An IPO is an important event to build a company’s brand and reputation, but it can also be a critical event to burnish the reputation of the listing exchange. Hence, there is an ever-increasing battle between the NYSE and Nasdaq for IPOs and a full scale war for the large, high-profile IPOs. Facebook, the IPO of the decade (or century if you like), generated breathless 24/7 media coverage (including breaking news fashion reviews) from start to finish. For Nasdaq, it was a fabulous listing win, seemingly solidifying its place as the destination for hot and tech-oriented companies to go public.
Unfortunately, for many in the financial markets, the story has now pivoted from talk of Facebook billionaires, underwriter support and a lackluster close to the significant glitches Nasdaq encountered in handling the first day of trading. Nasdaq head Robert Greifeld, who even jettisoned a suit for Facebook wear for the IPO festivities at the Company’s HQ, tried valiantly to put the issue in perspective, stating that the day was “quite successful but clearly we’re not happy with our performance,” and that there was not an impact on share prices.
Nasdaq has been scrambling to reassure investors and Wall Street pros that all is well and that they should not be concerned, with Greifeld out front with the media and this morning offering a play-by-play breakdown of what happened. As David Benoit of The Wall Street Journal calls out in his blog, Nasdaq is even affirmatively stating that there were no screw-ups with the Zynga IPO in its effort to try to restore trust.
This is certainly not the publicity Nasdaq wanted in regard to the Facebook IPO and it comes on the heels of BATS Global Markets fiasco with its own IPO (though there are now reports that BATS may even be looking toward Nasdaq for a do-over). What should have been a shining day for the exchange has now turned into a reputational nightmare amid questions about technology and Nasdaq procedures, as well as the obligatory regulatory/legislative inquiries. Investors are already voting with their feet, smacking Nasdaq shares down.
Nasdaq has rightly tried to get in front of this story, issuing mea culpas (though hedging a bit on some) and pledging that its systems and processes are up to snuff. The integrity and smooth operation of financial exchanges are paramount to their reputations. Nasdaq has been damaged and this story will likely be linked to the share performance of Facebook for some time to come. It must stay out front and continue to be transparent and forthcoming about what happened, why it happened and how it is fixing things. Nasdaq could even take a page from JP Morgan and have a resignation/firing or two to show it means business. This could help it ensure that going forward the news is only focused on the listing companies.
Rich Tauberman is Executive Vice President of MWW and a leader of the firm’s Corporate and Financial Communications practices. He directs some of MWW’s top professional services and financial services accounts. Rich’s background includes managing communications activities for law firms, accounting firms, banks, brokerages, asset managers, insurance companies and healthcare organizations. He possesses an expertise in crisis/issues management, litigation support and investor relations.