Life After Facebook: Nasdaq Will Hook Up With SharesPost To Sell Private Stock Nasdaq OMX and SharesPost will join to create a new exchange that will allow accredited investors to buy private-company shares. The move reflects the competition and new landscape these market-makers face–particularly whether interest in pre-IPO stocks will fade now that Facebook shares trade publicly. The exchange, NASDAQ Private Markets, will allow accredited investors to buy shares from insiders and will launch later this year. Nasdaq is under pressure to stand-out after Atlanta-based ICE said it would merge with NYSE Euronext. Mergers have been a go-to way for exchanges to grow in the last decade, but increased consolidation, in turn, meant a rise in anti-trust concerns from regulators. Nasdaq indeed tried a takeover of NYSE Euronext, only to eventually drop the bid. Yet, going toward private shares may not be as lucrative as it was once, and this is why the past year, at least, has been tough for SharesPost. Facebook’s IPO threatens to greatly reduce investor interest in private exchanges like SharesPost and its top competitor, SecondMarket. Before debuting, Facebook made up a third of SecondMarket’s revenue in 2011, according to DealBook. Making matters worse, other companies that traded on SharesPost and SecondMarket–Zynga and Groupon–haven’t performed well after their public offerings. Executives at both have been sanguine about the future. There’s still Twitter, after all, and the hope that other startups can capture investors’ attention like Facebook. Hooking up with Nasdaq does give SharesPost, and the whole idea of trading private shares, some added legitimacy. Criticism about SharesPost and SecondMarket have focused on the lack of regulation and opacity behind these market-makers. It’s not clear how much Nasdaq Private Markets will cannibalized from SharesPost’s own exchange, though that’s certainly a reasonable concern. The new joint venture certainly isn’t doing much for Nasdaq OMX stock; shares are up just 0.3% to $32.53. Something else worth noting: this move does nothing to provide retail investors greater access to private shares. Just like SecondMarket and SharesPost, you’ll need to be an accredited investor, meaning you need a net worth of at least $1 million or annual income of at least $200,000
Posted on: Thu, 13 Mar 2014 03:47:50 +0000