Investors relieved they got shut out of Facebook IPO

NEW YORK Tue May 22, 2012 9:58am EDT

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NEW YORK (Reuters) - Curtis Arnold tried to buy Facebook Inc stock 10 times throughout the day on Friday through his online brokerage, E*Trade Financial Inc.

Each time, he tried to make the $25,000 purchase of shares, E*Trade's trading site either timed out or he received a message that said trading in the stock had halted, Arnold said.

"I finally got so frustrated that I quit," he said.

Now that the stock is trading 10 percent below its original $38-per-share price, Arnold, who is founder of credit card rating site, said he is relieved.

"Seeing what the stock is doing now, I am glad that my order did not go through," he said. "It saved me a nice chunk of change."

Whether through trading glitches, or just an inability to get access to Facebook shares before the initial public offering, many investors who missed out on Friday, now say they are better off.

Over the past few weeks investors have been hammering their financial advisers trying to get access to the much-anticipated social media site's shares pre-IPO.

When advisers told some clients they were not able to get shares for them, the clients were extremely disappointed, advisers said.

Not so much now. The big first-day pop in Facebook's share price that many analysts expected, never happened. The highest the stock price hit on Friday, after opening at $42.05 per share, was $45.00. It closed at $38.23.

As of 2:30 p.m. EDT Monday, it was down 9 percent at $34.75.

One Morgan Stanley Smith Barney <MS.N. adviser said that a client who was not able to get the paperwork back in time to place an order for Facebook shares before the IPO, called the adviser on Friday saying "she felt that she had dodged a bullet."

Dave Cohen, a 48-year-old general manager for a paving contractor, said he was very disappointed when his adviser called last week and told him he could not get Facebook shares before it started trading Friday morning.

"I was really disappointed but not anymore," he said. "Now I am just happy I had nothing to do with it."

For the meantime, both Cohen and Arnold said they would opt for more conservative investments going forward.

For Arnold that means dividend-bearing stocks. For Cohen, it means annuities.

"I am more comfortable being in a safe mode right now," Cohen said.

(Reporting By Jessica Toonkel; Editing by Walden Siew and Maureen Bavdek)

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Comments (3)
chacama wrote:
My takeout from this article and interviews is the amazing stupidity level of these “investors” and their so called ” financial advisors” who were trying to get ahold of FB stock in mere greed without revisiting the fundamentals or prospects of the company they were trying to put their money on. “Financial advisors”? KMA!

May 22, 2012 10:10am EDT  --  Report as abuse
nikolotta wrote:
Sit down and do the math. Using a reasonable PE and futures mix, this stock is worth $3.50 to $3.80 per share. Also, they have no assets, dwindling revenue, massive losses of premium value users, and practically zero break-up value.

All the street did was massively reward an average web programmer who stole an idea, implemented it by then stealing college students’ personal information from campus websites, and turning it into a “look at me” vanity page, all the while endlessly harvesting users’ private information for sale. Zuckerberg’s only plan is to use raised capital to prolong Facebook’s inevitable collapse by buying up every rising threat for ridiculous sums of house money.

Better to have this happen now than all at once when Groupon, Yelp, and Zynga implode, too.

May 22, 2012 10:15am EDT  --  Report as abuse
Lgupta wrote:
Welcome to be victim of ETRADE’s trading and accounting platform. Get out before you loose all your life savings as I lost.

May 23, 2012 3:30pm EDT  --  Report as abuse
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