The bright side of Facebook's IPO

The definition of a successful public launch of a stock shouldn't rest on how much money the investment bankers make. Better is how close the offering price is to where the stock actually trades.

Facebook IPO celebration
Mark Zuckerberg, Sheryl Sandberg, and others at Facebook were jubilant when the stock market opened Friday morning. Facebook

On "Meet the Press" this weekend, Jim Cramer called Facebook's initial public offering a total fiasco and "one of the worst handled things I've ever seen." That's because the stock climbed only 23 cents, or just over 0.6 percent. Many said Facebook fizzled.

A surging stock on the first day of trading is certainly a success for those insiders with relationships to the investment bankers who can make an instant bundle. And the investment banker also does better under that scenario.

But my definition of a successful launch of a new publicly traded stock doesn't rest on how much money the investment bankers make. It rests on how close the offering price is to where the stock actually trades.

Read more of "Why Facebook's IPO was a success" at CBS MoneyWatch.

• Complete coverage: Facebook's IPO
About the author

View all articles by Allan Roth on CBS MoneyWatch »
Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.


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