London, May 29 (ANI): The world's most popular social networking site Facebook's lackluster Initial Public Offering performance may lead other Silicon Valley giants to put their IPO plans on ice, according to a report.
Facebook's initial public stock offering was supposed to fling open the public markets for Silicon Valley start-ups and usher in a new era of prosperity.
The most widely anticipated technology offering in years, however, disappointed investors and drew heavy scrutiny from lawmakers and regulators.
According to The Los Angeles Times, the botched debut could cast a long shadow on Silicon Valley, cooling, at least for now, investors' enthusiasm for other top IPO prospects including Twitter, Box, Spotify and Rovio.
This in turn could have a ripple effect, deflating soaring valuations of up-and-comers and the prices private investors are willing to pay for shares of young companies on the secondary markets, the report said.
"It may create a little bit of a drag effect on the whole tech sector," the paper quoted Lee Simmons, an industry specialist and IPO researcher at D and B, as saying.
Facebook debuted on the Nasdaq on May 18 priced at 38 dollars. It traded as high as 45 dollars that day before falling back. The stock closed down 1.12 dollars on Friday at 31.91 dollars.
Sam Hamadeh, the head of research firm PrivCo, called it 'the first clear sign of fallout in the IPO market from the problematic Facebook IPO' and predicted a 'black cloud over the IPO market.'
"Any IPOs wanting to price this summer will need to take a substantial reduction in valuation to get their deals done, or otherwise delay IPOs until sentiment improves, which could be months at a minimum," the paper quoted him, as saying. (ANI)