FB rode a bubble. An IPO is supposed be some mix of (a) like a giant VC round, with various institutional investors instead of VCs. The idea is that the company needs the money to fund growth.
and (b) a chance for early shareholders to cash out, more easily than via private stock sales.
The awkward part is that (a) and (b) tend to contradict each other -- why would you sell your share if the company is growing? (good answer: you need to sell a bit to buy a house. bad answer: you think the company has no upside potential)
If Facebook chose to go public 2 years ago at $20/share, it may well have seen the same hype-driven runup. Or maybe the pre-IPO pre-SEC private market auctions fed a 2-year bubble driving the stock up to ~35 based on wishful thinking and non-SEC-approved financial speculation, and the IPO was the cresting wave that took the stock close to 40 just as the wave broke and reality set in.
The awkward part is that (a) and (b) tend to contradict each other -- why would you sell your share if the company is growing? (good answer: you need to sell a bit to buy a house. bad answer: you think the company has no upside potential)
If Facebook chose to go public 2 years ago at $20/share, it may well have seen the same hype-driven runup. Or maybe the pre-IPO pre-SEC private market auctions fed a 2-year bubble driving the stock up to ~35 based on wishful thinking and non-SEC-approved financial speculation, and the IPO was the cresting wave that took the stock close to 40 just as the wave broke and reality set in.