Facebook’s return to its IPO price is gratifying to investors, as well as to the firms on Wall Street that set a price of $38 per share. But the comeback was more than just a successful resolution of a key business problem (mobile revenues). It was a case study in PR perseverance.
On May 18, 2012, after a 30-minute delay, the stock opened on NASDAQ and reached a high of 48. That’s where it stalled, and by the close of the first day of trading, finished flat. One month later, FB had fallen to $28, and reached an all time low of $18 at the end of August.
The level of criticism directed at all parties – underwriters, NASDAQ, and the company management – was overwhelming. The Wall Street Journal labeled the deal “a fiasco,” while others invariably referred to the deal as “botched.” Even the New York Stock Exchange publicly called out its rival, suggesting that NASDAQ may have set a “harmful precedent.” Facebook CFO David Ebersman and Morgan Stanley’s tech bankers took the most heat. Assessing the underwriters’ brand reputation, one Wall Street expert wrote: “…Morgan Stanley will take a hit for it, deserved or not. That’s a big break for Goldman Sachs and JPMorgan Chase.”
And yet, months later, all that has changed. Media criticism eventually lost steam, and the serious investors who held on to the company’s stock were vindicated over time. (Moreover, the JPM and Goldman reputations did not enjoy a “big break.”)
THE PR VERDICT: “B” (Good Show) for Facebook and Morgan Stanley.
THE PR TAKEAWAY: Don’t react; just act. Sure, Facebook management might have made more of an effort to embrace Wall Street. Mark Zuckerberg didn’t need to wear a suit and tie during the roadshow, but the hoodie and declarations that the company was “in no rush” to go public may not have sent the right message. But this was all on brand and contributed to Facebook’s business-as-usual unflappability. Given disclosure restrictions, defending Facebook’s pricing and underwriting process after the fact required consistency and patience. Over time, that strategy – which may have been no strategy – paid off.