Wall Street got the Facebook IPO it deserved

At the close of its second day of trading in the public markets, the Wall Street consensus is that Facebook’s (s fb) IPO was a flop. But it’s actually par for the course to see Wall Street and the tech media hype the heck out of something and then tear it apart at the first hint of failure. In this case the hint of failure comes from the failure of the Facebook IPO to “pop” or rise substantially on the first day of trading, giving those who got in on the IPO a quick potential profit.

While the real story of the Facebook IPO won’t be written for quite some time, here’s some historical perspective and guide to the blame game.

Glitches in the NASDAQ software on opening day, plus a last-minute bump in the size of the offering gave professional traders jitters that could have helped drive Facebook’s stock down to as low as $33 on Monday. The social network’s stock closed at $34.03 and continued to fall in after-hours trading.

But how much of the Wall Street narrative is worth heeding? From the point of view of Facebook, the issue was a success. Facebook walked away with a giant pile of cash, and so far doesn’t seem concerned about its stock price being off by more than 10 percent in the short-term. Mark Zuckerberg’s focus on the long term — which many tech denizens praise when they’re not talking about the hottest IPO since Google’s (s goog)– is what we’re supposed to want from innovative executives (see Jeff Bezos as an example).

How ’bout some historical perspective?

Speaking of Google, Facebook’s IPO reminded me of the hyperbolic analysis that occurred when Google went public back in 2004. At the time Google, which pissed off Wall Street — not by wearing a hoodie to the IPO roadshow, but by cutting out the investment banks from the process — had to reduce its share price ahead of the IPO. Of course, once it went public Google’s share price never dipped below the opening day’s price of $85 (it still hasn’t actually) but analysts were still concerned with the search giant’s transgressions and its effect on the market. It also (somewhat ironically now) was called out for having a much higher valuation to its closest competitor, Yahoo.

For example, The Washington Post in 2004 quoted author Tom Taulli who was not impressed with Google’s IPO and said:

“Google is putting a nail in the coffin for technology IPOs. It will be difficult for the next six months to get technology offerings off the ground. We will see a shakeout in the IPO market for tech stocks. After all, if Google can’t get a good price and is having difficulty with its own IPO, it overshadows everybody.”

Today Taulli wrote about Facebook:

If anything, the deal was a sign of the peak of the social revolution — which might not even be as big as the first Internet era. Despite having more than 900 million monthly users, Facebook has only been able to post $4 billion in revenues for the past year. Google, on the other hand, has about $40 billion. Social platforms just are not ideal for monetization. As it stands today, most people go to Facebook to hang out and keep up with friends; it’s not a shopping experience

Facebook is played out and other blame games.

Added to the narrative of glitchy exchanges, greedy bankers (and Facebook execs) and the end of the “social era” was the sense that Facebook’s highest growth days were behind it and consumer investors missed out. Maybe it was because the entire IPO system is broken and rigged against smaller investors, maybe it was because of the government regulations that make a public offering such a pain. Maybe it was because there’s so much hedge fund and Russian oligarch money floating around.

As an observer of the financial and tech communities for years, the Facebook IPO was one of those spectacles from a media perspective that rivals the launch of a new iPad. And sometimes the build up to these events create something so anticipated that it’s difficult to live up to (I’m looking at you, iPad 3 most recent iPad launch!) Maybe Facebook’s best days are behind it. Maybe the last-minute increase in shares spooked hedgies who dumped shares today. Maybe there really is a larger narrative about the Health of Technology IPOs or the Future of American Financial Reform.

Or maybe we all just got worked up into a frenzy inside our technology and Wall Street bubbles and the rest of the U.S. just let us know that even with 900 million members, Facebook may be a real business, but it’s not all that. Silicon Valley may have viewed this as the IPO to end all IPOs (and the bankers were counting on that when they acceded to the higher share price at the last minute) but America didn’t — or maybe it just wants to hedge its bets and wait until the traders stop flipping stock and the hype dies down. After all, U.S. unemployment is 8.1 percent and there’s an election going on. Investors have bigger things to worry about.

For the real meaning behind Facebook’s IPO (and for a true reflection of its value as public company) we’re going to have to wait a while and let the hype subside. Of course, by then no one will want to read about it in the headlines.