This morning at the Paley Center for Media, David Kirkpatrick, senior editor for Internet and technology at Fortune, and veteran venture capitalist Alan Patricof, dissected the Facebook IPO, and what an interesting dissection it was. To Kirkpatrick, the stock’s plummet (at least by IPO standards) was the result of at least two factors: Nasdaq mishandling and the large amount of Facebook users who bought the stock. The moment these unsophisticated investors saw the price go drop, they quickly sold their shares, driving the stock down even further, says Kirkpatrick.
For Patricof, the Facebook IPO is actually one more chapter in a larger story of how the IPO market has changed radically in the last few decades. The entire IPO ecosystem of underwriters and bankers has all but disappeared, he says, leaving entrepreneurs with only a slim chance to exit with an IPO. (Acquisition is now the rule of the day.) Still, Patricof says that in his 42 years of investing, he has never seen a better time for startups. There’s plenty of cheap money at generous terms. “It’s a seller’s market,” he says.
Where does Patricof and Kirkpatrick think the share price is likely to go from here? Or to put it more bluntly, should investors buy?
But by focusing only on Facebook’s share price, investors and the media are missing the real impact of the IPO: