Why I hate the Facebook IPO: Greedy inside-trading bastards

Soon after my work Monday began here on the America's Pacific Rim, I checked the news and was so delighted with the update on the share price of Facebook that I tweeted:

Watching the #Facebook share price drop below the float price is pure schadenfreude :)google.com/finance?chdnp=…
— sriram khe (@congoboy) May 21, 2012

The schadenfreude was not because of the love-hate relationship that I have with Facebook; after all, there are many companies and individuals who trigger such emotions in me.

The joy at the falling share price was simply because of the manner in which Zuckerberg and his buddies demonstrated yet again at how much the system has devolved into a crony capitalism.  To begin with, they dragged out the whole going IPO process by initially offering big investors a slice of the company.  And then began the lengthy process that reminded me so much of how Lebron James went about choosing his bride team--remember that one?  Remember then how nauseating that was to most of us, even if we were not from Cleveland or cared about any sport?  And, therefore, how much we jumped up with joy with Lebron couldn't win the championship?

If you remember all that, you can easily begin to understand my schadenfreude, though I have no nickel to invest in any stock.

And then, one of his co-founders renounces US citizenship and moves to Singapore in order to avoid taxes, the news reports said.  Seriously, isn't that a cheap version of corporate-national prostitution to sell oneself for money?

By the time public (not pubic!) trading began, I was rooting for the share prices to go down.  And to go down fast.

This Forbes column clearly articulates what I would otherwise struggle to write (ht):

2. Mark Zuckerberg’s disdain for investors. He never wanted to be a public company. This became all too obvious during the IPO road show’s crucial stop in New York when (a) Zuck hid out in the bathroom and forced the audience to wait, and (b) he took the stage wearing his hoodie. Zuckerberg’s view of shareholders is like President Obama’s view of blue collar workers. He needs them but secretly laughs at them.
 3. Facebook left nothing for the common investor. The insider pig pile of PE firms and celebrity Silicon Valley angels took it all. This is a rather new, post-Sarbanes-Oxley fact and it should make Americans very, very angry. When Microsoft when public in 1986, its market value was $780 million. Microsoft’s market value would rise more than 700 times in the next 13 years. Bill Gates made millionaires of thousands of ordinary public investors. When Google went public in 2004 at a $23 billion valuation, it left less on the table for you and me. Still, if you had invested in Google then and held your stock, you would be sitting atop a 9x return. Zuckerberg and his Facebook friends took it all.

Yes, it is that attitude that makes me want to celebrate the plunge in the share price.

This attitude of not wanting to share--and we are not talking about taxes and redistribution here--is a continuation of the trend over the past decade during when, as the Economist points out, the number of public companies has dramatically fallen: "by 38% in America since 1997 and 48% in Britain."  This is worrisome because:

First, public companies have been central to innovation and job creation. One reason why entrepreneurs work so hard, and why venture capitalists place so many risky bets, is because they hope to make a fortune by going public. IPOs provide young firms with cash to hire new hands and disrupt established markets. The alternative is to sell themselves to established firms—hardly a recipe for creative destruction. Imagine if the fledgling Apple and Google had been bought by IBM.
Second, public companies let in daylight. They have to publish quarterly reports, hold shareholder meetings (which have grown acrimonious of late), deal with analysts and generally conduct themselves in an open manner. By contrast, private companies and family firms operate in a fog of secrecy.
Third, public companies give ordinary people a chance to invest directly in capitalism’s most important wealth-creating machines. The 20th century saw shareholding broadened, as state firms were privatised and mutual funds proliferated. But today popular capitalism is in retreat. Fewer IPOs mean fewer chances for ordinary people to put their money into a future Google. The rise of private equity and the spread of private markets are returning power to a club of privileged investors.

You say privileged investors, I say crony capitalism!

Turns out there is more:

the disastrous performance of the overwhelmed stock exchange and new rumors that Facebook might have broken the law before its first minute as a public company by leaking exclusive news about its earnings to large banks, who then went ahead and told big investors to sell Facebook at the opening.

You see why I wrote"Greedy inside-trading bastards" in the title?