Stock debut fails to sizzle

Associated Press

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 initial public offerings 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 Mark Zuckerberg, the 28-year-old CEO, a stake worth $19,252,698,725.50.

“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 single-digit increase was somewhat of a letdown.

“This is like kissing your sister,” said John Fitzgibbon, founder of IPO Scoop, a research firm. “With all the drumbeats and hype, I don’t think there’ll be barroom bragging tonight.”

Added Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital:

“It wasn’t quite as exciting as it could have been,” he said. “But I don’t think we should view it as a failure.”

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.

Here was Facebook’s “timeline” Friday, trading under the symbol “FB” on the Nasdaq Stock Market:

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.

TD Ameritrade reported that in the first 45 minutes of trading, Facebook accounted for a record 24 percent of trades executed by its customers.

By comparison, on its first day back on the stock market, in November 2010, General Motors represented 7 percent of overall trades on the online brokerage.