Saturday, June 16, 2012
Facebook’s I.P.O.: A Disappointing Debut
On May 17, as investors scrambled to buy shares, Facebook raised $16 billion in its initial public offering, at $38 a share, that valued the company at $104 billion. It was the third-largest public offering in the history of the United States, behind General Motors and Visa.
The next day, Mark Zuckerberg, Facebook’s founder and chief executive, rang the opening bell for the Nasdaq from the company’s headquarters in Menlo Park, Calif., surrounded by executives, engineers and other employees. Trading was delayed because of technical glitches at Nasdaq, and shares of Facebook, under the ticker FB, started selling to the public around 11:30 a.m., at $42.05.
But shares fell soon afterward, closing at $38.23, just 0.6 percent above the I.P.O. price. And in the days afterward, they kept tumbling, closing on the third day at $31, more than 18 percent below its offering price.
After a rocky three days, the company’s shares went up 4 percent, at $32.25. That was an improvement, but still down 15 percent from the initial I.P.O. price of $38.
Of course, the final story for Facebook’s stock has yet to be written. Amazon.com quickly tumbled after making its public market debut in May 1997, trading well below its offer price of $18 a share for several months. A year after the I.P.O., Amazon had roughly quadrupled, and on May 21 the shares closed at $218.11.