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Facebook IPO: No Pop But Still Lots of Likes

Facebook IPO: No Pop But Still Lots of Likes

So here’s what happened to Facebook on May 18, the day of its IPO, the third-largest ever.

Its shares closed at $38.23, just 0.6 percent over the initial offering price.

Trading started at 11:30am EST after being delayed a half-hour due to what analysts think was a “technical glitch” (to be reviewed by the SEC). Shares were trading as high as $42.05 at the start, only to fall and then rise by mid-afternoon back to $41.06. More than 566 million Facebook shares changed hands.

Overall, the technology-heavy Nasdaq was down 1.24 percent at the end of Friday, says the New York Times Dealbook blog. Zynga, which makes CityVille and other Facebook games, fell 13.4 percent; Groupon was down 6.7 percent and LinkedIn, 5.9 percent.

In other words, Facebook saw no “1999-style pop.” Underwriters bought the stock to “support the deal“ and helped to keep it falling below the IPO price. Bloomberg noted some investors were indeed “disappointed”:

“They squeezed the lemon dry here,” said Dan Veru, chief investment officer at Palisade Capital Management, who didn’t participate in the IPO. “They didn’t leave enough on the table. You want to price these things a little lower, so that the shares have better support in the aftermarket.”

As CNET observes, the stock market has not been on the up and up in the past few months. Worries about Greece’s future in the euro zone, and about Europe’s economic stability, led to stocks falling for a sixth day.

Have Facebook’s Challenges Just Begun?

CNET also catalogued other reasons to say the Facebook “hype was too much to live up to”: Facebook’s slowdown in revenues and profits in the last quarter, a signal that “the days of hyper-growth are coming to an end”; the mobile challenge — the fact that, while more and more of Facebook’s users access the site via mobile devices, Facebook has yet to figure out how to make a profit from its mobile app; a $15 billion class action privacy class action suit that was brought against the company on Friday and that charges it with “improperly tracking the internet use of its members even after they logged out of their accounts.”

Facebook has, notes the BBC, already shown its awareness of other privacy concerns, including “evolving legal protections across the world on consumer privacy” and, in particular, revisions to privacy laws in the European Union. The company has also agreed to submit to a biennial external audit of its privacy policy and procedures under the FTC.

Pointing out that Facebook currently has only 3,200 employees, many of whom are now newly-minted paper millionaires, the Economist observes

…the prospect of having to motivate VIP employees—Silicon Valley shorthand for workers ‘vesting in peace’—may explain why Mr Zuckerberg delayed a flotation so long. With the billions of dollars that the IPO will bring in, the firm will add more people and services.

While Facebook’s offering has quite eclipsed the 2004 IPO of Google, its chief rival for advertising, the war (as the Economist) puts it between the two tech companies is only beginning.

Still, A Lot of Likes

With all this said, it’s only the start of the weekend in Menlo Park where Facebook’s headquarters are located. What will happen to Facebook in its first full week of trading on the Nasdaq remains to be seen. As David Kirkpatrick, author of “The Facebook Effect — The Inside Story Of The Company That Is Connecting The World.“ said in a Tech Crunch interview:

…The thing about Facebook is it has more passionate users than any product I’ve ever heard of. And that is an odd thing for a public company, and it could mean it’s a very widely held stock.

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Photo by Craig Deakin

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7 comments

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7:24PM PDT on May 19, 2012

Thanks

3:49PM PDT on May 19, 2012

thanks

11:33AM PDT on May 19, 2012

how little you understand about Socialism. Socialism promotes the helping of all. Eduardo is only selfishly helping himself. {{{Eduardo Saverin, a co-founder of Facebook, renounced his U.S. citizenship last fall and the government thinks it's to avoid paying taxes on the billion dollar fortune he accumulated as an American.
Since he owns about 4% of Mark Zuckerberg's company, his stock is estimated to be worth $3 billion to $4 billion as of today and he won't have to pay $600 million in capital gains tax in the future.
In response to what many consider a slap in the face of America, two senators have proposed a new bill that would slap him back with a mandatory 30% tax on future capital gains AND bar him from reentering the country.

http://www.rawstory.com/rawreplay/2011/09/watch-elizabeth-warren-rebuts-class-warfare-charges/

“There is nobody in this country who got rich on his own,” Warren says in the clip, “Nobody.” She shoots down the notion that the wealthy owe nothing back to society by pointing out that entrepreneurs and business owners rely on a vast array of public services and that part of the “social contract” is giving back to the society that has given them so much.}}}

i'm quitting fb.

10:19AM PDT on May 19, 2012

Hay, where are all their Liberal Socialist friends? Big Obama supporter.

6:17AM PDT on May 19, 2012

Ian........they create wealth (for large company advertisers), but no product, therefore no smoke. Big deal.

5:48AM PDT on May 19, 2012

Growth without smoke in Menlo Park: Refreshing to see how new tech companies can create wealth (104B$). without toxic smoke. Many still relate economic growth to heavy industry. Not necessarily so.
Thanks Facebook!

5:23AM PDT on May 19, 2012

Thank you for the article...

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