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Facebook: The Complete Forensic Post-Mortem
While much has already been written on the topic of peak valuation, social bubbles popping, and the ethical social utility of yesterday’s historically overhyped IPO, nobody has done an analysis of the actual stock trading dynamics as in-depth as the following complete forensic post-mortem by Nanex.

Because more than anything, those tense 30 minutes between the scheduled open and the actual one (which just happened to coincide with the European close), showed just how reliant any form of public capital raising is on technology and electronic trading. And to think there was a time when an IPO simply allowed a company to raise cash: sadly it has devolved to the point where a public offering is a policy statement in support of a broken capital market, which however is fully in the hands of SkyNet, as yesterday’s chain of events, so very humiliating for the Nasdaq, showed. From a delayed opening, to 2 hour trade confirmation delays, virtually everyone was in the dark about what was really happening behind the scenes! As the analysis below shows, what happened was at times sheer chaos, where everything was hanging by a thread, because if FB had gotten the BATS treatment, it was lights out for the stock market. Well, the D-Day was avoided for now, but at what cost? And how much over the greenshoe Facebook stock overallotment did MS have to buy to prevent it from tumbling below $30 because as Reuters reminds us, “had Morgan Stanley bought all of the shares traded around $38 in the final 20 minutes of the day, it would have spent nearly $2 billion.” What about the first defense of $38? In other words: in order to make some $67 million for its Investment Banking unit, was MS forced to eat a several hundred million loss in its sales and trading division just to avoid looking like the world’s worst underwriter ever? We won’t know for a while, but in the meantime, here is a visual summary of the key events during yesterday’s far less than historic IPO.

Read on: http://www.zerohedge.com/news/facebook-complete-forensic-post-mortem

The chart (5 millisecond interval) shows the result of the blast in trades and quotes when Nasdaq’s quote returned. Trades printed at least 900 milliseconds before quotes, an impossibility if orders are being routed according to regulations. We have jokingly referred to this anomaly as fantaseconds.

Nasdaq bids and offers (triangles), Nasdaq trades (circles) and NBBO (gray/yellow/red shading).
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12 comments
 
Very much appreciate your analysis here, +Alexander Becker .
Particularly appreciate this line:
And to think there was a time when an IPO simply allowed a company to raise cash: sadly it has devolved to the point where a public offering is a policy statement in support of a broken capital market, which however is fully in the hands of SkyNet, as yesterday’s chain of events...
 
It would be really nice if someone translated all of this from yuppie horseshit speak to English. Is the unspoken allegation that there was a massive failure of technology? Or is the allegation of massive manipulation?
 
In short; a massive scam, screw-up, and attempt to cover-up — in that order. And the mysterious workings of HFT, with trades being printed before quotes.
 
So all is well in the House of Mordor ... errr ... at NYSE!
 
Related: Have users pay to promote posts? http://www.bbc.com/news/technology-18033259

This is even more insane than the anti-knowledge graph
"Different methods of highlighting posts were being tested, said the spokesperson. These would see a range of charges being levied to make posts more visible. Comments on the tests suggest the highest price being charged was £1.25 ($2) while others cost 25p or 50p."
 
I read that news the other day, +Alexander Becker , hopped over to FB thinking they would be in uproar, and all I heard were crickets... generally speaking, very little uproar anywhere, which has surprised me.
 
By the way, I agree with +Steve Faktor's take:
"He maximized his cash payout. After all, it is a fundraising effort. Now he can buy more companies, talent, and hoodies with cold hard cash. You're right the stock takes a hit, but it was never really worth that much to begin with. He knew that, but let the Greederati do their thing. They did. And, they got stuck with stock they can't flip with little upside in the near future. He created value, they didn't. And for the first time in a while, the numbers reflect that" —
https://plus.google.com/101420285783101939251/posts/YRP4khuckws
 
Although I agree with the sentiment +Steve Faktor, I can't see the reality of the HR3606 crowd-funding legislation cutting out the middle man. Almost the opposite. Indeed, less than 10 days after the bill's passage into law I received a 24 page 'letter' size full colour brochure made to look like a jazzed up Facebook prospectus and pushing a penny stock for a buck. I shudder to think of the costs and the (now) non-qualified investors who will be duped.

The principle behind the legislation is long overdue. The drafting and compromises make it little more than a Huckster's Charter.
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