Hamish McRae: The cautionary tale of Facebook's public flotation
ANYONE who invested in Facebook will doubtless feel a little less friendly towards it than they did a couple of days ago. And I suppose if you are looking for symbolism, you could say the fact that Facebook shares fell by more than 10 per cent when they started trading was a signal that the social network bubble is about to burst.
Well, maybe. What happened may simply be the result of over-greedy advisers, issuing too many shares at too high a price and failing to heed the classic rule of all share floats: you leave a little fat in the deal for investors because if they lose money on this one, they are unlikely to stump up next time.
But there is a bigger story here even than Facebook. It is the challenge to the whole system of shareholder-owned companies, for the publicly-quoted corporation has been the very core of the Western economic model. It is a model that has swept the world – not only do these companies supply us with most of our daily needs, our private sector pensions depend on their performance. Just about everywhere, state-owned companies have been sold off or are being sold off to shareholders.