I'm guessing that the editorial team at The Grauniad bought shares in FB at their opening price, and over the past three months have been increasingly unhappy at their loss. Now they're telling us about just how unhappy they are:
... this is about insiders profiting at the expense of outsiders. Mark Zuckerberg and senior staffers at Facebook have been able to cash out of stock they bought ultra-cheap before flotation. Morgan Stanley and other underwriters will have made a mint on the deal. And Wall Street traders who jumped ship early will also have done well.Hmm. Facebook selling its stock cheap to FB execs is a matter for Facebook's shareholders - which, shock, seems to include mostly FB execs. I'm less convinced that the underwriters did well out of the floatation, given the amount of support they had to lend the shares at $38 - which then marched steadily down to $19, hence this editorial. And yes, Wall Street traders who bought low and sold high (in the first day trading) will have done OK. Those who didn't sell before FB went below $38, never to return - not so much. Have you got the figures of the profiteers vs the losers, Guardian eds? If not, why not shut up before you embarrass yourself further.
FB is another example of capitalism working as intended. Those with poor judgement in valuing a company lose money; those who cranked the numbers on the FB ad revenue just stayed away (or went short), and we now have a far better idea about what FB is worth. FB recent joiners really got screwed though - I believe that anyone with FB stock units will be paying tax on those units based on the IPO price. Ouch. 1000 FB shares at a 33% (federal + state) tax is a $12,540 tax bill, but the shares themselves are only worth $19,000 currently and could go lower.
As the Grauniad notes:
When Google joined the stock market in 2004, it held a "Dutch auction", inviting investors to bid for stock at whatever price they thought fair. It has drawbacks, but such a system prevents a bunch of Wall Street insiders getting in on a stock early, then dumping it.That's... a little bit simplistic. Nevertheless, perhaps the NASDAQ should randomly require 33% of new listings to price via the Dutch auction. It would be interesting to compare their results to the regular listings. If the Grauniad wants real data on Wall Street's rake-off, this is how to obtain it.