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
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."
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.
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
Facebook closes at $38.37, only $0.37 above its offering price.
And Facebook dips back down to $38. theverge.com/2012/5/18/3028…— Joshua Topolsky (@joshuatopolsky) May 18, 2012
|@ 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|
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
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.
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.”
This amusing NMA.TV animation depicts a blonde Mark Zuckerberg riding the stock exchange bull through Wall Street, spearing investors with the horns, as well as 'Goldman Sachs' shaking the pennies out of the pockets of a widow.
Zuckerberg vowed that Facebook is and always will be free. But that doesn't mean you won't start paying the social network: the company is now plotting how to turn its users into customers, experts say.
HuffPostTech's Bianca Bosker reports,
Users will find themselves paying Facebook in the near future -- not necessarily to use the service, but to promote their posts, pay for apps, subscribe to magazines, or even refresh their wardrobe. Having opened their lives to Facebook, users may soon open their wallets to the social network, too.
Comedian Joe Mande noticed that a group of exuberant Facebook fanatics have recorded a song and shot a music video thanking Facebook on the day of its IPO. The video -- called "Thank You Facebook Song -- dedicated to its FB IPO" -- was posted to YouTube on Wednesday and can be "enjoyed" below.
"I want to thank you for bringing to me...friends and family."
Facebook isn't yet part of the S&P 500 stock-market index, but if it were, it would be the 23rd-biggest company in that index, with its initial market cap of $104 billion, writes FactSet analyst John Butters.
According to WSJ, Facebook’s underwriters stepped in to support shares at the $38 IPO price.
The Facebook IPO has been a bit of an embarrassment for the Nasdaq stock exchange.
First there was a delay in the opening of trading of about half an hour. Then technical issues may have contributed to the stock price stumbling after the open, from an opening of about $42, all the way back down to its IPO price of $38. At that point, underwriters jumped in and rescued the stock from falling beneath that price and making the universe collapse in on itself with shame.
CNBC is reporting that there was a Nasdaq delay in executing trades, which caused buyers to back away from the stock, which contributed to the brief tumble back to $38.
The whole thing is reminiscent of the pratfall the BATS high-frequency exchange suffered when it tried to launch its IPO on its own exchange. This could be another example of how the ability to cram a market full of hundreds of millions of orders in nanoseconds is not always entirely desirable.
But this might not all be the Nasdaq's fault: Facebook's stock still isn't doing particularly well, recently trading at around $40 a share. That's not as disastrous as a first-day decline, and may even be a sign the IPO's underwriters priced the stock to near-perfection. But it is somewhat surprising, given the insane level interest in this IPO, that the jump has not been even higher.
-- Mark Gongloff
This morning's IPO isn't the only way former Facebook employees are getting rich. They're also starting new companies and investors are swarming to snap up shares. Also known as "The Facebook Mafia," Facebookers turned startup founders have collectively attracted $271 million worth of venture capital since 2006, according to financial analysis firm CB Insights. In the first half of 2012, Facebook Mafia scored $130 million amid all the hype around their former employer. Companies started by a Facebook mafioso include Path, Cloudera, Asana and Quora. Web companies like Google and PayPal similarly spawned a wave of startups founded by early employees. CB Insights says it will soon release a free report on the economic impact of the PayPal, Google and Facebook Mafias.
-- Nate C. Hindman
Follow Mark Zuckerberg's worth in real-time as he sells $1.2 billion worth of stock.
According to CNN Money, Facebook shares opened at $42.05, an 11% increase from the company's $38 IPO price.
Facebook, Inc. trades 82 million shares in first 30 seconds. Facebook IPO live blog - bit.ly/JXw9RQ $FB— Reuters Top News (@Reuters) May 18, 2012
Very bad numbers. FB up %0.00 percent YTD.— Farhad Manjoo (@fmanjoo) May 18, 2012
Why is Facebook going public? It couldn't figure out the privacy settings either.— Elizabeth Fish (@elizabethfish) May 18, 2012
Facebook opening trade has been delayed by five minutes, according to TechCrunch.
In this image provided by Facebook, Facebook founder, Chairman and CEO Mark Zuckerberg, center, rings the opening bell of the Nasdaq stock market, Friday, May 18, 2012, from Facebook headquarters in Menlo Park, Calif. The social media company priced its IPO on Thursday at $38 per share, and beginning Friday regular investors will have a chance to buy shares. (AP Photo/Nasdaq via Facebook, Zef Nikolla)
Facebook users are suing the social network for $15 billion -- almost as much as Facebook will raise from going public. The class-action case claims that Facebook invades privacy by tracking Internet usage.
“This is not just a damages action, but a groundbreaking digital-privacy rights case that could have wide and significant legal and business implications,” David Straite, a Stewarts Law partner, said in the e-mailed statement.
In just a few minutes, Facebook shares will hit the Nasdaq. Facebook has priced its shares at $38 a share.
As Joshua Topolsky pointed out earlier, you won't be able to see this again: