The bankers behind Snap's IPO totally botched the price, former Facebook exec says

  • Shares of Social Capital Hedosophia Holdings rose more than 2 percent in their public debut.
  • The holding company will use the funds to acquire emerging private businesses that don't have the resources or business model to do an IPO themselves.
  • CEO Chamath Palihapitiya has been vocal about topics such as bitcoin (he's a fan) and artificial intelligence.
  • Snap shares have tumbled more than 27 percent over the past 6 months, dipping below the public offering price.

Snap shareholders have felt the pain of its March IPO, as shares have tumbled more than 27 percent over the past 6 months, dipping below the public offering price.

That could have been avoided if the IPO hadn't been mispriced, Chamath Palihapitiya told CNBC's "Fast Money: Halftime Report" on Thursday.

"You have a bank, Morgan Stanley in that case, spending weeks and weeks with the company. They try to get the ground truth of what they think the company is worth," Palihapitiya said. "It's priced at $17, it opens in the mid-$20s ... all the mutual funds are forced to sell because the price spikes. Clearly it was mispriced. ... All of that, in my opinion, is fundamentally unnecessary and entirely avoidable."

Palihapitiya, a former Facebook executive, said Snap could have made a good candidate for his holding company. The founder and CEO of Social Capital ushered in the public offering of his company on Thursday. Shares of Social Capital Hedosophia Holdings rose more than 2 percent in their public debut.

It's somewhat of an unusual IPO: The holding company will use the funds to acquire emerging private businesses that don't have the resources or business model to do an IPO themselves. Alongside tech stars such as former Twitter executive Adam Bain, it aims to be somewhat like a bleeding-edge version of Berkshire Hathaway.

The right target could also stand alone under Palihapitiya's corporation, he said, but Social Capital would do the work of getting the company ready for public markets, while the management could focus on its product.

That would allow technical executives and "thoughtful" investors, like Palihapitiya, rather than bankers, to assess dynamic tech companies and determine what they are worth.

When the traditional IPO process fails, "the only people that pay the price are the employees and the CEO," he said.

"And you're talking about an exceptionally creative team — a lot of really good people who should otherwise have been left to build the business," Palihapitiya said. "There is a better way to price these IPOs."

WATCH: Snap IPO's poor start not unusual