From Investor Exuberance To Congressional Investigations: A Timeline of Facebook’s Rocky IPO

It is safe to say that the Facebook IPO has not gone as planned. A slumping stock price, and several sensational reports about what went on behind the scenes, have resulted in lawsuits, attention from regulators, and a lot of sniping and second-guessing from pundits. This week’s critical coverage is a complete 180 from the breathless, rapturous reports in the days leading up to last Friday.

Take a step back. Here’s a timeline of key events in the run-up to and brief history of Facebook’s life as a publicly traded company:January 27: The Wall Street Journal reported that Facebook is getting ready to file papers with the Securities and Exchange Commission for its long-awaited initial public offering. This is surprising news — the paper had previous anticipated that the IPO filing would between April and June 2012.

February 1: Facebook filed its prospectus paperwork with the Securities and Exchange Commission, saying it intends to raise $5 billion when it goes public, “as soon as practicable.” Morgan Stanley is named as the lead underwriter, followed by JP Morgan Chase, Goldman Sachs, BofA Merrill Lynch, Barclays Capital and the boutique firm Allen & Company.

Among other things, Facebook revealed in the filing that: the company had revenue of $3.7 billion in 2011, compared to $1.9 billion in 2010, and $777 million in 2009; the company had $3.9 billion in cash or liquid assets; that “in 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue”; and that CEO Mark Zuckerberg received a base salary of $500,000 in 2011, plus a $220,500 bonus.

April 9: Facebook announced the $1 billion acquisition of Instagram, the popular photo-sharing app.

“I’m excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook,” Zuckerberg wrote on his Facebook page.

April 23: In an updated filing with the SEC, Facebook reported that net income fell 12 percent to $205 million in the first quarter, compared to $233 million in the first quarter a year earlier. Reuters reported it was the “first quarter-to-quarter revenue slide in at least two years” for the company. From Reuters:

Facebook said its advertising business, which accounts for the bulk of its revenue, typically slows down in the first three months of the year. The rapid advertising growth may have “partially masked” such trends to date, and seasonal impacts may be more pronounced in the future, it noted.

May 3: Facebook sets a minimum price it will trade per share at $28 and maximum at $35, giving the entire company a valuation between $77 billion to $96 billion.

The company also launched a webpage on, which featured a 30 minute video starring Facebook executives, including Zuckerberg touting a “hacker value system.”

May 7: Facebook kicked of its investor “road show.” Zuckerberg, COO Sheryl Sandberg, and CFO David Ebersman spent 25 minutes answering questions from 400 investors in a ballroom at a Sheraton hotel in Manhattan. The attendees raised several concerns, according to CNN:

Chief among them: How will Facebook make money on mobile devices? Zuckerberg admitted that the social network is having trouble charting its growth in mobile and tracking its user base.

May 8: Road show goes to Boston. Tech analyst Michael Pachter, of Wedbush Securities, makes headlines after criticizing Zuckerberg for wearing a hoodie during road show events.

“I mean he’s actually showing investors he doesn’t care that much, he’s gonna be him and he’s gonna do what he’s always done, and I think that’s a mark of immaturity,” Pachter told Bloomberg TV.

May 9: Facebook amended its SEC filing and noted that users were moving to mobile, and the company was not yet making much money off mobile. Here’s the passage:

Based upon our experience in the second quarter of 2012 to date, the trend we saw in the first quarter of DAUs increasing more rapidly than the increase in number of ads delivered has continued. We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed, and in part due to certain pages having fewer ads per page as a result of product decisions.

According to Reuters, within the next two days, four of Facebook’s major underwriters — Morgan Stanley, Goldman Sachs, JPMorgan and Bank of America — reduced their earnings and revenue estimates for the company.

May 10: According to Reuters, Bank of America analyst Justin Post held a conference call with big investors where he revealed the lower estimates.

May 11: The road show wrapped up in Palo Alto, California. The company “signals” that it may start showing ads on websites other than Facebook, according to the Associated Press.

May 15: Facebook increased its share price range for the IPO to between $34 and $38, valuing the company between $93 billion to $104 billion. A source told Reuters the IPO was already “well-oversubscribed” and that the company planned to close the books on the deal on May 16.

Meanwhile, news broke that GM planned to pull its advertising on Facebook.

May 16: Facebook added 84 million shares, worth up to $3.2 billion, to the IPO, according to the AP. Today, the Wall Street Journal reported that “as word spread that the deal would be growing, investors got nervous that demand would be sated before the shares even began to trade… Many learned of the growth in the deal’s size after the change was filed Wednesday morning with regulators, according to people familiar with the matter.”

May 17: Thursday morning, Facebook CFO David Ebersman and Michael Grimes, the co-head of global technology banking at Morgan Stanley, and “directionally agreed” that the offer price should be $38 a share, according to the Journal.

May 18: After a 30 minute delay, NASDAQ manually opens Facebook, which begins trading at $42.05. Shares begin falling. One investor, according to The New York Times, sells hundreds of thousands of shares at about $42. Retail brokerage firms, meanwhile, get swarmed by customers looking to own a piece of Facebook.

The stock closes just above the IPO price.

May 21: Facebook ended the day $34.03, down 11 percent from Friday’s close.

May 22: Reports, including one from Business Insider, begin raising questions about the inner workings of the IPO. Regulators start to speak up.

“That’s a matter of regulatory concern to us and I’m sure to the SEC,” Richard Ketchum, the Financial Industry Regulatory Authority’s chairman and chief executive, said, according to Reuters. “And without saying whether it’s us or the SEC, we will collectively be focusing on it.

On her way out of a Senate Banking Committee hearing, SEC Chairman Mary Schapiro tell reporters, “I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook.”

Massachusetts Secretary of the Commonwealth William Galvin, meanwhile, announced that he’d subpoenaed Morgan Stanley over the disclosure allegations.

In a statement later, Morgan Stanley said that it “followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations.”

Facebook stocks closed at $31.

May 23: Shareholders sued Facebook, Morgan Stanley, and others, filing lawsuit seeking class-action status in U.S. District Court in Manhattan. (A similar suit was filed on behalf of an investor in California on Tuesday.) The suit claims the defendants hid Facebook’s growth forecasts.

Facebook spokesman Andrew Noyes told TPM, “We believe the lawsuit is without merit and will defend ourselves vigorously.”