Even as the Facebook IPO failed to reach the dizzying heights it was expected to touch, its new shareholders have sued the company, CEO Mark Zuckerberg and underwriters Morgan Stanley and others.
While the offer price of the share was pegged at $38, it was widely expected that the value of the shares would touch anywhere between $50 to $90 per share.
Instead, the price barely crossed the $38 level last Friday, and on Monday the share price fell to $34 and slid even further down on Tuesday to as low as $31 per share.
On Wednesday, some of the shareholders filed a class action lawsuit against the company, CEO Mark Zuckerberg, Morgan Stanley who are the chief underwriters and others including J P Morgan and Goldman Sachs.
The lawsuit was filed by Robbins Geller Rudman & Dowd LLP, a San Diego-based law firm. The suit claims that Facebook intentionally hid from them negative reviews about its future growth prospects.
The claim states that “While defendants pocketed billions of dollars … plaintiffs and the Class have suffered losses of more than $2.5 billion since the IPO,”
Apart from the lawsuit, the IPO will be independently investigated by the US Securities and Exchange Commission and the Financial Industry Regulatory Authority.
To add to the woes being faced by Facebook, General Motors has pulled out of a major advertising campaign on mobile, claiming that the advertising was not working as well as expected.
All these problems could certainly affect the working of the company and pull down the share price even further.