Facebook, the galactically popular social networking site that for so long has weathered friction regarding weaknesses in its software – particularly around security and privacy issues – may have seen its own IPO effort submarined by a software glitch in the NASDAQ stock exchange.
In reporting on NASDAQ's response to the technical difficulties it encountered on Facebook's IPO day, Bloomberg’s Nina Mehta writes:
Computer systems used to establish the opening price were overwhelmed by order cancellations and updates during the "biggest IPO cross in the history of mankind," Nasdaq Chief Executive Officer Robert Greifeld, 54, said yesterday in a conference call with reporters. Nasdaq’s systems fell into a ‘loop’ that kept the second-largest U.S. stock venue operator from opening the shares on time following the $16 billion deal.
According to Mehta, the reason Greifeld gave for the issues with the IPO was “poor design in the software it uses for driving auctions in initial public offerings.”
One would think that if any exchange out there were to be free of poorly designed software it would be the Tech-heavy NASDAQ exchange. Apparently offering the top Tech companies in the industry, though, does not necessarily mean you run the best software the Tech industry has to offer.
Truth is, software failures like the one experienced by NASDAQ have become quite commonplace lately; so much so that they’re practically met with a shoulder shrug and an “oh well.” We treat news of software failures as though they were inevitable and almost expected. Only when it affects finance – particularly the financial status of a marquis brand name like Facebook – do we step back and even offer so much as a “tsk, tsk, tsk” for the failure.
But why? When exactly did we decide that software failure was an unavoidable part of business, an acceptable excuse for possibly undermining the value of a highly touted IPO?
Facebook reached a high of $45 per share before it dropped back below its initial offering price of $38 per share. Whether the glitches at NASDAQ caused the per performance or whether you agree with Henry Blodget at Business Insider that they were just a convenient excuse for a poor showing, there is still no excuse for application software failure, especially since we know what causes it:
NASDAQ may need to pay back $13 million to investors who should have received transaction executions but did not because of its software failures. Meanwhile, brokers around the world may lose $100 million repaying investors for mishandled orders. A quick, pre-deployment application of automated analysis and measurement to diagnose the structural quality and health issues within the application software used by NASDAQ or any company would have been a much better investment of time and money.
I guess this is one more reason to lobby for a “DISLIKE” button.