Facebook Shares See Modest Debut
Facebook shares ended their first day of trading at US$ 38.23, barely above the company’s initial pricing of US$ 38.
Shares in the social network rose more than 10% to US$ 42 within minutes of trade beginning, before quickly falling back.
Later gains were wiped out too at the end of a volatile day’s trade, as the firm’s debut on the Nasdaq exchange was also delayed by a technical glitch.
Mark Zuckerberg, 28, who started Facebook while at university, remotely opened trading on the Nasdaq earlier.
He appeared via a video link from a celebration at the firm’s headquarters in California.
The US$ 38 share price values the eight-year-old social network site at US$ 104 billion.
There had been a delay of about half an hour in the start of trading in Facebook shares, caused by a technical problem, which analysts say reflected the huge demand for the stock.
During this time, investors were unsure whether their buy and sell orders had actually gone through. The Nasdaq later said it intended to reach a resolution for orders entered in that period through an “offline matching process”.
When trading did get underway, more than 566 million shares in the company changed hands, a record volume for US market debuts.
‘Tripped on red carpet’
Most analysts had expected the shares to experience a first-day bounce.
“This starlet tripped on the red carpet. That’s clear,” said Max Wolff, senior analyst at Greencrest Capital.
He added that the only reason the shares did not fall below the offer price was because underwriters stepped in to buy the stock.
“This is exactly what the underwriters are supposed to do. However, if the company is trading near $40 with assistance then the implied valuation is lower.”
Strong demand in the run-up to the flotation had led the company to increase both the price and the number of shares available for sale.
The initial public offering (IPO) of the shares is the third-largest in US history, after the financial giant Visa and General Motors.
Facebook’s US$ 104 billion valuation means the social network site is worth about the same as internet shopping giant Amazon, and more than the value of stalwarts such as Disney.
Profits and privacy concerns
The site is largely used for social updates, and although Facebook has said its use on mobile devices are the key to new profits, analysts question how much room there is for advertising on such platforms.
Via BBC News.
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