msnbc | May 24, 2012
>>> less than a week after facebook 's rocky first day of trading on the nasdaq there may be a status change in the works. cnbc says they may be moving to the new york stock exchange . nasdaq got a black eye last week when the system froze after being overwhelmed with orders for facebook stock. so today, stock shares are trading, just point 2% above where they opened, 32.07. in the first three days of trading, facebook stock fell, more than 18%, now many are raising questions about how the stock was valued or why it was valued so high. dan ackerman, savannah took time off from facebook profiles. we'll talk about credibility issue that facebook is having with this. let's first talk about the fact that today, fidelity investments say there is confusion over whether some of the customers fully knew what the stock valuation about facebook was really going to be, where they thought the initial ipo would be. dan , what are you hearing about that and were people behind the scenes getting whispers knowing analysts overinflated it.
>> that is one of the two big issue, the first is the software problems, the second one being investors getting last minute update saying that facebook 's revenues won't be what people thought they were, they said we are not going tobi biauy as much. mark zuckerburg loss more than three billion. the co-founder lost nearly $800 million. sean parker has seen over a $400 million slip away. these are not skipping meals, they will be fine because of the money they have, but that is a lot of money. savannah as we talk about the tact they are being sued, sued by the lawyers who represented people that sued enron and won for $7 billion. when we talk about enron, people have a visceral reaction, what does this mean for facebook going forward?
>> there is a few lawsuits going on the main one filed what dan was talk about that certain investors got a tip off more specific projections about facebook 's revenue than the average investor did. when a company goes public they have to put it in the registration statement, all their financials, so everybody is on a level playing field and what is alleged here that is certain kind of high roller type investors got information that the average investor didn't get. now facebook will say look, we did put some of this in our prospectus, we mentioned there were questions about growth, the revenue stream from facebook mobile, so that will probably be where the fight is in court, whether or not the average investor was warned.
>> they are saying they did nothing illegal, certain people would look at that, and say this game is rigged.
>> i don't know facebook would acknowledge that actually happened. that has been reported in a couple sources an who knows what the truth is, that is one of the facts that will be hotly litigated at trial. what is interesting the plaintiffs are suing under a section of the securities laws that permit plaintiffs to recover even without showing that facebook intentionally misled. if they can show there was a material omission or misrepresentation of facts in that registration statement, they potentially could recover damages.
>> dan , what does this do for facebook in the product it that does as opposed to the business model that it is?
>> they have been very focused on saying we will do long term product development , make it better the ads may come, go, revenue may come and go, if you're looking for a short term gain, they warned i this is not the stock for you.
>> everybody is so curious about the facebook flop. how it could flop. we shall see how it plays out. appreciate it.
>>> coming up hewlitt packard slashing jobs, the biggest purge in the company's 73 years history. the news sent shares of the computer and printer company up by 10%, we will see how that goes.
>>> the commerce department says new car orders jumped 5.6% last month. car sales are expected to top 14 million up from 12.8 million last year. now, the auto industry is hiring. chrysler adding 3,000 jobs, volkswagen, 800. toyota is hiring 1000 new employees at five u.s. plants. chris woodyard covers the car industry , also the eld i tore of drive on blog. great to have you with us, this is good news growth-wise increased sales, those are very positive numbers, the hiring going on in the auto industry bail out. is there a single straight line we can attribute all this growth to or is it just the facets of what we have seen over longer period of time?
>> it has been driven by people buying more new cars. a lot of the peoples cars on the road are plain wearing out. average age of a car on the u.s. road is past ten years. never been that old. people finally have to buy them, the economy is a little better, there is deals to be had at the dealerships, all going to mean better car sales this year.
>> so the trouble in the auto industry really hurt swing states , talking about ohio, but now their unemployment rate is below the national level, something the president is out there touting. because they are seeing the gains within their borders. but is there a pitfall awaiting the industry? this is come back here to stay what is a lot of people want to know.
>> it all depends on the overall economy. in europe and other things factor in to that. there is no question about it. this breaks great in swing states like ohio, some of the other former rust belt states. certainly will help the president in michigan.
>> chris woodyard from usa today , thanks so much, we appreciate your time.