Facebook Inc. went public Friday on the NASDAQ Stock Exchange at a price of $38 per share. In less than a week, Facebook's stock price has gone down 15% to $32 a share. As if this is not enough to get Facebook executives' blood pressures up, even after a botched NASDAQ IPO debut, Facebook is now being sued.
Facebook, select Facebook executives, and Facebook's IPO underwriters are being sued for supposedly releasing information to only a select few investors. A lawsuit filed on Wednesday seeking class action status accuses Facebook and the related parties had not told the public about Facebook telling the investment banks in charge of their public offering that earnings forecasts should be decreased due to Facebook's push to mobile phones. Morgan Stanley, Facebook's lead IPO underwriter, is being sued for giving this information to preferred investors only. The reason Facebook warned potential investors, in a May 9th prospectus, of the push to mobile devices is because there is less ad revenue available currently for mobile devices than there is for Facebook through desktop and laptop computers.
Lawsuits were filed in both New York and California; Facebook is based in Mountain View, California. Aside from supposedly failing to advise all investors on the decreased forecast, Facebook is also being accused of including false statements and omitting other information in the IPO documents. Facebook spokesman, Andrew Noyes claims, "We believe the lawsuit is without merit and will defend ourselves vigorously."
Adding to this public relations nightmare, there has been rumors swirling that Facebook could possibly move its shares over to the New York Stock Exchange. This is partly due to NASDAQ's gaffe delaying Facebook 30 minutes at the biggest moment in the company's existence thus far. Glitches in the NASDAQ Stock Market caused this delay making rumors spark. Another reason for the possible move is the lawsuit filed against NASDAQ by angry investors. The NYSE claims they have not communicated with Facebook about any such accusations. NASDAQ has not commented.