Nasdaq howler can’t explain Facebook flop for long
By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Nasdaq OMX is rightly coming in for a bashing after a systems howler on its U.S. exchange left Facebookâs stock trading in the dark for much of its public market debut on Friday. Chief Executive Bob Greifeld has already fessed up that the stock exchange was at fault. But the blunder has a limited shelf life as an explanation for Facebookâs IPO flop.
The software snafu dinged confidence in the deal last week. It wasnât just that Nasdaq postponed printing the first trade for almost half an hour – that in itself briefly sent the stock down to its original $38 offer price after initially opening at $42 a share. But the exchangeâs systems then failed to confirm trades or cancellations until almost 2 p.m. (1800 GMT), leaving underwriters and investors in the third-largest debut in American history resorting to pad and paper.
Once Nasdaqâs computers got back up to speed, many buyers and sellers found the trades they thought theyâd placed didnât match up with the shares on their books. Knight Capital, for example, one of the largest market makers in U.S. stocks, discovered the net short position it assumed it had built was in fact a larger net long position, as chief executive Thomas Joyce told CNBC. He dubbed the fiasco âthe worst performance by an exchange on an IPO, ever.â
All of this leaves Nasdaq on the hook financially – Joyce reckoned $100 million would not be a stretch. And the after-effects were still being felt on Monday as the exchange tried to clean up the mess. Itâs hard to imagine Greifeld wonât make heads roll around Nasdaq headquarters. But a technology glitch, even one as painfully embarrassing as this, shouldnât keep a good, or bad, story down for long.
Facebook already looked expensive at $38 a share – a March Breakingviews analysis suggested anything above $28 a share was a stretch. With the stock now a tenth below its actual offering price, the Facebook IPO officially qualifies as a bona-fide flop. Nasdaq may have helped make it so – but Facebookâs worth will soon stand, or fall, on its own.