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Published on May 23, 2012
Less than three days before Facebook's initial public offering, Chief Financial Officer David Ebersman decided to boost the number of shares the company would offer investors by 25%, said people familiar with the planning. His main adviser at lead underwriter Morgan Stanley MS +0.91% assured him there was plenty of demand, they said. That decision by the 41-year-old Facebook executive may have doomed any real chance the social-networking company had that its shares would jump when trading began—a hallmark of successful IPOs. On Tuesday, the second full day of trading, Facebook shares fell $3.03, or 8.9%, to $31, after falling 11% on Monday. Investors are blaming the downdraft on the last-moment expansion of the offering. Also, A senior Nasdaq Stock Market executive told customers that the exchange would have put the brakes on Facebook's initial public offering had it known the extent of the technical problems that would plague its systems and disrupt the eagerly anticipated listing.