The Facebook IPO in May was a disaster.
Hyped up as the must-buy of the decade, the stock faltered as soon as it opened, and the shares then crashed more than 50% over the next few months.
IPO buyers got demolished. Facebook's reputation took a dive. Lawsuits and recriminations commenced.
The main problem with the IPO was that investors paid way too much for the stock.
Most of the responsibility for this decision, unfortunately, lies with the investors themselves. No one made anyone pay $38 a share for Facebook.
But some of the fault lies with Facebook, Facebook's bankers, and some idiotic IPO information-disclosure rules.
During the IPO roadshow, sophisticated institutional investors got important negative information about Facebook that small investors didn't get. This made the institutions much less enthusiastic about Face