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Facebook IPO Pits Nasdaq Vs. NYSE

But really, indices aren't high on FB's list of priorities


A while back, I wrote about some of the worst IPOs in history, which included names like Refco, BATS and my favorite, Wilt Chamberlain’s Restaurants. But who would have thought just a couple months later that Facebook (NASDAQ:FB) would end up being a good candidate for the list, too?

While Facebook and Morgan Stanley (NYSE:MS) have caught heat, some of the blame goes to the botched execution from Nasdaq OMX Group (NASDAQ:NDAQ). And now there’s buzz about Facebook possibly de-listing and heading to the NYSE Euronext (NYSE:NYX).

During the past couple decades, the Nasdaq has been the epicenter of many of history’s great breakout companies. While many of the examples include tech giants like Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT), the index also is host to other great non-tech businesses, such as Starbucks (NASDAQ:SBUX) and Whole Foods (NASDAQ:WFM).

For the most part, Nasdaq has done a standout job, but in the case of the Facebook IPO, it looks like the index failed to anticipate a “black swan” event, such as a last-minute surge in cancellations or some other surprise. Frankly, it looks like Nasdaq was caught basking in the hype.

Going forward, the exchange will have to spend a lot of time repairing its reputation, and might even have to do things like lower fees to win new business.

But this is not necessarily good news for the NYSE, either. It’s fanciful to think that the IPO volume in the U.S. will go back to the levels seen back in the 1990s. That was a much different era, when the markets saw a massive bull market. Instead, the NYSE and Nasdaq are looking for growth in emerging markets as well as other categories like derivatives. For the most part, the U.S. market is fairly mature and in a fight over market share.

So really, it doesn’t matter if Facebook lists on the NYSE — nor does it seem like a priority. After all, Facebook must deal with an avalanche of lawsuits, regulatory inquiries and the negative impact on its brand. Where FB hangs its hat is probably the last thing on Zuckerberg’s mind.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

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