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 anticipated IPOs in Wall Street history ended on a flat 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 has a market value of about $105 billion, 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 $19,252,698,725.50.
"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 for many seeking a big first-day pop in Facebook's share price, the increase of six-tenths of one per cent was a letdown.
Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital, said: "It wasn't quite as exciting as it could have been. But I don't think we should view it as a failure." The small jump in price 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 $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 $60 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 $16 billion and represented 15 per cent of the company's stock. Facebook got $7 billion, and the early investors $9 billion. The other 85 per cent of Facebook's stock is owned by Zuckerberg and other Facebook executives, employees and early investors. In comparison, Google offered just 7.2 per cent of its stock when it went public in 2004. Its stock rose 18 per cent on day one. (AP)
