With the stock performance not what the company (or the investors) were hoping for, some investors have taken it upon themselves to SUE Mark Zuckerberg, Facebook, Morgan Stanley, the Statue of Liberty, and Kittens.
Our society has become so litigious over stupid shit that it annoys the fuck out of me. I understand that you lost a shit-ton of money. The stock opened on Friday, May 18 at $42, and closed at $38. That's a 10% drop on opening day. The stock went down further, coming to a low point of just under $31 on Tuesday, May 22nd.
A 26% drop in less than 3 days on the market. You'll get no arguments that it's horrible performance from a stock expected to go juggernaut. But lawyer-worthy? When you get into the meat of the lawsuit, it becomes even more crazy.
Apparently, Facebook's accounting team contacted Morgan Stanley days before the IPO opened with a revised earnings forecast much lower than previously estimated. Morgan Stanley took this information while on their "roadshow" - basically sales calls to high level investing firms/large companies/guys with lots of cash. Meanwhile, the "little guy" investors didn't get this information, even though Facebook outlined "broad risks facing its future growth" in its prospectus for the IPO.
Pretty sure this is Facebook's investment team.
Understandable for smaller investors to be upset at losing perhaps a large chunk of money on an IPO thought to be as insanely profitable as Facebook.
Until you think about it.
The whole stock market is a gamble. When you buy a stock, you have a chance to hit big, or lose it all. Why should someone be able to sue over the fact that someone gambled their money on success?
And in any case, IPOs are notorious for starting hot and declining. Sometimes, holding onto the stock is the right move. Here are a couple:
- AAPL (Apple, Inc.) opened September 7, 1984 at $26.50. On October 12, 1984, it hit a low of $22.75. That's a 14% decline. AAPL opened this morning (May 24th, 2012) at $570.56.
- GOOG (Google Inc.) opened August 19, 2004 at $100.00. Two business days later, on August 23rd, the stock closed at $109.40. Less than 2 weeks later, the stock went back to $100.01. Google opened this morning at $604.77.
- AMZN (Amazon.com, Inc.) opened May 16, 1997 at $23.62. By Thursday of the following week, the stock had dropped to $16.75 (29% drop). Today, AMZN opened at $216.76.
These are extreme success stories, of course, but the common thread is that they are all tech companies. The closest to Facebook could be considered Google, because neither of these companies have a physical product (before Android).
THE STOCK MARKET IS A HUGE RISK. Higher risk = higher reward. Tech companies are extremely volatile and therefore have a greater payout if and when they succeed. Facebook is no different. You can't go into a stock demanding a huge payday. The market doesn't work that way. Litigation is definitely NOT an answer to your failure to analyze your risk tolerance.
So, a better option would be to take the money you were going to spend on Facebook stock, place it in a pile in your driveway, and light that bitch up Waiting to Exhale style. Maybe the stock would level out if you weren't prematurely buying and selling on a whim. Dumbasses.

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