Facebook starts strong and ends flat on its first day of trading. The largest-ever initial public offering for a technology firm ended up just 0.61 percent above where it started, at $38.23 (29.92 euros), a share.
The global networking phenomenon Facebook stumbled on its first day out of the docks on the Nasdaq, despite a record volume of more than 575 million shares being traded.
"It's not uncommon in an IPO to see a big rise and then for the price to come back down, but I'm a bit surprised after all the hype to see such a small gain," said Darren Hayes, a Pace University professor and former investment banker.
A rollercoaster day
Facebook creator Mark Zuckerberg, 28, wearing his trademark hooded sweatshirt, remotely rang the bell to open the Nasdaq on Friday. Early on, shares jumped 12 percent to $42.55 (33.3 euros), but then fell back to the opening price.
"The negativity in the market overall has put a damper on the IPO," said Hayes.
A report on the Business Insider financial blog said the price held at around $38 because of a large number of standing orders at the offering price, and the Wall Street Journal said the underwriting investment banks stepped in to support this price.
Compared with recent tech IPOs, Facebook’s market debut was disappointing. LinkedIn, a business-oriented social network, for example, doubled its share price on the first day. Groupon, a discount deal aggregator, enjoyed a 30 percent increase.
With all the hype surrounding Facebook’s IPO launch, investors were expected to be keen to get a piece of the networking company, which has come a long way since its humble beginnings in 2004 as a project of Harvard student Mark Zuckerberg and his classmates.
Trip Chowdhry, of Global Equities Research, blamed the disappointing start on Facebook’s failure to answer crucial questions about how the company will boost revenues and adapt to the mobile internet.
Other concerns that have clouded Facebook’s debut are its long-term ability to generate ad revenues and privacy issues. General Motors pulled $10 million from paid advertising and $30 million from unpaid marketing on Facebook earlier this week. Meanwhile, some believe Facebook has been a bit too loose with user data.
Future value in question
The IPO gave Facebook a dizzying value of $104 billion at its market debut. For ordinary investors, who had to wait and buy the stock in the open market on day one, the stability of the price throughout the day meant they were able to get a piece of Facebook. And the lack of a huge initial spike also meant that early investors didn’t feel compelled to sell their stakes.
At its current market value, Facebook is now among the most valuable US companies, ahead of Amazon, Cisco and Ford Motor Co, but it lags behind Google and Apple.
Zuckerberg himself retains 55.8 percent of the voting power of Facebook’s shares, and more than 18 percent of the value of the company.
James Hughes, chief market analyst at London's Alpari, said "the real value of Facebook is not likely to be known until the hype of the IPO has died away and investors have been able to digest how the company is going evolve to be the money-making machine many expect it to be."
Zuckerberg, for his part, told colleagues yesterday in California not to be taken in by all the hype. "Right now this all seems like a big deal," he said before trading began. "Going public is an important milestone in our history. 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."
tm/ccp (AP, AFP)