Priced to perfection or underwhelming: Facebook stock closes at $38
After intense build-up and a decent initial pop when the market opened, Facebook’s stock ended the day at $38.23.
Some analysts are calling the IPO a dud because the stock did not trade well above its offering price. Underwriters including Morgan Stanley, JP Morgan and Goldman Sachs had to prop up the stock to keep it above $38. However, the company and its early investors will be pleased that they did not miss out on an opportunity to sell shares at a higher price to begin with. Facebook raised $16 billion at more than $100 billion valuation.
Because of unprecedented demand, the Nasdaq delayed trading by about 30 minutes. Once the floodgates were opened, Facebook shares hit $42. The stock hovered around the $40 range most of the day before falling in the final hours of trading. Overall, the Nasdaq was down 1.24 percent today. The Dow and S&P also finished down, as they have all week. Other social media stocks, including LinkedIn, Yelp and Groupon, ended the day on a low note. Zynga fared especially poorly because of its deep connection with Facebook. The social gaming company hit all-time lows that triggered halts on trading this morning.
Despite what some might see as a weak performance, Facebook traded 566 million shares today, the most ever for a U.S. stock the day of its IPO. The social network displaces GM as the record holder since 2010. Coincidentally, GM was in the news this week questioning the effectiveness of Facebook advertising and suggesting it would cut its $10 million paid media budget for the site. The Wall Street Journal followed up today with a report that GM would also cut its Super Bowl spend, implying the company is struggling outside of social media as well. Many advertisers across industries say they are increasing their spends on Facebook, even if they aren’t always able to quantify the results. Facebook will need to continue to develop its ad model and provide advertisers with the assurance that their time and money is well-spent on the social network. However, the company has a number of options for future growth, including a fledging payments business, which could make the stock a better long-term investment than immediate boon.
Perhaps as part of a continuing effort to show that it is focused on its product not its stock performance, Facebook announced after trading hours ended that it had acquired mobile commerce and gifting company Karma. Critics often point to Facebook’s uncertain future in monetizing mobile use. Whether the acquisition gives some investors any new confidence in the company may be reflected in how the stock performs on Monday.
The official total of the IPO today was $16,006,877,370 with about $6.8 billion going to Facebook itself, $9.1 billion going to selling stockholders and $176 million going to the underwriters. Here is a breakdown of how many shares each underwriter was granted to sell today, according to Facebook’s latest regulatory filing: