While Facebook’s stock continues to slip on its third trading day (more on that in a bit), Nasdaq’s reputation is taking a header after mistakes during Friday’s IPO. First there was a delay, then there were problems with the orders. Basically, it looks like the Nasdaq system became overwhelmed by the trading activity in those first hours.
“It took staff approximately 20 minutes to resolve the matter and open the stock, during which time millions of shares worth of trades fell into limbo. Brokers and traders didn’t learn the results of trades made in Facebook shares until nearly two and a half hours later, and some individual investors remained uncertain of their position in the social network’s stock Monday,” Dow Jones reports. Yikes and double yikes.
As a result the company’s chairman, H. Furlong Baldwin (who was destined to become the Monopoly man with a name like that) has had to come out in support of the CEO Bob Greifeld during this morning’s investor call, who openly spoke over the weekend about his desire to stay in his job despite the mishap.
The show of confidence was necessary; company leadership needed to come out to reaffirm cohesion and order at the company. But the problem now will be attracting other companies.
To make that point, the company announced that another business, Western Digital Corp., would be switching from the New York Stock Exchange to the Nasdaq next month. A Grant Thornton analyst, David Weild, who’s also a former vice chairman of the Nasdaq, told Reuters the company could have problems snagging the “ultra-IPOs” going forward. Some say the issues with Facebook’s stock price are partially due to Friday’s difficulties.
Reports say 30 million shares were impacted.
Nasdaq says it will no longer be using the software system is used on Friday, and it has set aside $13 million for bad trades. The company also has the benefit of being one of only a couple of games in town for stock listings. Some analysts are saying that, because this was a one-off situation, they don’t see this turning into a larger problem. Indeed, few IPOs will be as large as Facebook’s.
Nasdaq is also being called out for going silent once the problem arose. On this morning’s annual call, there were no investor questions and no press. In addition to the computer system, Nasdaq may have to work on its communications system going forward. Investors, analysts, and everyone everywhere who is watching these sorts of high-profile stock events must be kept up-to-date and in the loop. The SEC is recommending a review of the initial public offering, so if there’s any more info, Nasdaq may be pushed to shine a light on it.