Facebook is speculative

As was true of the dot-com bubble, so with the Facebook bubble: There’s a need to lie in the aftermath about what caused it.

It wasn’t “hype”. Whatever organs of the media investors turned to, they found a range of views about Facebook’s value, including scepticism. In the dot-com bubble, investors did it to themselves. In the Facebook bubble, if we may call it that, those who lined up to buy the stock at $38 did so with eyes open.

Yes, Facebook’s initial public offering (IPO) was a comedy of errors, and a price will have to be paid by those involved. But the claim that has excited the media and strike-suit lawyers is a red herring. Even if it’s true that analysts at the underwriting banks quietly reduced their revenue estimates based on public information released by Facebook, so what?

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Holman W. Jenkins, Jr is a columnist at The Wall Street Journal.

—THE WALL STREET JOURNAL

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