FB stock closes nearly flat
Online social network’s debut on Nasdaq fails to live up to the hype
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 on Friday.
One of the most anticipated IPOS in Wall Street history ended on a flat note, with Facebook’s stock closing at US$38.23 (RM119.58), up 23 cents (71.9 sen) from Thursday night’s pricing.
That meant the company founded in 2004 in a Harvard dorm room has a market value of about Us$105bil (Rm328bil), 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 US$19,252,698,725.50 (Rm60.2bil).
“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, California. “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 firstday 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 bar room 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 US$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 US$60 (RM187) on 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 Us$16bil (Rm50bil) and represented 15% of the company’s stock.
Facebook got Us$7bil (Rm21.8bil), and the early investors Us$9bil (Rm28bil).
The other 85% of Facebook’s stock is owned by Zuckerberg and other Facebook executives, employees and early investors.
In comparison, Google offered just 7.2% of its stock when it went public in 2004. Its stock rose 18% on day one.
Here was Facebook’s “timeline” on Friday, trading under the symbol “FB” on the Nasdaq Stock Market:
The stock opened at 11.30am at US$42.05 (RM131.53), but soon dipped to US$38.01 (RM118.8). It briefly traded as high as US$45 (RM140.70) and by noon was at US$40.40 (RM126.37). It fluttered throughout the afternoon and hugged the US$38 mark for much of the final hour, before closing at US$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% of trades executed by its customers.
By comparison, on its first day back on the stock market, in November 2010, General Motors represented 7% 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 halfhour.
The Securities and Exchange Commission also is investigating problems traders encountered in changing and cancelling their orders. — AP