…the Facebook I.P.O. was, indeed, a disaster. For starters, there was only the tiniest initial bump, so the Wall Street speculators did not make their usual killing. What’s more, because the company decided, late in the game, to issue 25 percent more shares — and because Morgan Stanley aggressively priced the stock, at $38 a share — Facebook maximized its take, at $16 billion. Long-term investors should be happy about this outcome; the company now has plenty of capital as it competes with Google and the other Internet big boys.
But let’s be honest. Were there really any long-term investors in Facebook that first day? Judging by the torrent of criticism that has rained on Facebook and Morgan Stanley, it sure doesn’t appear that way. Instead, what the Facebook aftermath suggests is that we’ve all become brainwashed into believing that, when it comes to I.P.O.s, up is down and down is up. A successful I.P.O. is one where the company gets hosed by Wall Street. A failed I.P.O. is one where the company’s interests, not those of Wall Street speculators, are served. It’s Alice in Wonderland goes to Wall Street.