It appears Facebook’s poor show at the Stock Markets is giving the company continual troubles. The latest of which is a string of lawsuits claiming the site withheld critical information.
One such suit has been filed by Gaye Jones who alleges that the Company’s Directors, despite knowing that Facebook did not disclose weaker revenue trends as more users accessed the website through mobile devices, went ahead with the Initial Public Offer (IPO) launch. The complaint alleges that information had been selectively shared with the company’s IPO underwriters and key investors. In simpler words, Jones feels that the company should have taken the moral high ground in informing the broader audience & eventual subscribers to Facebook stocks, that though the company gained traction via its mobile based endeavors, the company wasn’t able to make justifiable money off the same.
When Facebook, famously listed its shares on the NASDAQ Stock Exchange, the stocks did manage to get attention. However, merely 24 hours later, the stock started to plummet & within 15 days had reached the half-value mark, before gradually climbing & settling at US$ 27.72 at Monday’s closing.
It appears Facebook’s IPO was marred by controversies. A technical glitch in the NASDAQ exchange prevented many brokers from booking sales / profits. This incident alone is responsible for over 50 lawsuits. Apart from this, a full-fledged Class Action Suit is already underway in a Manhattan (USA) court. Jones’ case is a typical ‘Derivative Case’, which ironically entitles Facebook to receive the money from CEO Mark Zuckeberg, if found guilty. Four such cases have already been dismissed. Hence it may seem only a matter of time before this case meets with the same fate.
Given the circumstances, it surely appears that Facebook’s IPO was ill-timed, poorly conceived & executed. While it may not be the social media giant’s fault entirely, it did cost a lot. What do you think?
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