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Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00
- loumf 14y agoOn the one hand, this indicates that the underwriters did a good job of maximizing FB private shareholder value on the IPO. On the other, the shape of the daily curve looks like it was supported at that level artificially. Even if not, it doesn't look like there's a lot of market confidence for it at this level.
- earl 14y agohere's the pricing chart for today [1]. What makes you think it was supported -- the flat line beginning at 334 pm? [1] http://finance.yahoo.com/echarts?s=FB+Interactive#symbol=fb;range=1d;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined http://finance.yahoo.com/echarts?s=FB+Interactive#symbol=fb;...;
- loumf 14y agoYes, that and the rally at almost exactly that level a little before 12pm
- kami8845 14y agoThere's also similar things going on around 40. Any chance they tried to hold the round 10?
- maayank 14y agoIt was supported: http://www.businessinsider.com/chart-of-the-day-why-facebook-never-fell-below-38-per-share-2012-5 http://www.businessinsider.com/chart-of-the-day-why-facebook... A possible reason why it reached 38 in the first place: http://www.businessinsider.com/why-facebooks-ipo-pop-fizzled-nasdaq-isnt-telling-desks-if-they-got-their-stock-2012-5 http://www.businessinsider.com/why-facebooks-ipo-pop-fizzled...
- sks 14y agoWell the price did come very close to $38 several times (twice before 12:00 and then during the flat part at 3:34 that you mentioned) but the price never crossed below $38. This does show a lot of resistance/support at $38
- encoderer 14y agoYes, of course, because the underwriters in an IPO act as market-makers at the IPO share price. That's their function in exchange for making an obscene profit taking a company public.
- nextparadigms 14y agoI watched it go to down to 38.00, and then went up again 0.01, 0.02, etc, slowly. I don't think it dropped at all under 38.00, and it was most likely manipulated.
- deleted 14y ago[deleted]
- uptown 14y agoIt was unquestionably held up by underwriters ... unlikely to continue into next week.
- gojomo 14y agoMore evidence of artificial support, a tweet and screen capture from Paul Kedrosky: http://lockerz.com/s/209964861 http://lockerz.com/s/209964861 It's easy to overlook the graphic; it's the thin black bar with faint text. It shows: Bid (size): 38.00 (x9999900) Ask (size): 38.01 (x146300) ...and the tweet referencing it was about 20mins before the close. The earlier tweet was: @pkedrosky: Watching certain underwriters try to keep certain IPOs above their issue price reminds me of playing Missile Commander, at scale. Still, this isn't necessarily a negative for Facebook. They optimized their take, and Zuckerberg won't be needing the market's approval or capital again for a while.
- tazzy531 14y agoWhat's going to be interesting is how long they can hold this support. Banks can't take on too much risk on their books.. especially in the post Dodd-Franks world.
- state_machine 14y agoThis is the greenshoe option at work: When the price is determined, the shares are ready to publicly trade. The underwriter has to ensure that these shares do not trade below the offering price. If the underwriter finds there is a possibility of the shares trading below the offering price, they can exercise the greenshoe option. http://www.investopedia.com/articles/optioninvestor/08/greenshoe-option-ipo.asp#ixzz1vFsh1DfT http://www.investopedia.com/articles/optioninvestor/08/green...
- AndyIngram 14y agoNo its not. Over allotments are to stabilize the lack of sellers above the offering price and to raise additional capital for the issuer. It could be a reason for the price returning to $38 but most likely that was not why either. The buys at $38 can be explained by other factors like orders from people or funds who did not get all or any of their requested allotments and had resting orders at 38. Overall the markets are skittish and the price range is high based on current earnings but there is so much potential future earnings, I think we will see much higher prices if not right away some time in 2013.
- squeee 14y agoSo... get short on FB?
- AndyIngram 14y agoThat's your choice.
- gdubs 14y agoUgh. What is it about finance that I find so hard to grok... So, essentially they're able to offer more shares than they originally agreed to, correct? Where do those extra shares come from, and how exactly does that help keep the price above water?
- hiddenstage 14y agoIt beat the market. Not saying it will over the short/long term, but it went up on a day the majority of the market went down.
- Cyndre 14y agoWhere do you think the billions used to buy facebook stock came from?
- mratzloff 14y ago> On the other, the shape of the daily curve looks like it was supported at that level artificially. Facebook's too big to fail!
- cookiecaper 14y agoThe prospect of that reality is frightening. Facebook is so large now that if it went away the amount of civil discontent would be a point of concern for politicians (primarily if Facebook's disappearance gets pinned on them).
- shangrila 14y agoThe flipside of that of course is that they can pass whatever draconian regulations they want in regards to the internet, so long as Facebook gets a free pass and is allowed to keep chugging along. Surprised they didn't do that already for things like SOPA.
- cookiecaper 14y agoFacebook would in practice get a free pass on things like SOPA. AFAIK SOPA left discretion up to whatever agency would have been charged with enforcement (likely ICE or SS), so reports asking for the removal of Facebook would, of course, never be allowed, but reports on any/all of FB's competitors would go through. That is one of the reasons lobbying is such an important game for conglomerates. Once you're on top, regulation is your friend; it's much cheaper to hire paper-pushers to fill out forms and submit them to the feds than it is to actively respond to and dismantle competitors. If only MySpace had gotten something like this in place a little sooner, FB would have been destroyed and MS would still be on top.
- joshz 14y agoThey did. http://www.bloomberg.com/news/2012-05-18/facebook-underwriters-said-to-support-stock-at-near-38-a-share.html http://www.bloomberg.com/news/2012-05-18/facebook-underwrite...
- rorrr 14y agoI really don't get why FB is valued that much. If you look at their revenues, net income, quarter-to-quarter growth, the stock should be at $5.50. Seriously, look at GOOG, compare it to FB. You must be insane to buy FB.
- wanderful 14y agoThe question for many investors isn't in the current figures so much as what are the future figures likely to be and how that compares to the current figures.
- rorrr 14y agoTrue, but if the company is not really growing, how can you expect the future figures to go up? FB is really stuck, they have no fucking idea what to do with all the users. FB ads don't work. The only way FB will survive is if they start selling shit directly on their pages, highly targeted, Amazon-level goods and prices.
- dsil 14y agoBuying stock is generally about what you think will happen in the future, not what has happened in the past.
- swasheck 14y agoBut isn't the future based, at least in part, on what's happened in the past?
- rmATinnovafy 14y agoNo, sir. Speculating is about what you think will happen. Buying stocks in a business is about buying into something that has shown to be profitable, and stable. Enough to exchange your hard-earned money for it. Read "The Intelligent Investor" by Benjamin Graham to gain a better picture of what investing really is.
- 14y ago
- EternalFury 14y agoThey got a lot of capital to play with. What they do with it will determine if they can build a business that is worthy of such a high valuation. They are currently priced as if they were bound to run a highly profitable business. Now, reality must catch up with the dream and promises.
- craze3 14y ago"The stock closed Friday at $38.23 — just 23 cents above its IPO price" Just wanted to point out that FB did NOT close at $38.02, though I think that would've been hilarious.
- its_so_on 14y ago(EDIT: Earlier this title read "barely above it's IPO price". It definitely used this word, "barely". My comment is now moot. I'm leaving it due to the replies.) what is with this title? It sounds like it's saying sullenly, "a year later, Facebook is barely above its IPO price". OF COURSE IT'S TRADING AROUND ITS IPO PRICE, GIVEN THAT IT'S JUST IPO'D. I mean, of ALL the times a company could be trading at its IPO price, don't you think the IPO date is the least notable? Yeesh. Incidentally, the submitter and I also have a VERY different definition of 'barely.' $0.23 in a day means $230 per 1000 days. At that rate, investing at $38 sounds like a steal to me! A better title might be "Facebook stock up already!"
- RobAtticus 14y agoConsidering many recent tech IPOs have ended up much higher on their opening day, AND Facebook was highly anticipated, it is surprising that Facebook barely gained anything on its opening day. In fact, if not for the underwriters, it might not have gained anything at all.
- fl3tch 14y agoWhat great world we would live in if all stocks increased that linearly.
- sukuriant 14y agoThe more interesting thing is: "It didn't plummet like some people were expecting!!!"
- shock-value 14y agoIt quite possibly would have if the underwriters hadn't been propping it up. Next week, when they stop buying up shares to keep it at $38, will be the real test.
- mratzloff 14y agoWait until employees start dumping their stock.
- faramarz 14y agoI read earlier that the underwriters were forced to buy large amounts to keep the price above the IPO. It could have been much lower!
- fusiongyro 14y agoWait until next week. It'll happen.
- chintan 14y agoFB: $38.00, May 18th 4:19 ET http://i.imgur.com/QP12D.png http://i.imgur.com/QP12D.png
- waterlesscloud 14y agoSo how does this ripple out? My (amateur) thought is that it means the end of billion dollar valuations for companies with no revenue whatsoever. Which will have the effect of pushing all valuations down. Which is maybe not a bad thing, overall. Will it mean less actual funds raised? Or similar amounts, just at notably lower valuations (and thus for a greater percentage of shares)?
- kjemperud 14y agoSo what about the cancel/change orders being stuck in limbo the entire day? I was unable sell $fb because of this. Tried to dump them at 41.50, but because one cannot "trade with oneself" I couldn't. Heads should be rolling at Nasdaq by now...
- shangrila 14y agoThis is why you do not play the IPO game unless you are an insider (underwriter or early investor of the company in question). You will lose. They will see to it. And you will have no recourse, as they are in bed with the regulators.
- deleted 14y ago[deleted]
- mtkd 14y agoWait until the engineers leave to become VCs.
- typicalrunt 14y agoThe after-hours charts are interesting. The stock price is bouncing around the $38.23 range (+/- $0.03), but even marketwatch.com is showing some jumps up to the $40 range.
- btbuilder 14y agoafter hours trading is not a great thing to try to trend with because the volume is so low.
- felipemnoa 14y agoStupid question: How much money did Facebook (the company) actually raise? A lot of shares where sold but not all of that money goes to Facebook. It goes to whomever was selling those shares.
- deleted 14y ago[deleted]
- ben1040 14y agoA number of early investors sold some of their shares in this IPO. Of note from this SEC filing (look at the "Principal and Selling Stockholders" heading), Zuckerberg himself put 30 million shares into the IPO, shares from some early angels were offered, Goldman Sachs offered half their stake, as did DST. http://investor.fb.com/secfiling.cfm?filingID=1193125-12-235588&CIK=1326801 http://investor.fb.com/secfiling.cfm?filingID=1193125-12-235...
- fennecfoxen 14y agoFacebook sold some new shares to raise money, but previous investors were also selling their shares through the IPO (including some insiders exercising stock options and then selling the exercised shares to cover the taxes). The SEC filings will tell you the grimy details.
- debacle 14y agoWe saw ~125% volume today, meaning that 125% of the shares that were for sale were sold (some were obviously sold twice. I would assume this means that all of the stock was sold, meaning, with a valuation of ~104 at close, Facebook raised ~16 billion.
- jlft 14y agoIt started trading at $43.00 and ended at $38.23 which is a -8.39% loss. Why is the IPO price $38.00 if it started trading at $43.00?
- debacle 14y agoI believe the issue price was technically 38.00.
- zred 14y agoFacebook's IPO was yesterday (while it started active trading today). If you were one of the blessed investors, you could buy the shares yesterday at $38. It seems like there were a lot of orders early today (probably entered in before Facebook started trading) that were executed early and by the time 3pm rolled around the pent-up demand had subsided. So, this morning when it started trading, the first order seems to have been $42.05 (according to Google) with subsequent orders fluctuating from there. The LA Times is reporting (http://www.latimes.com/business/technology/la-fi-tn-facebook-trading-20120518,0,6622700.story http://www.latimes.com/business/technology/la-fi-tn-facebook...) that the companies who underwrote the IPO (for example, Morgan Stanley) had to defend the price so that it didn't drop below $38 during trading today. Basically, one can do this by offering to buy shares at $38. That way, their clients who bought yesterday at $38 don't suffer a loss today as the stock is actively traded.
- cletus 14y agoI'm glad about this. If we had trading that quickly doubled or tripled the market cap then that may well be evidence of unsustainably high valuations (I hesitate to use the word "bubble" [1] as it's largely a baseless pejorative at this point). That being said, some say this is evidence of FB being fairly priced. I disagree on two points: 1. Pre-IPO investors expect an immediate return. Investment banks ("IBs") underwriting IPOs will be selling those shares to their most valued clients (in large part). Those clients expect an immediate return. Also there is a nontrivial number of "stag" investors in IPOs (investors who do first-day sales to trade on this bump); 2. The IPO itself can in large part in set the tone. A stock that jumps 50% on IPO sets expectations as a stock that's going places. A stock that drops can have everyone for the hills and a stock that's level can just make everyone nervous (becoming a prisoner's dilemma); 3. There's evidence the IBs are propping up the stock at issue price levels; and 4. Current investors will have a lock-out period from selling. This may be 6 or 12 months. Whatever the case, if supply meets demand now then extra supply suggests a price drop may be coming when that lock-out period ends. Consider this: Even Groupon jumped 25% on first-day trading. Now I'm not predicting doom and gloom here. In all honesty I have no idea what will happen with the stock. I do consider it a high-risk investment at this point and personally I wouldn't touch it. YMMV. It may still be spectacularly well. OTOH it could be the Beijing Olympics of the tech sector (the Beijing Olympics being essentially the turning point of the economy in 2008). Trading at a P/E of ~100:1 is high risk. Make no mistake. Facebook has important strategic issues they need to deal with. Anyway, to those early employees, congratulations. This will change the life for many (and already has). I'm particularly glad to see that Zuck didn't pull a Pincus [2]. This speaks highly of him IMHO. [1]: http://news.ycombinator.com/item?id=3987892 http://news.ycombinator.com/item?id=3987892 [2]: http://online.wsj.com/article/SB10001424052970204621904577018373223480802.html http://online.wsj.com/article/SB1000142405297020462190457701...
- aufreak3 14y agoHaving read Dan Ariely's post about "a note to Zuckerberg..." (http://danariely.com/2012/05/16/the-facebook-ipo-a-note-to-mark-zuckerberg-or-with-friends-like-morgan-stanley-who-needs-enemies/ http://danariely.com/2012/05/16/the-facebook-ipo-a-note-to-m...), I think the title better rephrased as "facebook IPO succeeds in not 'popping'..." instead! Edit: I would summarize the post, but I would then spoil some of the drama of reading it as written.
- gamble 14y agoTraditionally, the point of an IPO was that it let the company raise more money than private investors could provide, so that the company could fund further growth. It's hard for me to see what opportunities this IPO opens for Facebook. They were already extremely well-funded. They already saturate their niche. It seems like the most likely consequence is that it will lead to early employees cashing out and moving on, while the only possible use for the billions raised are the kind of acquisitions that history shows rarely result in a net gain for the acquirer.
- adventureful 14y agoWith $12 billion or whatever they're keeping out of the $16 billion, plus the $4 billion on hand, I guess they could try to eat Twitter if they get really bored. But you're right, the extra $12 billion doesn't do much for them, other than perhaps provide defense capital for patent problems (it'd take a helluva patent problem to start eating multiple billions though). Wall St. will now expect an annual profit, so even using the cash to grow the company massively with new costs (employees, buildings, etc.) will be frowned upon. They'll obviously still be expected to operate moderately within their cash flow means.
- encoderer 14y agoBut the reason they had so many billions cash on hand was the huge round they rased last year via Goldman Sachs. Investors certainly participated in that with the expectation that they could exit with profit in the near future. In other words, they took a payday advance (with very generous terms to the borrower). You still need the payday.
- nirajd 14y agoNASDAQ glitched all day.. Scottrade, Fidelity, and other brokerages were unable to place orders.
- btbuilder 14y agoApart from the 'blessed' investors who purchased before the stock started trading on Nasdaq, everyone who bought FB lost money today.