The Facebook IPO Went Fine
I think I'm the only professional saying that the Facebook IPO was okay. I don't say that because there weren't problems. There were. I say that because the IPO did what it was supposed to do.
IPOs are designed to give the offering company capital. Usually, they want the money to finance an expansion of their products and services. While companies which are profitable do have money to expand, sometimes the cash (and/or access to debt) they have isn't enough for their plans. Then they have to decide whether the amount of money their plans require justify the loss of control and the additional scrutiny that come with being a public firm.
When companies "go public", the money that investors pay for their stock goes to the company. I know that probably sounds simplistic. But I was sitting on a plane recently when I overheard someone asking a banker where all that money "went". Facebook offered, people bought, and there's a case to be made that Facebook made the maximum amount of money they could have. That's good for Facebook. It's good in a way even IF investors "lost" some money since then. Investors surely hope FB will be smart with the money.
Regarding the offering, YES, their exchange, NASDAQ, had some problems. And yes, the stock price has gone down since the offering. People have "lost money" (actually, if they haven't sold, then they haven't lost anything yet). And, having your investors lose money isn't good. One could - and many have - argue that the initial price was too high. But the choice to buy was each investor's. It's reasonable to assume that these were adults, and they bought because they thought the company was worth more than the price suggested (meaning the stock would go up in the future).
But there's also a belief among a lot of people that buying IPO stock is a way to make a lot of money fast. When THAT happens, the IPO ceases to be about the company's need for cash. If a company's stock price goes WAY up on the offering day, the investors make money at the expense of the capital needs of the firm.
Yes, you could argue that it's more complicated than that. I encourage you to do so below. But there are a lot of things in professional life that one can make incredibly complicated. When we're doing so, let's not make it so complicated that we forget what the most important thing is.