Facebook Epic Fail Is Decade’s Worst Large IPO

Facebook Inc.’s initial public offering, which set a record for technology companies by raising more than $16 billion, also has the distinction of producing the worst return among the largest U.S. deals of the past decade.

The CHART OF THE DAY compares the first five days of trading for the 10 largest U.S. IPOs from the past 10 years. Shares of Menlo Park, California-based Facebook have fallen 13 percent since underwriters sold them for $38 on May 17. The decline exceeds the 10 percent drop by MF Global Holdings Inc. in its first five days. Visa Inc. did best among the biggest deals, rising 45 percent.

Facebook and Morgan Stanley, its lead underwriter, have faced criticism for boosting the number of shares sold in the IPO by 25 percent last week to 421.2 million. They also boosted the asking price to $34 to $38 from $28 to $35.

“Raising the price and number of shares was clearly a mistake,” said Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $1.9 billion.

The first day of trading was disrupted by the “poor design” of Nasdaq OMX Group Inc.’s software for IPO auctions, Robert Greifeld, the chief executive officer of the exchange operator, said on May 20. The malfunction also prevented Nasdaq OMX from sending messages to brokerages confirming that clients’ orders went through.

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