Is there a PR lesson in last week’s Facebook IPO? It would seem so. With much of the non-financial press complaining bitterly about its closing day price, everybody it seems, has an opinion. Might there be a PR opportunity to make a wider educational point about IPOs and what passes for the new normal?
Though Facebook shares rose more than 10% to $42 within minutes of opening, they quickly fell back and ended the day barely above the company’s initial pricing of $38. In the end the underwriters had to come in and help support the price so that it didn’t fall below its launch level. As one of the sexier IPOs to come to market, this was obviously not ideal.
But market giddiness over IPOs has shifted expectations to the extreme end of the performance dial. When Linked In went public it closed over 100% higher than its issue price, while Groupon climbed 30% on launch. This has suddenly become the new normal. Unless the price increase on opening is stratospheric, then sour editorials and negative coverage are guaranteed.
The PR Verdict: “C” for IPO bankers and their advisers. There is a PR opportunity for bankers and the media to reestablish the standard for “normal”.
PR Takeaway: Sooner rather than later the PR dial needs to move back to the centre. Who said 100% uplift on day one of an IPO is the new normal? While Facebook’s debut clearly hit some rocks, the press coverage demonstrates the wider point that expectations are now out of sync with traditional market practice. A ten percent uplift on day one used to be considered healthy, while anything higher tended to suggest that shares were sold too cheaply. For PR advisers and bankers this might be a message worth revisiting.
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What’s your PR Verdict?