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It 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?
by jlft 14y ago
It 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.