Facing facts at Facebook

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There may be an interesting psychological study available in Menlo Park, Calif., this year -- a study on disappointment -- as Facebook employees watch the value of their company sink day by day.

So soon after Facebook's initial public offering in May, it remains vaguely forgivable that guesswork is involved when a chief executive officer approves of an initial sales price for a company going public. But Facebook's initial price of $38 per share was so off the mark that at least one major newspaper on Friday, the Los Angeles Times, has posed the predictable question: Is 28-year-old CEO Mark Zuckerberg in over his head?

There are investor expectations at stake and Facebook's initial valuation of $38 per share means that everyone who bought into Facebook on Day 1 or even Week 1 is looking at losses. Only early, pre-IPO investors have made out well, especially those that sold shares during Facebook's premiere.

But now, even mutual fund T. Rowe Price, which bought in before Facebook's IPO, paying about $25 per share, is looking at losses. Goldman Sachs did better, spending $500 million along with Digital Sky Technologies at about $20.85 per share well before Facebook went public. But Goldman, too, has fallen behind on its investment.

On Thursday, it took the release from lockup of only 13 percent of the company's outstanding shares to push the stock price to a record low of $19.69 in midday trading, although prices recovered slightly, closing at $19.87 per share.

If memory serves, however, Goldman Sachs invested $450 million and Digital Sky $50 million in Facebook in January 2011, which was 16 months before the IPO.

Reports at that time said the investment valued Facebook at about $50 billion.

What, then, it should be asked, occurred in the 16 months from January 2011 until the IPO in May 2012 that doubled the worth of the company, given the $38 price tag valued the company at about $100 million.

And the answer is, of course, nothing.

Reports before the IPO said revenue growth at Facebook was slowing down, not accelerating. So, what was Zuckerberg, a computer programmer by trade, doing second-guessing Goldman Sachs concerning the value of his company?

Back to those employees. It is unknown what percentage of Facebook employees became instantly wealthy during the firm's public debut compared to those who just became moderately rich, but it is fair to say any company employees with a stake in the firm's valuation likely feel they were handed sand at the IPO and that sand is slipping through their fingers.

Zuckerberg may come to realize that it is one thing to disappoint investors. It is quite another to disappoint the people who are keeping the company going on a day-to-day basis. Either way, Facebook still has to prove it can stay viable as the digital world shifts from personal computers to smaller, mobile devices.

Zuckerberg's Midas touch may be useful for that chore, but as for running Facebook, as the LA Times said, he may be in over his hoodie.

In international markets Friday, the Nikkei 225 index in Japan added 0.77 percent and the Shanghai composite index in China rose 0.13 percent. The Hang Seng index in Hong Kong gained 0.77 percent and the Sensex in India climbed 0.19 percent.

The S&P/ASX 200 in Australia rose 0.92 percent.

In midday trading in Europe, the FTSE 100 index in Britain added 0.11 percent while the DAX 30 in Germany gained 0.36 percent. The CAC 40 in France was flat, rising 0.03 percent, and the Stoxx Europe 600 rose 0.34 percent.