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Facebook IPO: Social Network's Stock Up Slightly In Public Debut

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NEW YORK — It was barely a "like" and definitely not a "love" from Facebook investors as the online social network's stock failed to live up to the hype in its trading debut Friday.

One of the most anticipated IPOs in Wall Street history ended on a flat note, with Facebook's stock closing at $38.23, up 23 cents from Thursday night's pricing.

That meant the company founded in 2004 in a Harvard dorm room has a market value of about $105 billion, more than Amazon.com, McDonald's and Silicon Valley icons Hewlett-Packard and Cisco.

It also gave 28-year-old CEO Mark Zuckerberg a stake worth $19,252,698,725.50.

"Going public is an important milestone in our history," Zuckerberg said before he pushed a button that rang Nasdaq's opening bell from company headquarters at 1 Hacker Way in Menlo Park, Calif. "But here's the thing: Our mission isn't to be a public company. Our mission is to make the world more open and connected."

But for many seeking a big first-day pop in Facebook's share price, the increase of six-tenths of one percent was a letdown.

"This is like kissing your sister," said John Fitzgibbon, founder of IPO Scoop, a research firm. "With all the drumbeats and hype, I don't think there'll be barroom bragging tonight."

Added Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital: "It wasn't quite as exciting as it could have been. But I don't think we should view it as a failure."

Indeed, the small jump in price could be seen as an indication that Facebook and the investment banks that arranged the IPO priced the stock in an appropriate range.

It was also good for ordinary investors, who are mostly shut out from the IPO price and have to buy the stock in the open market on day one. They got a chance to buy all day at a price not much above $38.

And it was good for early investors in the company, who owned more than half the 421 million shares made available in the IPO. Had the stock shot to $60 Friday morning, those early investors would have felt they hadn't gotten enough money for their stakes.

The 421 million shares that were sold fetched $16 billion and represented 15 percent of the company's stock. Facebook got $7 billion, and the early investors $9 billion. The other 85 percent of Facebook's stock is owned by Zuckerberg and other Facebook executives, employees and early investors. In comparison, Google offered just 7.2 percent of its stock when it went public in 2004. Its stock rose 18 percent on day one.

Here was Facebook's "timeline" Friday, trading under the symbol "FB" on the Nasdaq Stock Market:

The stock opened at 11:30 a.m. at $42.05, but soon dipped to $38.01. It briefly traded as high as $45 and by noon was at $40.40. It fluttered throughout the afternoon and hugged the $38 mark for much of the final hour, before closing at $38.23.

By the end of the day, about 570 million shares had changed hands, a huge trading volume for any company.

TD Ameritrade reported that in the first 45 minutes of trading, Facebook accounted for a record 24 percent of trades executed by its customers.

By comparison, on its first day back on the stock market, in November 2010, General Motors represented 7 percent of trades on the online brokerage.

Steve Quirk, who oversees trading strategy at TD Ameritrade, said that about 60,000 orders were lined up before Facebook opened.

Technical glitches delayed the start of Facebook's trading by a half-hour. The Securities and Exchange Commission also is investigating problems traders encountered in changing and canceling their orders.

Other social media companies, most of which have gone public in the last year, saw their shares plummet when it became clear what kind of reception Facebook was getting in the public market. Shares of game-maker Zynga Inc. and reviews site Yelp Inc. both hit all-time lows.

The stock market will now begin assigning a dollar value to Facebook based primarily on its financial performance. If Facebook can continue to increase its revenue and profit at the rate it has the past few years, the stock should rise. Google reported strong earnings after it became a public company, and its stock price more than tripled the first year, from $85 to $280.

Facebook's stock price will also depend somewhat on broad economic forces, as well as the whims of investors.

Facebook is one of those rare companies whose IPO transcends Wall Street's money lust. Since its start as a scrappy network for college students, Facebook has come to define social networking by getting its 900 million users around the world to share everything from photos of their pets to their deepest thoughts.

Most tech companies going public want a big rise in their debut to show they're "strong, dynamic companies standing out in the crowd," said Francis Gaskins, president of researcher IPOdesktop, but Facebook already has that image, and so may not care.

Few of the Internet companies to go public recently have been profitable. But Facebook had net income of $205 million in the first three months of 2012, on revenue of $1.06 billion. In 2011, it earned $1 billion on revenue of $3.7 billion, up from earnings of $606 million and revenue of $2 billion a year earlier.

That's a far cry from 2007, when it posted a net loss of $138 million and had revenue of $153 million. The company makes most of its money from advertising. It also takes a cut from the money people spend on virtual items in Facebook games such as "FarmVille."

Facebook's public debut marked a milestone in the history of the Internet. In 1995, Netscape Communications' IPO gave people their first chance to invest in a company whose graphical Web browser made the Internet more engaging and easier to navigate. Its hotly anticipated IPO lit the fuse that ignited the dot-com boom. That explosion of entrepreneurial activity and investment culminated five years later in a devastating bust that obliterated the notion that the Internet had hatched a "new economy."

It took Google Inc.'s IPO in 2004 to prove that an Internet company with a revolutionary idea could be profitable. In the process, the Internet search leader is forcing other industries to adapt to a new order where people have come to expect to be able to find just about anything they want by entering a few words into a box on any device with an Internet connection.

Facebook's IPO almost certainly will enrich other up-and-coming entrepreneurs as Zuckerberg uses the company's cash and stock to buy other startups in an effort to bring in other talented engineers and promising technology. That's what Google has been doing for years. Since it went public in 2004, Google has spent $10.2 billion buying nearly 200 other companies. Those figures don't include Google's pending $12.5 billion acquisition of cellphone maker Motorola Mobility Holdings Inc., which is still awaiting regulatory approval in China.

Zuckerberg's biggest deal so far came when he agreed to buy Instagram, a maker of a popular mobile app for photos, for $1 billion in April. Because most of the deal is being paid for in stock, Instagram is already getting richer. Based on Facebook's current share price, Instagram is in line to receive about $1.2 billion.

Friday's debut, though, resulted in deals worth much less.

Alper Aydinoglu, a DePaul University student who got 50 shares via Etrade at $38, said he was "disappointed with the first day of trading."

His gain on paper: $11.50, but that was before Etrade's standard commission of $9.99.

Aydinoglu still called it an excellent learning opportunity.

"On top of everything, I now have the bragging rights that I participated in one of the most popular IPOs of all time."

___

AP Technology Writers Michael Liedtke in San Francisco and Peter Svensson in New York, Associated Press Writer Marcus Wohlsen in Menlo Park, Calif., and AP Business Writers Bernard Condon, Pallavi Gogoi and Joseph Pisani in New York contributed to this story.
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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."

More here.

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From the AP:

The stock opened at 11:32 a.m. at .05, but soon dipped to .01. By noon, it was up again at .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 5 billion, more than Amazon.com, McDonalds and storied Silicon Valley icons Hewlett-Packard and Cisco.

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Facebook closes at .37, only .37 above its offering price.

via AlThingsD

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@ 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

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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 price target on Facebook, which was recently trading at less than 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

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The figure of the day is "0 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.

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Today's Facebook IPO has made Zuckerberg the 29th richest person in the world, according to Bloomberg.

At a share, Zuckerberg's 503.6 million shares and options are valued at .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.”

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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.

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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.

More here.

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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."

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A few things Facebook doesn't want you to think about today:

Five Things Facebook Won't Be Telling You Today

CEO of Personal Capital, Bill Harris, offers his advice to Facebook millionaires:

A Million Dollars Won't Change Your Life

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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 4 billion, writes FactSet analyst John Butters.

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According to WSJ, Facebook’s underwriters stepped in to support shares at the IPO price.

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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 , all the way back down to its IPO price of . 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 .

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 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

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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 1 million worth of venture capital since 2006, according to financial analysis firm CB Insights. In the first half of 2012, Facebook Mafia scored 0 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

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Follow Mark Zuckerberg's worth in real-time as he sells .2 billion worth of stock.

(CREDIT: WSJ)

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According to CNN Money, Facebook shares opened at .05, an 11% increase from the company's IPO price.

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Facebook opening trade has been delayed by five minutes, according to TechCrunch.

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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 per share, and beginning Friday regular investors will have a chance to buy shares. (AP Photo/Nasdaq via Facebook, Zef Nikolla)

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Facebook users are suing the social network for 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.

Read the full story at Bloomberg here.

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In just a few minutes, Facebook shares will hit the Nasdaq. Facebook has priced its shares at a share.

As Joshua Topolsky pointed out earlier, you won't be able to see this again:

facebook fb

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