Facebook Flub Not Critical for Nasdaq: Analysts
By Dan Freed - 05/21/12 - 2:41 PM EDT
NEW YORK (TheStreet
's botched initial public offering is a black eye for Nasdaq OMX Group
, but is unlikely to do lasting damage to the exchange's share price, according to a pair of analysts who cover the company.
Facebook's offering was delayed by 30 minutes on Friday due to technical glitches the exchange has acknowledged. The problem "infuriated individual investors and asset managers across the country, with some saying over the weekend that they remained uncertain about how many Facebook shares they own after Friday's trading--if they own any at all," according to a report
in The Wall Street Journal
| Nasdaq shares rebounded Monday after losing 4.4% on Friday.
While Nasdaq shares lost 4.4% Friday, they bounced back on Monday, and were up by 2.64% in mid-afternoon trading. Shares "were already priced for disaster," according to Stifel Nicolaus analyst Matthew Heinz, who retained his "Buy" recommendation on Nasdaq.
Heinz argues the incident could easily have occurred at a Nasdaq rival and is mostly indicative of "the mounting pressure on cash equity market operators to perform flawlessly in an increasingly complex trading environment, where any mishap is relentlessly criticized and 99% flawless execution falls on deaf ears."
Earlier this year, for example, BATS
, another exchange operator, flubbed its own IPO and had to withdraw it from the market. It has been considering listing on a rival exchange such as Nasdaq or NYSE Euronext
, according to The Wall Street Journal.
In addition to Stifel's report, analysts at Keefe Bruyette and Woods continued to recommend Nasdaq shares. They argue "the sheer magnitude" of Facebook's offering "and the speed with which Nasdaq
addressed the issues" are marks in Nasdaq's favor. Still, the analysts note the NYSE "is unlikely to be shy, about flagging the issue - now resolved - when pitching for business or looking to poach new clients."
-- Written by Dan Freed in New York
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