Explaining Southern California's economy

Facebook v. SpaceX, Part II: The agony and the ecstasy



Blast off! Hawthorne-based SpaceX has had a very good week.

Last week, I wrote about how two California companies — Facebook and SpaceX — were experiencing big events. Facebook of course was staging its long anticipated IPO, immediately after which its CEO staged his own private big event, a marriage to longtime girlfriend Priscilla Chan. SpaceX was expected to launch the first mission by a private company to service the International Space Station. That didn't happen over the weekend, but it took place on Tuesday. SpaceX's CEO has been married twice already, so celebratory nuptials weren't on his agenda.

Of the two big events, you'd have expected Facebook's IPO to be more-or-less hassle-free, as it minted numerous billionaires and millionaires. Meanwhile, SpaceX was shooting rockets into space. Millions of things could have gone wrong.

The way things actually turned out is a study in contrast. Astonishing contrast.


Oh, what a mess this Facebook IPO has become!

Facebook Debuts As Public Company With Initial Public Offering On NASDAQ Exchange

Spencer Platt/Getty Images

The Facebook IPO now seems so long ago, now that everyone is complaining about how it was screwed up.

I'm resting up a bit this week and spending some quality time with what I think could be the next big social-media site, Quora. Head on over there and watch me answer some questions. And watch other Quorians do it, too.

But I do need to update everyone on the Facebook IPO mess. And it's a very big mess. You can read the Wall Street Journal's blow-by-blow here, or jump over to Business Insider and read Henry Blodget all but accuse Facebook CFO David Ebersman of violating SEC rules (which is ironic, given that Blodget himself is banned for life from the securities business for breaking the rules). At Reuters, Felix Salmon offers his own analysis — also laying much blame on Ebersman, but pointing to Morgan Stanley lead technology banker Michael Grimes as someone who botched his job.

Circumstantially, it seems what happened — apart from the computer screw-ups by NASDAQ that delayed trading on Friday — is that several of the major banks involved in the Facebook IPO, such as Morgan Stanley, Goldman Sachs and JP Morgan, cut their estimates for Facebook's second-quarter and full 2012 financial performance during the IPO "road show." They were motivated by Ebersman allegedly conveying information to them, as well as by an amended IPO filing with the SEC. 


Facebook v. SpaceX


The Dragon capsule, developed and built by Hawthorne-based SpaceX. On Saturday, it will be launched in the first-ever private mission to service the International Space Station.

Just for the sake of argument, let's say Facebook's highly touted IPO was a flop, priced at $38 a share and closing just 23 cents above that figure. There's another California company that's staging a big event this weekend, and it has nothing to do with Wall Street. 

It may wind up being remembered for far longer.

On Saturday, before dawn at the Kennedy Space Flight center in Florida, the L.A.-area's own SpaceX will launch a rocket tipped with a capsule designed to perform an experimental service mission for the International Space Station. This marks the first time a private company will perform a mission traditionally handled by NASA or a state-run space agency. 

From the Christian Science Monitor:

For NASA, the mission represents the first test of its new stance as a customer for launch services to low-Earth orbit. No longer is it the organization sitting in the driver's seat from rocket design through launch to landing. Once the Falcon 9 leaves the pad, control of the mission shifts to SpaceX's command center at its Hawthorne, Calif., headquarters. Only when Dragon closes in on the space station will NASA have thumbs-up or thumbs-down say in the test flight's next steps.


For Facebook IPO, Twitter was the superstar


The DeBord Report Twitter feed. Truth in advertising: I was actually following and tweeting from @mattdebord today about Facebook.

If you wanted to follow the Facebook IPO today and get the kind of crisp insight that helped you understand what was going on and maybe develop a few storylines, you wouldn't have turned to Facebook itself, nor would you have stayed glued to CNBC, which seemed to playing catchup with...


Yes, Twitter, that other kindasorta social network that's really an (increasingly mobile) breaking news and opinion service. 

Twitter is sometimes seen as a sad stepchild to lordly Facebook, but despite the intense levels of engagement that some generate on Facebook, when stuff is happening in the world, Twitter shines.

I went on the "Patt Morrison" show right after the markets closed and basically kept myself informed in the postgame not by studying the subtitled in-studio comments of Erin Burnett on CNN but by keeping one eye on my BlackBerry's Twitter feed, which was churning out real-time 140-word analysis.


Not so Happy Facebook Day for Facebook IPO

Facebook Debuts As Public Company With Initial Public Offering On NASDAQ Exchange

Spencer Platt/Getty Images

The share price of newly debuted Facebook stock is seen at the Nasdaq stock market moments after it went public on May 18, 2012. The highly touted IPO for the social network fizzled after some early froth.

Well, that was a disaster. Facebook closed its first day of trading at just above its offering price of $38 per share. Mark Zukerberg did say that it wasn't Facebook's mission to be a public company, after all, and it looks like he got his wish to at least have it not be the company that brought the Everyday Joe, retail investor back into the market.

Two new subplots. First, you can't believe how tense it was to watch the market close, as Facebook got precariously close to "breaking the IPO" by dipping below $38. That would have been a debacle for Morgan Stanley, the lead underwriter in the offering. My Twitter feed was on fire for the last half hour of trading with tweets about how Morgan was waging an "epic battle" to hold that $38 line (@TheStalwart and @carney — Joe Weisenthal of Business Insider and John Carney of CNBC, respectively, were all over it). Who knows how much money they spent to buy shares, on trading volume that hit 460 million in a single session, a new record.