Friday, June 22, 2018
Business

Little to like about Facebook's stock debut

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 Friday.

One of the most highly anticipated IPOs in Wall Street history ended on a bland note, with Facebook's stock closing at $38.23, up 23 cents from Thursday night's pricing.

That meant the company founded in 2004 in a Harvard dorm room is worth about $105 billion, more than Amazon.com, McDonald's and Silicon Valley icons Hewlett-Packard and Cisco.

It also gave 28-year-old chief executive officer Mark Zuckerberg a stake worth more than $19 billion.

"Going public is an important milestone in our history," Zuckerberg said before he symbolically rang Nasdaq's opening bell from company headquarters at 1 Hacker Way in Menlo Park, Calif. "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 first-day pop in Facebook's share price, the 23-cent increase was somewhat of a letdown.

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.

And it was good for ordinary investors, who are often shut out from IPOs or buy the stock at a high price on day one.

Facebook offered 15 percent of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2 percent of its stock when it went public in 2004 — and rose 18 percent on day one.

The stock opened at 11:30 a.m. at $42.05, but soon dipped to $38.01. It briefly traded at one point as high as $45 and by noon was at $40.40. It fluttered throughout the afternoon and hugged the $38 mark for much of the final hour before closing at $38.23.

By the end of the day, about 570 million shares had changed hands, a huge trading volume for any company.

Other social-media companies, most of whom have gone public in the last year, saw their shares plummet when it became clear what kind of reception Facebook was getting in the public market. Shares of gamemaker Zynga and reviews site Yelp both hit all-time lows.

The stock market will now begin assigning a dollar value to Facebook that will rise and fall with investor whims. It will be subject to broad economic forces and held accountable for how much it earns — or loses — from one quarter to the next.

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