Facebook’s IPO had built so much hype and took place with much intense coverage as expected. However, what fell out of expectation was the performance the first day of the trading of Facebook stocks faced. Facebook shareholders are the most disappointed and have even filed a class action lawsuit against the social network. Besides, the underwriting banks, including that of Morgan Stanley, were also taken action against. The law firm Robbins Geller Rudman & Dowd is representing the shareholders and the suit has been filed in a Manhattan U.S. District Court on May 23.
Their charge is that Facebook had kept secret “a severe and pronounced reduction” in revenue forecasts from its investors. This means that Facebook gave a pessimistic revenue guidance to its underwriters. The experts believe that Facebook could get in serious danger as it has violated security laws. Mark Zuckerberg was in the news, less for the good change that happened in his life, that of being finally married, and more for his company’s stocks not faring well on the first day. Zuckerberg got married just a day after Facebook’s first day at the market on May 19.
For the delays that occurred by NASDAQ’s own admittance due to its technical glitch had also caused a lawsuit against it. Hence, all things are not going so perfectly for Facebook, as it is already facing questions about its ads and the sponsored stories it features on the side. But with the money that Facebook has, it can take many such lawsuits and should better get prepared for them or improve its performance responsibly.
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