Eight years, 900 million users, and several Winklevoss lawsuits later, Facebook went public in the third largest IPO in history. Despite months of hype, it got off to a rocky start.
The social network raised more than $18 billion, putting the company's total market value at $104 billion. By comparison, Google raised $1.67 billion in its 2004 IPO, which valued the company at $26.4 billion.
But the stock's first trading day was anything but smooth. After an unexpected delay due to an overwhelming surge of orders, the stock finally started trading on the Nasdaq at around 11:35 a.m. ET, with the ticker symbol "FB." It jumped briefly to $43 a share, but then tumbled alarmingly back to its initial public offering price of $38.
The record will show that Facebook stock ended its first day of trading at $38.23, a gain of 23 cents above its IPO price. What it won't show is the unbelievable effort by its underwriters to hold the stock price above the $38 level for a huge part of the day.
Just take a look at the chart, posted by Josh Brown at The Reformed Broker blog. The stock price improbably held right at $38 for most of the entire final hour of trading, and it briefly touched $38 early in its first minutes of trading. Like a pilot at the controls of a jumbo jet that's lost three engines and its autopilot, the underwriters -- including Morgan Stanley and JPMorgan Chase -- wrestled and sweated to keep the stock at altitude.
That's not a great sign for the stock's future, according to research firm PrivCap, which believes it should have been priced lower. In a research note, PrivCap wrote:
The very presence of a supporting bid augurs poorly for Facebook stock, indicating the "pent up demand" was mostly wiped out whenFacebook increased the IPO size by 25% in the last 2 days,” said PrivCo CEO and Founder Sam Hamadeh from the NASDAQ marketsite earlier today.
Nonetheless, all those people who were supposed to get rich on the IPO? They are no less rich as a result of today's shaky action. The underwriters did their jobs for Mark Zuckerberg et al. in that respect.
-- Mark Gongloff
05/18/2012 5:10 PM EDT
Facebook Makes New Acquisition
Facebook has just purchased mobile gifting service Karma.
"The service that Karma provides will continue to operate in full force," wrote Karma co-founders Karma Co-founders Lee & Ben. "By combining the incredible passion of our community with Facebook’s platform we can delight users in new and meaningful ways. As we say … only good things will follow."
05/18/2012 4:47 PM EDT
The stock opened at 11:32 a.m. at $42.05, but soon dipped to $38.01. By noon, it was up again at $40.40, a 6 percent increase. It fluttered throughout the afternoon, but it never hit the double-digit jump that many Facebook-watchers had expected. By the end of the day, more than 500 million shares had changed hands
The closing price means Facebook is worth about $105 billion, more than Amazon.com, McDonalds and storied Silicon Valley icons Hewlett-Packard and Cisco.
05/18/2012 4:35 PM EDT
Breaking: Facebook's volume crosses 500M shares; only IPO to see 500M shares traded on first day of trading. #FacebookIPO— CNBC (@CNBC) May 18, 2012
05/18/2012 4:24 PM EDT
The Price Is Right
Facebook closes at $38.37, only $0.37 above its offering price.
05/18/2012 3:55 PM EDT
And Facebook dips back down to $38. theverge.com/2012/5/18/3028…— Joshua Topolsky (@joshuatopolsky) May 18, 2012
05/18/2012 3:43 PM EDT
A New Record
@ WSJ :
Facebook traded 460 million shares by 3:07pm ET, the most ever for a US stock the day of its IPO. http://t.co/KDNbZxeL
05/18/2012 3:36 PM EDT
Facebook Gets Its Very First 'Sell Rating'
Aww, look at that: Facebook shares have their very first "sell rating" from a Wall Street analyst.
Brian Wieser of Pivotal Research Group wasted little time in slapping a "sell" recommendation and a $30 price target on Facebook, which was recently trading at less than $39 a share, up a buck from its IPO price. Not a rip-roaring start for Zuck & Co., and Wieser thinks it will get worse, at least in the short term:
While we consider ourselves optimistic on the company’s underlying business opportunity and regard its prospects for durable success as favorable, we view shares as being “priced for perfection."
-- Mark Gongloff
05/18/2012 3:22 PM EDT
Seismic Activity At The Podium?
05/18/2012 2:53 PM EDT
A Feminist Reminder
The figure of the day is "$100 billion." But activist Shaunna Thomas notes you shouldn't forget about "0" -- the number of women on Facebook's board.
Thomas, co-founder of women's advocacy group Ultraviolet, which organized a protest at Facebook's New York headquarters last month, said in a statement:
Today, as Wall Street, the media and entrepreneurs around the world watch with great interest the historic Facebook IPO one story that has not gotten much attention is that while many will make millions today, women will not have a seat at the table. Literally. Facebook does not have a single woman on their board. The fact that a company as large as Facebook with a massive global reach does not have a single woman on their board is nothing short of shameful. We will continue our campaign to get women on the Facebook board because in 2012 no company with the massive global reach of Facebook should shut women out of the board room.
05/18/2012 2:10 PM EDT
Zuckerberg Is Now Richer Than Google Founders
Today's Facebook IPO has made Zuckerberg the 29th richest person in the world, according to Bloomberg.
At $38 a share, Zuckerberg's 503.6 million shares and options are valued at $19.1 billion, surpassing the wealth of Google Inc. co- founders Sergey Brin and Larry Page.
“Zuckerberg doesn’t think about his wealth,” David Kirkpatrick, author of “The Facebook Effect,” a history of the company, said in an interview on May 17. “This is a huge success for everybody. There’s no way it can be seen otherwise.”