The NASDAQ exchange has revealed that a software SNAFU spoiled the Facebook (NASDAQ:FB) IPO. The problems caused stock price quotes to be unavailable and orders to be canceled. In the end, $FB closed only just above the offer price, but there's some dispute over whether this failure to pop was caused by the glitch. In IT Blogwatch, bloggers ponder poor system design.
By Richi Jennings: Your humble blogwatcher curated these bloggy bits for your entertainment. Not to mention: Groovy ST:TNG disco party...
Juan Carlos Perez reports:
Technical problems...affected the trading of Facebook shares on Friday. ... [They] centered on order cancellations [and] have "humbly embarrassed" Nasdaq. ... Facebook shares were expected to start trading at 11 a.m...but the process was delayed...and other glitches surfaced...which led to confusion among investors. ... [NASDAQ CEO Robert] Greifeld pegged the initial trading delay on poorly designed software...[which] buckled under a flood of order cancellations and updates. ... [The SEC] plans to look into the Nasdaq problems.
Nina Mehta tells the story:
Computer systems used to establish the opening price were overwhelmed by order cancellations and updates...[which] prevented the second-largest U.S. stock venue operator from opening the shares on schedule. ... Nasdaq officials manually intervened. ... The IPO software “didn’t work” even after thousands of hours of testing for “a hundred scenarios”...Greifeld said. ... Buy and sell requests that should have been filled in the opening auction...weren’t, while cancellations...were ignored [sources] said. ... By 11:31 a.m....quotes produced a so-called crossed market, where sellers appear to be asking less than buyers are willing to pay.
Rory Cellan-Jones says what happened:
[A]fter a hiatus as Nasdaq's systems struggled to cope...the share price began to soar from its already vertiginous $38 to $42. ... [But] by the time trading ended, it was just a fraction above the starting price. ... For other technology firms hoping to follow...the road to IPO riches, any sign that the bubble may burst is deeply worrying. ... For Mark Zuckerberg and his colleagues, there's not too much to worry about in the short-term. ... But perhaps we'll look back on May 2012 as the month when the air started to leak from a technology bubble.
But Michael J. de la Merced says the problems aren't related:
The chief executive of the Nasdaq...[said] the missteps had not affected the performance of [Facebook] shares. ... He said that the firm’s own data showed that the morning’s delay had no impact on the opening price. ... Mr. Greifeld also said his company was seeking ways to help out investors whose orders had been wrongly canceled. ... [It] was chaos, with many shareholders unsure of whether their orders had even been processed. ... And instead of gaining a big bounce, Facebook shares quickly slid from their early rise.
Meanwhile, Henry Blodget wishes everyone would stop "whining":
But to hear people bitch, you'd think they'd been swindled out of their life savings. ... And what happened? ... IPO buyers got less free money than they expected to. ... Well, it's time for people to grow up. ... Trading stocks is a risky business. Perhaps it's time...to acknowledge that.
Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. He's the creator and main author of Computerworld's IT Blogwatch, for which he has won ASBPE and Neal awards. He also writes The Long View for IDG Enterprise. A cross-functional IT geek since 1985, you can read Richi's full profile and disclosure of his industry affiliations.