Facebook chief operating officer begs students to 'click an ad or two' on social network as IPO woes continue

Sheryl Sandberg, 42, attended Harvard Business School 17 years ago

Underwriter says it will adjust prices for investors who overpaid for shares

Facebook CEO Mark Zuckerberg saved $174 million by selling off 30.2 million shares at $37.58 each

Shares at $32.30 today - down 15pc from IPO



Shareholders filed a lawsuit alleging banks that underwrote the IPO downgraded revenue projects for company but never released the information to the public

Facebook insider warned privileged clients before the IPO that revenue would fall short of expectations and that shock price would drop

Facebook's chief operating officer joked about the company's disastrous public offering during a speech to Harvard Business School students.



Sheryl Sandberg, 42, asked the class yesterday to click on the social network's advertisements now that the company had gone public.



In the 22-minute speech, where she offered advice based on her career success, the executive quipped: ' We’re public now. So can you click on an ad or two while you’re there?'

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Words of wisdom: Facebook's chief operating officer Sheryl Sandberg made light of the company's woes during a speech to Harvard Business School in Allston, Massachusetts

Ms Sandberg also advised the students to keep in touch via the social network during the presentation in Allston, Massachusetts.



The former head of the U.S. Treasury's stake in Facebook is set to make her a billionaire. She explained to this year's Harvard class that although she had been offered jobs elsewhere, she went to work at Facebook because 'if you ’re offered a seat on a rocket ship, you don’t ask what seat. You just get on.'

The former head of the U.S. Treasury graduated from HBS 17 years ago and advised students not to climb the corporate ladder but to 'build their skills'.

Facebook's to p underwriter said yesterday that it was prepared to pay back investors who were burned when they bought shares.



The share price sat at $32.30 today down around 15 per cent from its initial public offering.



Amid a flurry of lawsuits over Facebook's IPO, Morgan Stanley announced in a memo on Wednesday that it is reviewing Facebook trades and would adjust prices for some retail customers who overpaid.

Trouble ahead: Ms Sandberg and Facebook founder Mark Zuckerberg rings the Nasdaq's opening bell for the company's initial public offering

The IPO mishaps have sparked numerous lawsuits against Morgan Stanley, the Nasdaq stock exchange and Facebook itself by shareholders who claimed they hid the social networking company's weakened growth forecasts just before it went public.



The allegations raised questions about whether top investors profited at the expense of smaller buyers.

Meanwhile, Facebook is in talks with the New York Stock Exchange to move its stock from the Nasdaq Stock Market after the botched IPO on Friday, according to a person familiar with the matter.

The insider spoke on the condition of anonymity because they were not authorized to speak publicly.

Facebook's much-anticipated IPO was delayed by a half-hour on Friday because of technical glitches on the Nasdaq.

Zucked: Mark Zuckerberg saved $174 million by cashing out tens of millions of shares of Facebook stock early Friday when the price was above $38 a share

After pricing at $38, Facebook's stock closed up 23 cents on Friday and has been down since.



Decline: One prominent plaintiffs lawyer said what happened with Facebook was reminiscent of the dot-com bubble

NYSE declined to comment. A Nasdaq spokesman did not immediately return a call for comment.

The news came as even Facebook CEO Mark Zuckerberg dumped his own shares in the company, making $1.13billion as the stock nosedived, according to company filings.

Shareholders filed a lawsuit yesterday against Facebook and the banks behind the company's stock, Morgan Stanley and Goldman Sachs.



Additionally, both the Securities and Exchange Commission and the Financial Industry Regulatory Authority have begun looking into the matter.



The U.S. Senate Banking Committee has also launched an inquiry and the state of Massachusetts has subpenaed Morgan Stanley, demanding answers.



The House Financial Services Committee said that it was also gathering information for their own review.



Facebook's stock was still down at least 15 per cent Thursday from the price of its initial public offering almost a week ago.



However, a new analysis said the stock could fall to as low as $9.59.



That's a far cry from the $37.58 that Zuckerberg fetched for 30.2 million shares he unloaded on Friday.

By the end of trading on Tuesday however the price had dropped to $31 meaning Zuckerberg saved himself a cool $174 million by getting out early.

The 28-year-old still holds a vast amount of Facebook stock but his decision to sell off so much will leave investors wondering about his confidence in the company.

The drop is based around the realization that Facebook might not be growing as quickly as initially thought. And the company's second-quarter growth will likely fall short of expectations as fewer new users join the social networking giant.



Shareholders filed a lawsuit alleging that Zuckerberg, Facebook and the banks that backed the Initial Public Offering, Morgan Stanley and Goldman Sachs, knew this information, but weren't forthcoming with it.

On Tuesday, Reuters revealed that the banks' analysts downgraded their estimates about the future earnings of the company while they were rolling out the IPO.

Business Insider called the move 'unprecedented.'

Furthermore, the website reported that the banks revealed to privileged major investors that the share price was likely to tank, but left smaller stock buyers in the dark about this information.

The Securities and Exchange commission is investigating these allegations and the state of Massachusetts has filed a subpoena demanding Morgan Stanley release information about the IPO.

Zuckerberg’s plans to sell were revealed in documents filed in advance of the IPO on Friday, but the problems that have happened since cast them in a new light.



Venture capitalist Peter Thiel also announced his plans early too but his return was beyond anything he could have hoped for. He wrote Zuckerberg a cheque for $500,000 in 2004 but has offloaded 16.8 million shares for the tidy profit of $633 million. Among the others to cash out was Mark Pincus, the chief executive of online gaming company Zynga.

Big returns: Peter Thiel (left), the co-founder of PayPal, earned $633 million for an initial investment of $500,000. Zynga CEO Mark Pincus gave Zuckerberg a check for $40,000 in 2004 and cashed in $38 million in stock



Eight years ago he gave Facebook a cheque for $40,000 but now has sold $38 million worth of stock.

Venture capitalists Accel Partners, which handed over $12.7million back in 2005, sold $1.9billion of stock but retained $5.8billion.

Whilst the big players were making a fortune however, small investors have seen their attempts to get in on the Facebook bubble fall flat.

As of close of trading on Tuesday shares were a staggering 18 per cent below what they had been at the opening on Friday.

At one point they had slumped 31 per cent from the $45 peak hit shortly after they started trading.

But according to analysts StarMine this could not be the end of it and the slide could carry on until stocks are just $9.59 each.

It has examined estimates from Wall Street experts and concluded that Facebook is currently vastly overpriced, though its forecasts do tend to be gloomier than others.

Eddy Elfenbein, editor at finance website Crossing Wall Street, said: ‘Facebook right now is going for far more than what it's worth, it's like buying $1 for $1.98, it just doesn't make sense at this price.

‘Just from basic modelling the stock should be around $17 to $20, and that is with a lot of variables.

Cleaning up: Facebook's IPO has caused a mess that is being investigated by two congressional panels

‘I would call that an ideal price. I would be interested in buying and I think that is a good deal for investors.’

Among those who did not cash out on Friday when Facebook shares were trading at $38 each was the company’s former president Sean Parker.

His stock is still worth over $2billion but the price slump meant his fortune decreased by a staggering $300million.

In a sign of how feeling is changing against Facebook, some commentators have begun comparing its activities to the most reckless behaviour of Wall Street banks.

They have also coined the word ‘Zucked’, which means to get shafted on the sale of Facebook shares.

These major sell-offs comes as new allegations are emerging the the over-hyped Facebook stock sale may have been rigged against small, every-day buyers.



Two separates lawsuits have been filed against the company and the banks that organized the IPO, Morgan Stanley and Goldman Sachs, alleging the executives knew second-quarter revenue would not meet expectations as Facebook's growth slows.

Business Insider says this information was shared with the banks by a Facebook insider. As Zuckerberg went on his pre-IPO roadshow, touting his company, the banks downgraded their revenue projections for Facebook.



This information could have reduced the value of Facebook's initial stock offering. In turn, this could have decreased the amount of money Zuckerberg and his early investors made when they dumped tens of millions of Facebook shares on Friday as trading opened.



However, the banks failed to widely disclose the downgrade, the lawsuits say.

Business Insider says they told only large, institutional investors so they would know to stay away from Facebook stock on the first day of trading.

Facebook denies the allegations in the lawsuit and said it will 'vigorously defense itself.'

Morgan Stanley says it followed the same procedure it would for any IPO.

