SAN FRANCISCO: Facebook shares fizzled on their first day of trade on the Nasdaq, erasing early gains of as much as 18 percent to trade close to their initial public offering price.
The stock opened 11 percent higher and rose to $45 (R375) before heading south in frenzied trade, touching its initial public offering price of $38.
The world’s biggest online social network raised as much as $18.4 billion in one of the biggest initial public offerings (IPOs) in US history.
After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company’s stock began trading at $42.05, compared with an IPO price of $38.
To rapturous applause from employees, Facebook chief executive Mark Zuckerberg – flanked by chief operating officer Sheryl Sandberg and Nasdaq chief executive Robert Greifeld – rang the bell to begin trading at the company’s Silicon Valley headquarters.
The 28-year-old billionaire founder hugged and high-fived Sandberg and other employees in celebration after he pressed the remote button.
The area outside Facebook’s offices at 1 Hacker Way was packed with throngs of photographers, more than 12 television trucks and a television news helicopter hovering.
“A 15 to 20 percent pop is in the realm of possibility,” said Tim Loughran, a finance professor at the University of Notre Dame, before the start of trade.
Some expected shares would rise by 30 percent or more yesterday, despite ongoing concerns about Facebook’s long-term money-making potential.
An average of Morningstar analyst estimates put the closing price for Facebook shares yesterday at $50. – Reuters