Seeking Alpha

One of the reasons for Facebook's (FB) less-than-stellar performance today may be due to the...

One of the reasons for Facebook's (FB) less-than-stellar performance today may be due to the fact that the system became so clogged that traders backed away, says CNBC's David Faber. The big mid-day drop - from $40 to $38 - apparently happened because the Nasdaq temporarily stopped taking orders at one point, which created enough uncertainty that traders on many desks stopped trading the shares altogether. The SEC has launched an investigation into the issue. (video)
From other sites
Comments (29)
  • C Michael Croston
    , contributor
    Comments (196) | Send Message
     
    Why didn't they just stop trading the stock. They couldn't even open on time because everyone was bailing out. Maybe David Einhorn said he was going to short FB as soon as he could.
    18 May 2012, 06:44 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4367) | Send Message
     
    550m+ shares by the end of the day, 17m+ After hours...maybe this sucker will bounce big on Monday, who knows. That or everyone is frustraded and not willing to enter the stock and it sinks. Its a mystery!
    18 May 2012, 06:46 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4367) | Send Message
     
    I think $38 is on the top end of it, its probably more like 35-38, but I believe that Zuck will do a good job, a billion in ad revenues isn't anything to shake a stick at, I think it will grow from here, as long as I see diversificatio and good aquisitions to get them there, I think it could be a great long term investment. I believe in it more than AMZN for example.
    18 May 2012, 07:41 PM Reply Like
  • C Michael Croston
    , contributor
    Comments (196) | Send Message
     
    Yup.
    18 May 2012, 06:50 PM Reply Like
  • mitrado
    , contributor
    Comments (2018) | Send Message
     
    I won't touch it... and I feel stupefaction seeing people selling $AMRN to buy $FB. That's almost the same as trading gold for plastic. Weird people...
    18 May 2012, 06:52 PM Reply Like
  • Spencer Knight
    , contributor
    Comments (417) | Send Message
     
    I'm still confused at who was buying or trying to buy. My wife said the morning news was saying people who've never bought stocks were the ones buying and/or trying to buy. That is reckless in my opinion. Regardless of what happens to FB, your first stock should not be something like FB. I understand you could think, "well, I use Facebook everyday and all my friends use Facebook everyday so it must be the next $1000 stock."

     

    Of course then again, I am sure people said that about GOOG and plenty of other long term bellwethers...
    18 May 2012, 06:57 PM Reply Like
  • ninjaneer
    , contributor
    Comments (23) | Send Message
     
    Agreed on the sentiment for FB not being a first stock. Then again, it's not the time or place for anyone to buy their first stock, in anything. Worst week in 2012 for the major indices?

     

    The problems it caused across the system were amazing, though. What was it, 20% retail involvement? That's amazing and I hope it's a sign of things to come as the younger, new middle class comes in. Users of some online firms experienced across-the-board blackouts. FB was a wash but I like it; I hope systems catch up and its involvement is a sign of things to come... a much more engaged and democratic market than these people's parents experienced with their dysfunctional 401k's. We'd now only have ourselves to blame. Places like Goldman Sachs might be reduced to grocery store delivery guys... wouldn't you laugh at someone who tried to tie an astronomically high premium for delivering a bushel of tomatoes?
    18 May 2012, 07:20 PM Reply Like
  • chopchop0
    , contributor
    Comments (3873) | Send Message
     
    Whatever reason they can come up with besides the obvious overhyped, overvalued ipo that it is
    18 May 2012, 07:10 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    This stock worth for $38. But other social stocks including Linked worth may be $1.
    18 May 2012, 07:11 PM Reply Like
  • mitrado
    , contributor
    Comments (2018) | Send Message
     
    $FB will be worth what people pay for it...

     

    If you compare http://bit.ly/n8JSSE & http://bit.ly/Kmqr7x ... and you didn't know what companies the graphs belonged to, you'd certainly reach the conclusion that the second is better, way better.

     

    Yet, the company with no profit margins whatsoever is the one with a P/E of 175... and the more profitable company has a P/E of 9.35?

     

    In theory, this makes no sense whatsoever. But we all know speculation dictates the values... nothing else matters.

     

    So yeah, $FB can trade around $38, around $380 or $3.8.

     

    I'm not willing to gamble this much. :-P
    18 May 2012, 08:59 PM Reply Like
  • warrenrial
    , contributor
    Comments (561) | Send Message
     
    The system became clogged with toilet paper.
    18 May 2012, 07:16 PM Reply Like
  • Hendershott
    , contributor
    Comments (1616) | Send Message
     
    "traders on many desks stopped trading the shares altogether". The implication being that they would have moved the stock higher or lower. Do we really need or want these people at all?
    18 May 2012, 08:57 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4367) | Send Message
     
    If you are retail investor yes, but it seems as if it was the big boys who were keeping the price in the 38 range. Over 500 million shares? Thats not retail.
    18 May 2012, 09:09 PM Reply Like
  • Hendershott
    , contributor
    Comments (1616) | Send Message
     
    Traders on desks doesn't refer to retail investors. These are traders at hedge funds and institutional desks trying to scalp a few nickels. The underwriters supported the stock at the IPO price. They do that with high profile IPO's. They used to do it with all of them. One trading strategy for the people on the desks was to use the underwriters as a backstop. Buy near or at $38 and scalp a nickel. That's what the best and brightest do for our economy and our markets.
    18 May 2012, 09:24 PM Reply Like
  • ninjaneer
    , contributor
    Comments (23) | Send Message
     
    They hurt themselves by trying to keep it at 40. When it went to 41.xx, why didn't they accelerate to 45? To keep out the daytraders?

     

    By going down from 42+ to 38, they hurt themselves BIG TIME because a high profile stock like this elicits a huge retail reaction. Had the soulless dirtbags at Goldman thought about what they were doing 1-2 pm, and thought about going at least 45 like was expected, they might have done well for the day. But no.... the quota was to keep it at 40. Such worthless, unresponsive losers and all higher ups to their chairman should be sent through a wood chipper.
    18 May 2012, 09:35 PM Reply Like
  • Peter Schmotzer
    , contributor
    Comments (73) | Send Message
     
    Overvalued, over hyped Garbage imo. See ya in the twenties, then we'll see....
    18 May 2012, 09:55 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4367) | Send Message
     
    It could happen if we all continue to be scared of Europe, as if the whole world is gonna explode on Dec 21st.
    18 May 2012, 10:52 PM Reply Like
  • Aloha96815
    , contributor
    Comments (20) | Send Message
     
    Should investors expect the banks to prop FB again to prevent it from going under $38? Also, will analysts come out to downgrade FB on Monday? What an affair.
    18 May 2012, 11:56 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4367) | Send Message
     
    What makes you think there will be a downgrade the next trading day? Don't they wait until earnings and forward statements?
    19 May 2012, 12:13 AM Reply Like
  • Aloha96815
    , contributor
    Comments (20) | Send Message
     
    I was being sarcastic. What an affair. Enjoy your weekend.
    19 May 2012, 05:32 AM Reply Like
  • C Michael Croston
    , contributor
    Comments (196) | Send Message
     
    There was a downgrade during the opening session.
    19 May 2012, 11:28 AM Reply Like
  • s4aqom
    , contributor
    Comment (1) | Send Message
     
    It took over 3.5 hours before our order was filled. Our broker amost gave up.
    19 May 2012, 04:13 AM Reply Like
  • jc11
    , contributor
    Comments (10) | Send Message
     
    If you had level II access and were looking at the tape you would be able to see that the underwriters were there to support the stock, large blocks of buy order stuffing the bid side when FB first hit 40 then again when it hit 38, so the high priced IPO would not bomb

     

    Also there were many large orders placed way above the current price, orders that could have never been filled since it was in the millions of shares first of all and second they were at $20, $30 above current price (think 70). This was done to drive the price up so whoever were not looking at the tape, unsuspecting retail investors would start bidding up the price. Is this legal? CNBC"s Tausche reported the same rumors of fake orders on FB. I have seen them before on other stocks, especially one with low vol. Buyer beware. Wall Street is a high tech poker game of bluff, the game is often rigged unless you are on the inside and the first to get in and the first to get out.
    19 May 2012, 04:18 AM Reply Like
  • jc11
    , contributor
    Comments (10) | Send Message
     
    If you had level II access and were looking at the tape you would be able to see that the underwriters were there to support the stock, large blocks of buy order stuffing the bid side when FB first hit 40 then again when it hit 38, so the high priced IPO would not bomb. Easily 50% of the volume was generated by FB's own underwriters doing everything possible to defend the $38 line.

     

    Also there were many large orders placed way above the current price, orders that could have never been filled since it was in the millions of shares first of all and secondly there were $20, $30 above current price (think 70). This was done to drive the price up so those not looking at the tape, or don't have level II, unsuspecting retail investors would start bidding up the price. Is this legal? SEC, please answer. CNBC"s Tausche alluded to the same rumors from other traders of fake orders trying to drive the bid price up. I have seen them on other stocks, especially those with low daily vol. Buyer beware. Wall Street is a high tech poker game of bluff, the game is often rigged unless you are on the inside and the first to get in and the first to get out, you will be holding the bag
    19 May 2012, 04:18 AM Reply Like
  • ninjaneer
    , contributor
    Comments (23) | Send Message
     
    I've seen receipt tickers of underwriters trading as much as 100m shares back and forth to first retain it at 40 (to keep out daytraders), then to support it at 38, then to flip it up at 38.40 (one big trade missed it at 4:00 to be an AH trade). Retail investment was reported to be as much as 20%, and I really hope this incites the "shareholder spring" that others have spoken of.

     

    Investment in a semiautomatic weapon to take down the seditious criminals at GS is much less than investment in 100 shares they pawn on the public. Bankers are by definition a parasitic class on society, and it's prime time to keep them in line.
    19 May 2012, 12:26 PM Reply Like
  • C Michael Croston
    , contributor
    Comments (196) | Send Message
     
    CNBC's Gary Kominsky stated that he had spoken to some "high-level traders" that were planning to dump the stock around 3:00 PM. Isn't that considered manipulation? Who care what his circle of connections do? It becomes self-fulfilling prophecy and manipulation, not only of FB, but of derivative plays also.
    19 May 2012, 11:33 AM Reply Like
  • DianeLee
    , contributor
    Comments (360) | Send Message
     
    Unfortunately, it's common, called "flipping" and we're better to wait for the afterMarket.
    19 May 2012, 01:03 PM Reply Like
  • HercMadooky
    , contributor
    Comments (3) | Send Message
     
    Leave it to the stock terrorists to try to burn down another institution driven by a mob mentality of talentless sociopaths. These are American businesses built with postive energy and talented minds which are destroyed by thugs who profit qucikly kicking and punching destroying business infrastructures and the dreams of fellow Americans.
    When will our trading laws change to reflect contributing for sharing ownership or simply not. The notion that battalions of individuals and brokerage firms can decide to gang up and destroy business for their personal gain needs is ludacris.
    19 May 2012, 01:56 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4367) | Send Message
     
    Only when they realize the need for a spin off of retail and institutional, when we have two stock markets is when the playing field will be more level.
    19 May 2012, 04:43 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs