Investors.com: Facebook Flop Popped Social Media Bubble in 2012
BY BRIAN DEAGON
The social media bubble burst in 2012, said a majority of 50 attorneys that manage initial public offerings, in a new survey.
About 66% of the attorneys polled say the social media bubble had burst, and 89% of them say it's the result of Facebook's (FB) IPO in May. The value of Facebook shares fell by nearly half from May through early November. From its low point in early November, however, the stock has rebounded roughly 30%, closing closing at 26.05 on Thursday after going out at $38 a share.
Financial public relations firm KCSA Strategic Communications did the survey of attorneys that it says work with law firms involved with about 80% of U.S. IPOs.
The attorneys almost unanimously agreed that Facebook was both the most anticipated - and most over-hyped - IPO of 2012. The Facebook flop was preceded by Zynga (ZNGA), which launched its IPO last December. It closed its first day at 9.50, and closed Thursday at 2.42. Yelp (YELP), Groupon (GRPN) and Angie's List (ANGI) also had less-than-stellar IPOs.
Other companies in the social media field that might have done IPOs in 2012 have chosen to wait it out, according to the survey.
If there is a silver lining, about 35% of attorneys surveyed said they believe the 2013 IPO market will be stronger than in 2012. The rest expect it to be flat. While it might not sound like an especially optimistic finding, this is the largest percentage of bullish forecasts in the three years KCSA has done this survey.
Those expecting a better IPO market point to expected stabilization of the U.S. economy, resolution of the Eurozone crisis and increasing consumer confidence.
But those surveyed couldn't point to any blockbuster IPO likely in 2013, which might be a good thing.
"It's healthier for the IPO markets not to have one highly anticipated hot listing that both overheats the market, causing a lot of volatility, as well as keeps investors and, in turn, money, on the sidelines awaiting the big listing," said Alex Lynch, a partner with Weil, Gotshal & Manges, in the KCSA release.
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