"A person who trades derivatives, commodities, bonds, equities or currencies with a higher-than-average risk in return for a higher-than-average profit potential. Speculators take large risks, especially with respect to anticipating future price movements, in the hope of making quick, large gains."
I feel very sorry that these people lost money (on paper - assuming they haven't sold), but I'm pretty sure that they knew what they were getting themselves into.
As for Joe Investor who jumped on the Facebook hype train? Relax! If you truly believe that the company is solid then all you have to do is hold onto the stock for a long time, and you should do fine. If your intention was to make a quick buck, then please see the definition of a speculator above.
So why do I believe the Facebook IPO was a success? It's really very simple. Facebook didn't get screwed by their investment bankers! It would seem that Facebook's stock was priced just high enough to get the IPO investors excited to invest, without leaving money on the table. This means that Mark Zuckerberg and the other owners of Facebook maximized the price of the shares they sold. As an entrepreneur, you can't ask for much more. And did Mark Zuckerberg lose $5 billion on his honeymoon as widely reported? The answer is no, because he's not going to sell his stock! Most of his wealth is on paper, and from what most people say about him, it will likely stay that way for a long time.
LinkedIn on the other hand got screwed. Its stock went up over 100% within two hours of trading. That means that Reid Hoffman and the other investors that sold stock that day received less than half of what the market would pay! The people who did really well on the LinkedIn IPO were the deep pocketed investors that received preferred IPO allocations from the investment bankers, and the investment bankers themselves who made commissions on the IPO and then again selling off the shares of their preferred clients. At the time of the LinkedIn IPO, BusinessInsider offered up a great analogy: