Nasdaq ‘Humbly Embarrassed’ by Botched Facebook IPO

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There's been a lot of talk recently about how Mark Zuckerberg has finally become a man. At the tender age of 28, the Facebook founder became even more unfathomably wealthy when Facebook went public on Friday, and now Zuckerberg's being lauded for the bold decision to forgo his signature hoodie at his wedding on Saturday. Yet, perhaps the real story here is that Zuck has brought some of Facebook's scrappy make-mistakes-and-apologize-later ethos to Wall Street.

On Friday, Nasdaq delayed the start of trading on Facebook by 30 minutes owing to a technical problem. For more than two hours, traders were left wondering if they'd actually scored a piece of Facebook, and many believe that the confusion contributed to the social networking site's underwhelming debut.

Nasdaq Chief Executive Officer Robert Greifeld acknowledged the mistake in an interview with reporters on Sunday, saying, "This was not our finest hour." Despite hours of testing, Nasdaq failed to detect a problem with the way the trading system processed order cancellations. Greifeld said Nasdaq is "humbly embarrassed" about the technical glitch, and plans to redesign its IPO systems. He added that Nasdaq will ask the Securities and Exchange Commission to approve its plan to repay investors who were hurt by the computer error.

Though Greifeld described Facebook's first day of trading as "successful," the problems with the IPO may have long-lasting implications. On Friday, lead underwriter Morgan Stanley stepped in to keep the stock from falling below its $38 IPO price, and at the end of the day, Facebook was up only 0.6 percent. Sources say the bank won't continue propping up the shares this week. There may even be more fallout from the Nasdaq glitch. Rick Meckler, president of investment firm LibertyView Capital Management, told Reuters, "I don't know if people stepped away at some point because they just couldn't execute in a clear manner, and that Monday we will have some follow through of people that weren't executed and still need to sell."

Regardless of what happens to Facebook in the coming weeks, disappointment over its initial performance is likely to hurt other online companies looking to go public. Various social media stocks, including LinkedIn, Groupon, Pandora Media, and Yelp dropped at least 5 percent on Friday. As IPO author-blogger Tom Taulli put it in The Wall Street Journal, "If Facebook can't skyrocket and do well, then what can you expect from anything smaller?" Sorry, Cheezburger Network executives. Lolcats might not make you billionaires after all.