Post date: May 18, 2012 5:17:1 PM
The stock opened 11 percent higher and rose to $45 (USD) before rapidly heading south in frenzied trade on Friday morning (May 18), touching its initial public offering price of $38. The No. 1 online social network raised as much as $18.4 billion in one of the biggest initial public offerings in U.S. history.
After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company's closely watched stock began trading at $42.05, compared with an IPO price of $38.
Facebook shares rise and then fall again after the social media giant made its stock market debut on the Nasdaq in one of the biggest initial public offerings in U.S. history.
NEW YORK CITY, NEW YORK, UNITED STATES (MAY 18, 2012) (REUTERS) - Facebook Inc shares fizzled on their first day of trade on the Nasdaq, erasing early gains of as much as 18 percent to trade close to their initial public offering price.
To rapturous applause from employees, Facebook Chief Executive Mark Zuckerberg -- flanked by Chief Operating Officer Sheryl Sandberg and Nasdaq Chief Executive Robert Greifeld -- rang the bell to kick off trading at the company's Silicon Valley headquarters at 6:30 a.m. Pacific time (1130 GMT).
"Any time there is so much hype over any individual stock it's usually a peak in the stock. Any time that you have that much excitement because the value is not created from the crowd knowing that a company is so great, the value comes from very few people paying attention to the company. In the case of Facebook, Facebook is such a household name and I believe it' the biggest IPO market cap in history now for the United States, that to me is a big concern, seeing people outside the Nasdaq market site in crowds as if a rock star is right here. I think that's of concern. But again, from a sentiment standpoint, if it gets people excited about stocks, it's a good thing. We'll see if that happens," explained Michael Gayad, Chief Investment Strategist at Pension Partners, Llc.
"We've actually seen a few of that type of behaviour in some other tech IPOs this year where the initial excitement was high, there was a lot of buying and then it just gradually fell off. The market has to see what the true value of Facebook is, given local through rates, given already over-subscription in the IPO. The market I think in general has to see are earnings going to be as good as people think they will be. So there's going to be a little bit of a wait-and-see period. So the initial reaction is excitement, then come back into rationality mode. Beyond that a few quarters probably have to pass to get comfortable with Facebook," he added.
Some still expect shares could rise 30 percent or more on Friday, despite ongoing concerns about Facebook's long-term money-making potential.
An average of Morningstar analyst estimates put the closing price for Facebook shares on Friday at $50.