It’s been less than a week since Facebook has opened it’s shares, and now they are faced with a class-action lawsuit. The suit has been filed by Facebook shareholders in a New York federal court. The suit alleges the company intentionally hid the bad prospect and claiming statements from the company were “false and misleading.”
The suit not only targets Facebook execs but its underwriters, as well. Those included would be Morgan Stanley, JPMorgan Chase, Goldman Sachs as well as other banks who went public face questions in regards to the whole IPO process.
Blog writer, Felix Salmon of Reuters, has come out with a hit list called Facebook: The List of Incompetence, and at the top of that list is CFO David Ebersman. “it was his job to accurately forecast Facebook’s second-quarter figures, and give the company’s banks a good feel for where they would come in. He failed so badly that he was forced to re-file the IPO prospectus just days before the deal came to market,” remaked Salmon
Towards the end of the article Salmon criticizes Facebook investors and board members claiming they came off “short-term greedy than long-term greedy.”
Prospects of Facebook share prices going up are a long shot. Since the opening share prices have been going down. Monday Facebook shares closed just above $34. Tuesday’s high was only at $33.59 a share. The continuing dip in stock prices has only had an opposite effect from previous predictions of stock prices raising to over $50 a share.
Analyst Patrick Moorhead of Moor Insights & Strategy said, “This is very bad for Facebook short-term, mid-term, and even long-term.” Moorhead points out the determining factor of Facebook’s future performance are its IPO.
“In this new age, many people see stock-price and even IPO performance with determining how well the company is actually doing…Facebook is absolutely, categorically struggling right now.”