Nasdaq will refund piqued early Facebook investors in cash

Image Credit: Jolie O'Dell

In a deal worth an estimated $40 million or more, Nasdaq is planning to bail out investors who lost bigtime during Facebook’s disastrous IPO.

Back in May, when Facebook stock first went public, Nasdaq was responsible for some glitches in early trading. Huge trading volumes caused by rabid anticipation of the IPO were met with delays, a lack of trade confirmations, and general mayhem.

While some parties lay the blame on Facebook for the screw-ups, Nasdaq admitted its own culpability in the glitch-storm and reportedly offered investors around $13 million in cash and $27 million in trading credits.

Some of the larger investment firms may have lost as much as $100 million in the IPO, and they reportedly didn’t take well to the freebies-plus-cash offer.

Sources say a revised deal is all cash and is currently under review with the SEC. We’ve contacted Nasdaq, but a rep told us Nasdaq is not commenting on the deal yet.

On Facebook’s first day on the market, shares opened at $42. Analysts had forecast trading in the $40s, and pre-IPO private trades supported that hypothesis. However, the stock finished the day at $38.37 per share, around $4 down from its starting price.

Two weeks later, the stock had sunk to $27, around 30 percent lower than its opening price. This kind of lackluster performance ended up dragging down a few other boats in the tech-startup harbor, with other tech stocks dipping and some companies even choosing to delay their own IPOs.

Here’s a look at Facebook and other recent tech IPO stocks over the past couple months:

FB Chart

hat tip:Fox Business

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