IPO glitches to challenge NASDAQ's status

NEW YORK: NASDAQ must communicate clearly with the technology industry and other stakeholders as it fixes the issues that snarled Facebook's IPO last Friday.

NEW YORK: NASDAQ must communicate clearly with the technology industry and other stakeholders as it fixes the issues that snarled Facebook's IPO last Friday.

NASDAQ blamed the design of the software it uses during IPOs after technical glitches stopped the stock exchange from offering shares on schedule during Facebook's public debut. The US Securities and Exchange Commission said this week that it will review the IPO.

In the days that followed, NASDAQ CEO Robert Greifeld told media outlets that Facebook's IPO “was not our finest hour,” adding that it will pay back investors who were not able to make trades.

Executives at technology-focused PR firms said NASDAQ must emphasize transparency moving forward and clearly describe how it will improve its performance for the next big technology IPO.

“Now that NASDAQ has admitted responsibility for its poor performance, it's critical that it stays out in front by being completely transparent about what happened, and open about how it plans to address the issues for all future IPOs,” said Jason Clarke, VP of marketing and business development at Text 100.

“In working with the proper authorities to resolve the situation quickly, I think the best outcome is that NASDAQ learns some hard lessons to improve its business, and Facebook can get back to work on innovating its next experience for its millions of users and now investors,” said Tim O'Keeffe, MD at Horn.

Facebook's reputation and share value both took a hit from the IPO problems. Despite holding one of the most anticipated IPOs in recent memory, Facebook's shares were trading at $32 apiece by midday Thursday, down at least 15% from last Friday.

While NASDAQ built a reputation as the stock exchange of choice for the world's top technology companies, that status is at risk after Facebook's IPO. How the company reacts to the challenge and performs in upcoming public offerings will make or break its reputation as the go-to technology stock exchange, Clarke added.

“Any company looking to IPO in the near future will need to seriously consider the benefits of listing on NASDAQ versus the New York Stock Exchange and feel confident that the right procedures are supported by the right technology to ensure a successful, glitch-free filing,” said Clarke.

Jason Mandell, co-founder and partner at LaunchSquad, said the situation is a serious setback for NASDAQ as it tries to secure future tech and internet company IPOs.

“I would anticipate that the next slate of companies getting ready to file are much more likely to look at the Dow Jones Industrial Average as a more secure option for their listing,” he said.

Conversely, Michael Kuczkowski, MD of Edelman San Francisco, said that while the glitches created an adverse situation for the stock exchange, its position as the first choice for tech IPOs won't be negatively impacted.

“NASDAQ's whole function is to make sure the trades are transacted well, so I'm sure they will address the issues,” he said. “It's impossible to predict the future on these things, but I do think in all likelihood they will be able to address these issues as time goes on.”

NASDAQ representatives did not respond to requests for comment.

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