Citi lost $20M on Facebook IPO

http://www.reuters.com/article/2012/05/25/facebook-citigroup-idUSL1E8GPANM20120525

by jsherry • 14 years ago

30 15 14 years ago

sigkill2• 14 years ago

Can't we all rest at peace knowing that the facebook guys priced it perfectly and raised the maximum amount of money they could and these high frequency traders and investment bankers couldn't manage to play on perception to make their share of quick money that they've been doing at every IPO.

This almost seems to me like they want to play on public perception to somehow bring the price to a higher number and then sell it. Is that why the news is filled with facebook this, facebook that?

Almost sounds like a conspiracy theory.

Zombieball• 14 years ago

Agreed, there should be more news about how awesome of a job the underwriters did!

sigkill2• 14 years ago

Exactly my point. Just because this time around, people who matter (i.e. people with money) lost money, the real smart folks totally don't get the recognition. But I'm sure that at facebook offices atleast they'll hopefully be recognized and get rewarded.

antrix2• 14 years ago

It is being argued that these losses aren't just vanilla trading losses. They arose due to technical glitches at NASDAQ which led to quotes being unavailable, delayed processing order cancel requests, missing acks, etc.

Essentially, traders couldn't act in time to react to the market due to NASDAQ's troubles.

Edit: I should also add that Citi, Citadel, etc. were acting as market makers - they don't have the option of holding the stock for recovery as others in this thread suggest.

astrodust• 14 years ago

Are we supposed to feel sorry for the poor market maker? They were trying to skim an enormous profit and ended up with a small loss. Ç'est la vie.

WarDekar2• 14 years ago

I'm not sure I have any sympathy even if NASDAQ had trading issues- do they actually guarantee trades go through and you're informed within a certain period of time? From what I've seen and read, it boils down to a bunch of people claiming they lost out because the price didn't balloon on the first day of trading. Yet, you know, it's still down >15% in the week after that. How can anyone that bought last Friday possibly claim they got screwed in this matter? Unless NASDAQ has terms that say that future trades can be guaranteed, I don't see any legitimate beef here.

JumpCrisscross• 14 years ago

The investment bankers made more money by the price being high - MS made around $100 million. HF guys similarly - high frequency will have access to multiple venues and shouldn't get pinned to a single faulty system. Plus, few HFs would take on IPO stock.

The losers were traditional market makers and the pensions, hedge funds, etc. that bought the IPO stock. And Facebook employees.

WarDekar2• 14 years ago

How did FB employees lose in this? They likely have a run out before they can sell- it doesn't really matter what the IPO was at, the share price would've settled to the same point regardless.

endlessvoid94• 14 years ago

They only lost it if the stock doesn't recover. And...it's been less than a week.

Everybody, everywhere, just needs to take a goddamn breath.

nknight• 14 years ago

No, in many cases these are actual, realized losses, as in "we bought at this price and sold at this much lower price". They have no money, and no stock. Recovery of the stock is irrelevant to them.

RollAHardSix• 14 years ago

Well they shouldn't have bought it. Sorry but that's capitalism and the way the market works. If you invest, you invest in the possibility of it going down.

Day and Short-termers should have known it wasn't going to do well. For me, this stock was literally the Grinch. And long-term investors well it certainly hasn't been long-term yet now has it.

But really, why anyone bought any Facebook stock...I'm just clueless.

RockyMcNuts• 14 years ago

UBS, Citadel, Knight also announced losses, bringing total market maker losses to around $115m:

http://www.reuters.com/article/2012/05/25/us-facebook-nasdaq...

A longer read on all the Nasdaq glitches http://www.reuters.com/article/2012/05/26/us-facebook-proble...

Hard to know the counterfactual, but if the IPO had a clean start and some traders hadn't been scared to the sidelines by not knowing if trades were going through on NASDAQ, the stock might have traded up. If it looks like everybody's buying, people hop in. If it looks like a dud, people hold off. Social proof is a powerful thing.

In the long run, the market is a profit-weighing machine, not a voting machine, so a few opening trades shouldn't really matter.

On the other hand the perception of a hot stock and company impact ability to hire, acquire etc. Remember how a Yahoo stock drop nixed their handshake agreement to acquire Facebook. The stock price can impact the business and, in an extreme case, create the reality it tries to measure.

Citi lost $20M on Facebook IPO

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