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Facebook Inc. executives met Friday with potential investors in Silicon Valley, while the Nasdaq Stock Market conducted a test of its IPO auction systems ahead of the social network's expected debut in the coming week.
Founder and CEO Mark Zuckerberg kicked off a presentation to about 200 attendees at a Palo Alto, Calif., hotel, describing the company's goals, including the need to make progress in the mobile-advertising market.
The Palo Alto event was the latest stop by Facebook executives, who have crossed the country this week to pitch the company's stock in an IPO that could value the company as high as $96 billion. The meeting here took place a short drive from Facebook's original headquarters, opened shortly after the company was founded by Mr. Zuckerberg in a Harvard dorm in 2004.
Expectations were high for Facebook's executives to make a case for investment despite some recent data showing signs of slowing growth at the company and what's been a relative lack of progress in the key mobile device market.
"It comes down to valuation," said Chris Biles, an investment manager with CJB Capital Management, before he walked into Friday's presentation. Investors, he said, "need to understand their story, and to have these guys be able to articulate it."
Meanwhile, the Nasdaq's IPO test run, which included other exchanges, involved a 15-minute auction period in shares with the placeholder symbol of ZWZZT and a simulation of live trading, according to a notice sent to traders.
Exchanges often simulate trading to try out new market functions, sometimes using stock symbols reserved for such tests. But traders said that simulating an IPO—a regular task at Nasdaq and the New York Stock Exchange—was an unusual move.
The Nasdaq's test followed several high-profile IPO misfires in recent weeks. BATS Global Markets listed shares for trading on the exchange operator's own market on March 23 before a software glitch forced a trading halt and eventually prompted the company to pull its offering.
Data-mining company Splunk Inc. saw some trades in its newly issued shares cancelled the morning of its April 19 debut on the Nasdaq, after transactions were erroneously executed on a platform run by NYSE Euronext despite a temporary halt in trading touched off by the stock's rapid rise.
"It looks like after the BATS debacle, Nasdaq isn't taking any chances," said James Angel, a finance professor at Georgetown University. He said that anticipated demand to trade in Facebook shares could overwhelm some exchange systems if proper preparations aren't made.
A spokesman for Nasdaq OMX Group Inc. said the company doesn't comment on market system tests.
The Facebook IPO is expected to be the biggest ever to hit Wall Street. The social media company is seen raising as much as $13.6 billion in its May 18 listing.
"It's uncharted territory," said Neil Catania, chief executive of New York-based brokerage firm MND Partners. He estimated that day-one trading in Facebook shares could see as many as 600 million of its shares change hands, triple the size of its public float, due to diverging views on Facebook's prospects and intense public interest in the deal.
Other exchanges that offer trading services allowing members to interact in IPO auctions joined in the test Friday.
"Even though nothing is new technically speaking with the new Facebook IPO, it is still a good idea to give industry participants and other exchanges the opportunity to reaffirm the IPO opening process street wide," said Bryan Harkins, chief operating officer for Direct Edge Holdings LLC, which runs two electronic stock exchanges from Jersey City, N.J.
Capturing the Facebook listing was a key win for Nasdaq OMX, burnishing its reputation as the technology-centric stock exchange at a time when archrival NYSE Euronext has stepped up competition for a new breed of social media listings.
Nasdaq OMX in April shortened the waiting period for publicly traded companies to join the Nasdaq 100 from as long as two years to just three months after the first month in which a company lists its shares on the market. The move means that Facebook could be eligible for inclusion in Nasdaq's widely followed stock benchmark in September.
The policy shift was among the factors that played into Facebook's choice of Nasdaq as its listings venue, according to a person familiar with the matter.
(courtesy:wsj.com)
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