Facebook Stock Falls
Facebook shares sank on Monday in the first day of trading without the full support of the company’s underwriters, leaving some investors down 25 percent from where they were Friday afternoon.
Facebook’s debut was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing but does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.
Without that same level of defense, its shares fell $4.50 to $33.73 in the first 1-1/2 hours of trading. That represented a decline of 11.8 percent from Friday’s close and 25 percent from the intra-day high of $45 a share.
“At the moment it’s not living up to the hype,” Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago said, adding that some people may have decided to hang back and buy the stock on the declines.
“Look at the valuation on it. It might have said ‘buy’ to a few people, but boy it was awfully rich,” he said.
The losses wiped some $19 billion off of the company’s market capitalization — not far from what Chief Executive Mark Zuckerberg was worth personally when the stock debuted.
The news was not all bad, though, as the Nasdaq rose 1.2 percent. High-profile tech stocks rose sharply, with Apple up 3.3 percent and Amazon 1.6 percent higher.
As the stock fell, there was a long list of questions — ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever — and few immediate answers.
“It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that’s the bottom line here,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.