Facebook's horrendous debut

This deal ultimately will go down as one of the worst-executed IPOs ever. Given all its problems, this stock is a sell, sell, sell.

By Jim Cramer May 21, 2012 8:34AM

What the heck happened with the Facebook (FB) deal? In the old days, you would have had to canvas the customers one by one in order to find out, and you wouldn't be able to reach enough people to really know.


These days, it's very different. I have more than 500,000 followers on Twitter, and I'm being deluged with people who didn't get their orders filled, still don't know what they have and aren't sure if they are long or short.

This deal, when the smoke clears, will go down as one of the worst-executed initial public offerings we have ever seen.


Now, I am sure that all of the companies involved will (1) disclaim any problems (2) find a way to say it was the best offering ever and (3) say that, given the demand and the volume, it was handled extremely well.


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Here's the issue, though: All of these people who are complaining can't be wrong. They didn't all make it up, and they aren't all griping jerks. Should we just ignore them?


Look, someone blew the opening. Someone didn't have control over the deal. Someone was negligent. We just need to know what happened here.


You see, with these Twitter comments, I am not pointing fingers. The people are. The people can no longer be ignored just because they are little, or not JPMorgan Chase (JPM), or because they are rich private clients of Goldman Sachs (GS). Someone must answer to these people.


But you know what? I am so jaded and cynical these days that I figure no one will. The process is hard enough, and the regulators are not sophisticated enough to do anything other than say, "Hey, it went pretty smoothly."


They will get away with that, because the press doesn't have subpoena power.


Now, on the deal itself, and why it was so sloppy, here's what I am hearing. Regardless of what the brokers were saying about demand, it was not tight at all. Regardless of what Facebook told Morgan Stanley (MS), which amounted to something like "Let the real people have it," the real people didn't expect it -- that, or they didn't want it nearly as much as the Facebook gazillionaires thought they did.


There were plenty of brokers who couldn't fill the supply, not the demand. That's why I was so adamant on "Meet the Press" (video) that you need to be a seller. It was that, as well as the fact that all of these social media deals are busts, and the ones that don't stay at a premium to the deal are real busts.


In other words, given the lack of demand on the opening day, given the lack of faith and the anger that the IPO process engendered, and given the fact that Facebook is now just one more stock caught up in the fiasco that is Greece and the coming tragedy that is Spain, the stock is a sell, sell, sell.


Do you think any one of these underwriters can recommend it up here, given the metrics and the worries -- yes worries -- about the next quarter?


I don't think so.



Jim Cramer is a co-founder of TheStreet and contributes daily

market commentary to the financial news network's sites. Follow

his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust, and is long JPM.

May 21, 2012 12:38PM

Last Thursday Cramer said it was going to $70



May 21, 2012 12:37PM
...a rotton egg thrown at the 'FACES' of investors who don't go with what the 'BOOKS' teach. The bottom line: Zuck is enjoying his dough with honeymon to boot while early entrants to the stock have been lumping their losses. Wonderful THUD!
May 21, 2012 12:36PM

I'm almost 100% certain the Cramers just a month ago was like, "I don't support any social media plays, I have actually told ppl not to buy socal media but I'm telling you right now buy FB this is not an averaqe social media play this is a company to invest in" and now he is saying this on msn.  Cramer I am not hating on you and I do believe that you make good calls every once in a while, but when you have a TV show and as much influence as you do on the general public every once in a while is just not good enough. MAD money means if you listen to cramer about what to do with your money it almost always ends with you being MAD.


May 21, 2012 12:36PM

This seems like such a volitile stock, I mean, it is not even really a product.  The only thing that would need to happen for this stock to plunge would be for one small negative thing to happen to FB, one little nuisance or caviot that would irritate it's users (or the next best thing to come out), and POW, you could have an uprising or protest from the users that would shut the whole thing down. 

Remember, this is simply a social media webpage, at the end of the day, that's all it is. 


May 21, 2012 12:36PM
Told you so... to anyone that took our collective advice no charge... which is way less than those have charged you that bought into it.....
May 21, 2012 12:36PM
May 21, 2012 12:35PM
It's vaporware.  There is no actual product to sell.  Maybe the buyers aren't as stupid as these people hoped. 
May 21, 2012 12:33PM
It's not thievery if sheeple willingly give their cash, is it?
May 21, 2012 12:21PM
The real question is Facebook worth $100B?  Would you want to put this amount of money in facebook or some other company(ies)?The next several quarters will give everyone a view of that answer.Just because the companies that  handled the initial IPO messed up does not mean it was Facebooks fault. Of course, those companies will not want to admit if there were issues since that affects future deals.
May 21, 2012 12:10PM

If it sounds too good to be true ... it probably isn't. There is and never has been a free lunch... and this unbridled salivation over FB is simply meeting up with reality.



May 21, 2012 12:02PM
What has Greece have to do with a Facebook IPO?  Jim is hitting the 420 again.
May 21, 2012 11:11AM

of course cramer can be fact checked and shown to be a complete hack but he knows

he can prey on the gullible...........which is how he makes a living........the lowest lifeform there is

May 21, 2012 11:10AM
Another example of the game is rigged. cnbc,regulaters,crony capitalist,underwriters etc etc decide who wins and who loses. political hacks/shills (kiernan,drugster kudlow,lips bartiromo) pick the slant they want to promote and use the bully pulpit to enrich themselves and their masters. small investors,like myself,swim with crooks who use their power to steal.lock them all up and level the playing field so we can make some money.
May 21, 2012 11:06AM

Thank you to all who have become followers on Twitter!


Just a quick follow up to my FB posts from last week. There was a story posted Saturday about FB forcing a picture of a child with a birth defect to be removed from the mothers FB page. This is just the type of action that can and will land FB in the dog house. A bunch of spoiled little rich kids want to censor the content on toy.

As a publicly held company this is not acceptable; and very possibly illegal from the standpoint of discrimination. Hopefully the loving mother of this child will take legal action and all of you FB users will make your voices heard to correct this.

Who is banned next-People of color-The Elderly-Those of certain sexual orientation?

Will Barry make sure that his equal rights for all includes those with birth defects and instruct the AG to file suit on behalf of all children with birth defects?

May 21, 2012 11:03AM
same as usual when everybody know whats going to happen it doesnt. gas wil be down all summer baring international diaster. ive seen guesses as high as 5.25 a gallon
FB may be all that some day - but right now we don't really know what it is.  It is also not managed well.  People are forced to go along with their format changes and often those ideas are not useful.  Furthermore, from a business standpoint, I haven't seen any figures showing quantitative success.  The only thing we know for sure is that it has a lot of potential.  Now that it costs something, we will see if management will respond to its followers and HOW MUCH MONEY anyone is actually making from using FB.
May 21, 2012 10:49AM
And let the transfer of wealth from main street to wall street be complete.  
May 21, 2012 10:43AM

Hey Cramer,  What happened to your long term buy and hold recommendation.  You are the fraud



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