Mark Cuban Got Burned By Facebook IPO, Too (VIDEO)

Even Mark Cuban Got Burned By Facebook IPO
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Even Mark Cuban got burned by Facebook’s IPO.

Less than a month after Cuban bought Facebook shares on the open market, the billionaire investor and Dallas Mavericks owner sold them at a loss.

“It was gambling money, to be honest with you,” Cuban said in a CNBC interview Monday. “Any time you try to time the market, you get what you deserve. Sometimes you’re right. Sometimes you’re wrong. This time I was wrong.”

Cuban announced on his blog late last month that he had bought 150,000 shares of Facebook in three different purchases. He said he bought 50,000 shares at $33, 50,000 at $31.97 and another 50,000 at $32.50.

“It’s a trade, not an investment,” Cuban wrote at the time. “Kind of like buying a Mickey Mantle, a Hank Aaron and a Barry Bonds rookie card knowing there is a card show in town next week.”

But that proverbial “card show” never came. Facebook stock continued to tumble in the aftermath of Cuban’s comments. A week after his blog post, on May 30, shares closed at $28.19, down 26 percent from the issue price, leaving Cuban $645,000 underwater.

“I took my hit,” Cuban said Monday. “I thought we would get a quick bounce with some excitement about the stock. I was wrong, and when you’re wrong, you don’t wait, you just get out. I took a beating and left.”

Obviously, the walloping wasn’t an isolated incident. Both individual and institutional investors suffered heavy losses from Facebook’s post-IPO nosedive. And despite recent gains, the stock is still around 17 percent below its issue price of $38.

Facebook and its investment bankers, led by Morgan Stanley, have been criticized for deciding to increase the IPO’s price and size shortly before the offering. The Wall Street Journal lobbed the latest criticism at Morgan Stanley star banker Michael Grimes, who reportedly made a series of unusual decisions after insisting he be the “single driver” of Facebook’s IPO.

Cuban didn’t call out any specific names on Monday, but he did blame the stock’s poor performance on the decision to offer such a large number of shares.

“[Facebook] put out 421 million shares,” Cuban noted. LinkedIn, in comparison, "issued 8.4 million shares and the stock skyrocketed," he pointed out. “If Facebook would have come out with 8.4 million shares instead of 421 [million], the stock would be at about $200 right now.”

Not everyone lost money on the Facebook IPO. Dan Niles, an investment manager at AlphaOne Capital Partners fund, shorted Facebook’s stock soon after it opened and now he’s reaping the benefits.

In addition, Facebook posted its third consecutive day of gains Monday, on the heels of a positive study about its ads, an announcement that it's launching a real-time advertising exchange and the acquisition of a facial-recognition startup.

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