“Facebook Inc. shares got off to a rocky start in what has been the most highly anticipated initial public offering in history,” Joe Bel Bruno reports for The Los Angeles Times. “Facebook founder Mark Zuckerberg rang the Nasdaq opening bell from company headquarters in Menlo Park, Calif.”
“The stock jumped more than 10% in the first few minutes of trading. But then sellers swept into the market and that gain evaporated,” Bruno reports. “‘It’s a total disaster because the stock is trading right at the IPO price,’ said Francis Gaskins, editor of IPOdesktop.com in Marina del Rey. ‘They didn’t want that in a million years. A traditional IPO is up 10% or 15%.'”
Bruno reports, “The inauspicious opening suggests that retail investors paid close attention to reports of soft financials and big selling by insiders… There had been hopes that Facebook’s IPO would be a shot in the arm to the broader markets. But that too appears to have fallen by the wayside. Major U.S. stock indexes were all higher in the hours leading up to the public offering. Once Facebook shares began to weaken, however, so did the market.”
MacDailyNews Take: Facebook (FB) is currently trading at $38.13, +0.13, or +0.34%.
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Stephen Gandel reports for Fortune, “Add taxes to the potential reasons the social network’s stock didn’t pop in its IPO. The issue is the $4 billion dollars that will be owed by Facebook’s employees as part of their stock windfall in six months. That tax bill is almost certain to lead to a wave of forced selling of at least 100 million of the company’s shares, and quite possibly much more, within the next six months. The risk of all those shares flooding the market was likely a weight on Facebook’s offering.”
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Andrew Tangel reports for The Los Angels Times that Facebook underwriters are propping up the stock as it nears break-even marks: “The big Wall Street banks that brought Facebook public scrambled to prevent the stock from collapsing into declines.”
Tangel reports, “The underwriters averted a potential debacle by scooping up shares of the company during the Nasdaq debut. This propped up the stock, keeping it above the $38 offering price through most of the day. ‘When a deal gets priced and breaks price on the first day, that’s definitely a major embarrassment,’ said trader Andrew Frankel, co-president of Stuart Frankel & Co. “‘But it didn’t do that here – at least for the time being.'”
“The practice is pretty standard during IPOs, especially high-profile ones like Facebook. The big banks buy into a wave of selling as a way to prevent their customers from suffering big losses,” Tangel reports. “The stock bolted at the open to $42.05, but then quickly withered in the first hour of trading. It touched $38 several times, but eked out a small rebound…”
Read more in the full article here.
MacDailyNews Note: Next, Zuckerberg will be on the iPhone begging Cook for Ping integation.
Facebook: The new BOOM.BUST stock.
Watch and learn, again…
Facebook may be worth investing in sooner rather than later since the company continues to do a lot of groundbreaking IT innovation, and it tends to attract many of the smartest minds in the IT industry
Isn’t Facebook just myspace or bebo or whatever came before it? It’s nothing really new.