clients. In the end he got 6,000 shares to distribute, grumpy customers, and a whopping $480 commission. The Facebook underwriting was a bragging rights deal; the fees were skinny.

At the end of the day, Facebook set a record for first day trading for an IPO: 567 million shares, the most active on the Nasdaq. And the closing was just pennies above the $38 initial pricing. The only people still smiling are probably Mark Zuckerberg and his early investors.

Mark Zuckerberg Got Married Saturday

His timeline announced a new “life event” the day after Facebook went public: he's now married to Priscilla Chan, his longtime girlfriend. Congrats and “likes” to the happy couple!

Facebook Going Public to Raise 5 Billion

Facebook- it’s simply the site that keeps on sharing and growing, at such a rapid pace with over 845 million users trending the one billion mark which is expected to happen before the end of 2012. Since Facebook was launched by Zuckerberg it has always been a private company that never has disclosed it’s exact profits/revenue, although many have an idea that Facebook makes billions upon billions of dollars per year from advertising.

Could Facebook stocks be the next best thing to invest in this upcoming spring? Facebook expects to make and raise 5 billion- that’s right folks 5 billion dollars in stock which would be the largest public web offering firm in history. From that information many predict that Facebook will raise much much more, in fact 75-100 billions dollars. The shares are expected to be trading this spring under the ticker “FB.”

With over 800 million users and billions of pageviews a day Facebook generates a mind-blowing amount of money. Last year in fact Facebook earned over $3.7 billion in revenue and $1 billion in profits- those are incredible amouts of money for just an 8-year old enterprise that bases its income on the web. Google on the other hand brought in a whopping $38 billion dollars- of course Google has a larger advertising base with the adsense program spanning across millions of websites.

Mark Zuckerberg

Facebook going public means that Mark Zuckerberg co-founder and CEO of Facebook will hold approximately one third of the company’s shares and about 57 percent of voting power leaving him control over the firm. A filing stated that Zuckerberg made a salarly of $483,333 last year in addition to a 220,500 bonus for the first half of 2011. Zuckerberg also received other compensation that covers chartered travel costs and other expenses totaling $783,529.

Facebook going public means a big change for the large social network that connects millions of users daily. Will you be investing any money into Facebook stock? What does Facebook perhaps have in store for the future? I’m sure we will see a lot of great upcoming features and releases made to the site. It will definitely be intersting to see where Facebook goes from being a private company for 8 years over to public.

Facebook patents the News Feed

Summary: Facebook has been granted yet another patent related to the News Feed: “Communicating a newsfeed of media content based on a member’s interactions in a social network environment.”

Facebook today successfully patented the News Feed. Almost six years after filing for it, the U.S. Patent and Trademark Office (USPTO) has granted Facebook the patent. Facebook co-founder and CEO Mark Zuckerberg is among the listed inventors.

The patent gives the company a strong lock on the ability to let users see not just status messages, pictures, and links to videos of online friends, but also actions those friends take. Those actions could include playing a game or leaving a comment on someone else’s post.

Here are the basics:

U.S. Patent No. 8,171,128 — “Communicating a newsfeed of media content based on a member’s interactions in a social network environment” – Filed on August 11, 2006, and granted on May 1, 2012.

Abstract:

A system and method provides dynamically selected media content to someone using an electronic device in a social network environment. Items of media content are selected for the user based on his or her relationships with one or more other users. The user’s relationships with other users are reflected in the selected media content and its format. An order is assigned to the items of media content, for example, based on their anticipated importance to the user, and the items of media content are displayed to the user in the assigned order. The user may change the order of the items of media content. The user’s interactions with media content available in the social network environment are monitored, and those interactions are used to select additional items of media content for the user.

Reading the patent more closely, you’ll see Facebook discusses how to let users see certain status updates, pictures, links to videos, and even actions friends take. The social networking giant describes keeping a profile of each person on the social network in a database, identifying relationships between said users, generating “stories” based on the connections, and then creating a News Feed for each user.

Last but certainly not least, Facebook watches what actions the viewer takes in response to the stories (such as Liking, Sharing, or commenting), and then uses that information to serve more stories. It’s also noted that content can come from outside the social network and that users can change preference settings to filter in or out what stories they see.

The patent should help Facebook defend itself against any company that says it owns the News Feed concept. In fact, the social networking giant has other such patents already, including this one:

U.S. Patent No. 7,827,208 — “Generating a feed of stories personalized for members of a social network” – Filed on August 11, 2006, and granted November 2, 2010.

Abstract:

Systems and methods for generating dynamic relationship-based content personalized for members of a web-based social network are provided. At least one action of one or more members of a web-based social network is associated with relationship data for the one or more members to produce consolidated data. One or more elements associated with the consolidated data is identified and used to aggregate the consolidated data. Further exemplary methods comprise weighting by affinity the aggregated consolidated data to generate dynamic relationship-based content personalized for the members of the web-based social network.

The two are very similar. Facebook is already using the second one to countersue Yahoo. I wouldn’t be surprised if this one was added to the arsenal as well.

Facebook scam: I just got my hillbilly name! Hilarious!!

Summary: Scammers are once again trying to trick Facebook users into installing a rogue Facebook app that simply spams their friends. Always remember to only install Facebook apps that you trust.

Facebook scammers are once again trying to take advantage of ignorant users who can’t help but click on every link they find. This time it’s a hillbilly that piques their curiosity. Don’t click it, don’t Like it, and don’t Share it.

This particular scam says something along the lines of “I just got my hillbilly name! Hilarious!! Get your hillbilly name! CLICK –>” followed by a fraudulent link. Sometimes it has “WOW” or “bo-wow” tacked on to the beginning. It also has the following description: “What Is Your Hillbilly Name? Photos.”

The link takes you to a Facebook app installation screen. Clicking on “Allow” gives the scammer permission to “Post on your behalf” so he or she can spam their scam messages to all of your Facebook friends. The scam also tags your friends in the Wall post.

The scammers’ goal is to drive more traffic towards certain sites. This is how the scammer earns his or her money: a commission for every survey completed, every product purchased, and/or every account compromised. You’re also often told to share the link with all of your Facebook friends, as well as add a comment. The next webpage urges you to sign up for a premium rate mobile phone service, complete an online survey, and/or buy some pills. Last but not least, they also use the scams to spread malware and obtain personal information.

As a general word of caution, don’t click on everything your Facebook friends share on the social network. If you see a scam like this one, report it. Then go check your Messages and Wall to make sure you’re not spreading the scam; the sooner you clean it up, Unlike all relevant Pages, and uninstall all relevant Apps, the better. You can also contact Facebook Security if you’d like to.

Facebook now lets you say you’re an organ donor (video)

Summary: Facebook has added a new organ donor feature to its service. The company is hoping it will inspire its users to become organ donors. Unfortunately the option is only available in the U.S. and the U.K.

Update - Mark Zuckerberg: Steve Jobs, girlfriend inspired organ donor tool

Facebook today launched its latest feature: the ability to add whether you are an organ donor to your Timeline under the “Health & Wellness” section, and share your story about when, where, or why you decided to become one. If you’re not already an organ donor, Facebook gives you a link to your state or national donor registry so you can quickly enroll.

Public health awareness campaigns have so far failed to get people to become organ donors. Now Facebook has taken the problem into its own hands. You can see how the feature works in the video embedded above.

There’s an important limitation worth underlining here: the feature is only available to Facebook users in the U.S. and U.K. I have contacted Facebook to find out when it will roll out more broadly and I will update you if I hear back. Update at 12:30 PM PST - “We plan to expand the use of this feature to additional countries in the coming weeks and months,” a Facebook spokesperson said in a statement.

To validate the new feature, Facebook quoted two statistics from Donate Life America, a nonprofit alliance that is partnering with the social networking giant. First Menlo Park underlined that more than 114,000 people in the U.S., and millions more around the globe, are waiting for the heart, kidney, or liver transplant that will save their lives. Furthermore, Facebook said that an average of 18 people per day will die waiting because there simply aren’t enough organ donors to meet the need.

Will sharing that you’re an organ donor on Facebook really help change the world? Facebook says medical experts think broader awareness about organ donation could help solve the crisis. Facebook of course believes in the power of sharing, with your friends (and with the public as well).

“What we hope will happen is that by just having this simple tool, we think that people can really help spread awareness of organ donation and that they want to participate in this to their friends,” Facebook co-founder and CEO Mark Zuckerberg told ABC News. “That can be a big part of helping solve the crisis that’s out there.”

“Facebook’s mission is simple: to make the world more open and connected,” a Facebook spokesperson said in a statement. “But the Facebook community has also shown us that simply through sharing and connecting, the world gets smaller and better. Even one individual can have an outsized impact on the challenges facing another, and on the world. At Facebook, we call that the power of friends.”

Facebook starting IPO roadshow next week (rumor)

Summary: Facebook may start its initial public offering (IPO) roadshow as soon as next week. The company is widely expected to go public this month, although some have suggested there could be a delay.

Despite rumors of delays, others say Facebook is still on track to go public this month. It’s important to underline that nobody yet knows the plan as it mainly depends on two things: when exactly the U.S. Securities and Exchange Commission (SEC) gives the green light for Facebook’s mounting stack of paperwork, and what exactly Facebook co-founder and CEO Mark Zuckerberg feels like doing with his company.

The social networking giant could get approval from government regulators to officially distribute its S-1 public offering prospectus to investors this week. The company’s road show could thus begin as early as next week, according to sources close to the situation cited by AllThingsD.

Zuckerberg will reportedly be appearing before potential shareholders, and will be present at key meetings to help sell the company to them. Some may find this surprising given his recent behavior (Zuckerberg skips Facebook analyst meeting (rumor) and Wall Street whines as Zuckerberg skips out on Facebook investors) but as I have said before, of course “Zuckerberg will likely play some sort of role in selling the company’s shares to investors.”

Zuckerberg is simply too important to Facebook’s business to not participate in his company’s public offering. Facebook CFO David Ebersman and Facebook COO Sheryl Sandberg will also play key roles in the road show, as will many other Facebook executives.

Following the road show, there will be a sales process in which investors ask management questions. Facebook’s bankers will price the offering, anywhere between $75 billion, $100 billion, or maybe even higher. Lastly it will go public on the Nasdaq market under the “FB” ticker. Only then will you be able to officially buy Facebook stock.

So when will this happen? One rumor previously said Facebook will go public in the third week of May: the days of 14, 15, 16, 17, or 18. A second rumor narrowed it down to just two days: May 17 or May 24, claiming the choice will come down to how smoothly the Instagram acquisitiongoes. A third rumor said May 17, 2012 is the likely candidate.
All three warned, however, that anything can still happen, and as I’ve already noted, a fourth one >said everything has been pushed back to June.

Facebook adds 'life saving' organ donor feature to Timeline

Summary: Facebook has launched its latest feature: the ability to share with your network whether you are an organ donor, in the hope it will save more lives on a daily basis.

Facebook has launched a new “life-saving” tool, allowing its 900 million users to share their organ donation status on their timelines.

The world’s largest social network now allows U.S. and UK users to include a life story on their profile pages, and offers a link urging users to sign up to official organ donation services in their region.

Writing for ABC News, Facebook founder Mark Zuckerberg and chief operating officer Sheryl Sandberg note how “amazed” the two were in how people use Facebook to share “billions of stories, updates and photos,” and how “people use these same tools and social dynamics to address important issues and challenges in their communities”.

Zuckerberg said his friendship with Apple co-founder Steve Jobs, who died in October of pancreatic cancer, was one of the driving forces in harnessing the social network for spreading awareness.

“We never could have anticipated that what started as a small network would evolve into such a powerful tool for communication and problem solving.”

More than 114,000 U.S. residents are waiting for organ donations, according to the U.S. Department of Health. “Many of those people –– an average of 18 people per day –– will die waiting, because there simply aren’t enough organ donors to meet the need,” Zuckerberg and Sandberg said.

Using the power of Facebook, they want those figures to fall.

While organ donation is a very worthy cause, it may not have been what was expected in the run-up to the today’s announcement. Considering there has been a noticeable rise in cyberbullying in recent years with Facebook often at the hub of the issue, some had expected the social network to announce a plan to combat the problem.

Image credit: ZDNet/Facebook.

Facebook CEO Mark Zuckerberg joins Viddy

Summary: Facebook co-founder and CEO Mark Zuckerberg has joined Viddy. This is interesting for two reasons: Viddy is growing very quickly, in part thanks to Facebook, and it’s also been compared to Instagram.

Why has Facebook co-founder and CEO Mark Zuckerberg joined Viddy? There are many reasons, although most probably aren’t different to the ones given when he joined Pinterest. Zuckerberg often tests out the work of new Web companies, but he seems to make public accounts on quickly-growing apps and services, especially those which leverage Facebook.

On Viddy, Zuckerberg already has thousands of followers (viddy.com/zuck). More interestingly, at the time of writing he is following 56 other Viddy users.

Zuckerberg only has one video on the service though. Titled “Baby Beast” (embedded above for your viewing pleasure), it has over 400 comments and over 3,000 likes.

For those who don’t know, in addition to Facebook (over 13.37 million Subscribers), Zuckerberg also has profiles on Google+ (over 638,000 followers), Twitter (over 149,000 followers), andPinterest (over 9,000 followers). He’s only slightly more active on Twitter than he is on Pinterest, and he’s not active on Google+ at all, at least not publicly.

Two weeks ago, I wrote an article titled “The Facebook effect: Timeline app developers rule the App Store.” This was just after Viddy became the top free iPhone app, and it was pointed out to me that seven of the top 10 grossing iOS apps are integrated with Facebook, as are seven of the top 10 free iOS apps.

Earlier last month, Facebook said Viddy was doing very well:

Viddy recently integrated its mobile app with Timeline to give people more ways to share the videos they’re creating with friends. Since integrating with Timeline in February, Viddy has gone from 60,000 monthly active users to more than 920,000, and seen over 9,000,000 interactions with Viddy content on Facebook. Additionally, the startup has more than doubled its average daily sign-ups since integrating with Open Graph.

Personally, I haven’t bothered with Viddy nor Instagram. The reason is simple: I have a BlackBerry and whether I want to or not, my phone is simply more business than play. Zuckerberg has been known to switch between iPhones and Android smartphones, though he is clearly using the former right now.

I say “clearly” because Viddy is only available for iOS. Android and Windows Phone versions are expected to be in the works, based simply on logos that recently appeared on the site’s homepage.