News Update :

Facebook falls flat in Market debut

Saturday, May 19, 2012


NEW YORK: Facebook stumbled in his introduction on the market looking forward to Friday, the shares ended barely above the offering price, damping optimism about the world's largest social network.

The shares, priced at $ 38 on Thursday in the largest ever initial public offering (IPO) for a technology company, has made a small gain of 0.61 percent to close at $ 38.23, amid volume record of more than 567 million shares.

Facebook stocks saw the roller coaster of action in what was one of the most highly anticipated in history.

Shares jumped 12 percent to $ 42.55 in Nasdaq opening trades, but in the minutes that falls on the offer price and despite a rally twelve o'clock closed almost flat.

"The negativity in the market as a whole has put a stop to the IPO," said Darren Hayes, a professor at Pace University and former investment banker.

"It is not uncommon in an IPO to see a sharp rise, then the prices go down, but I'm a little surprised after all the hype to see a small gain," he said.

"I think there may be some investors are skeptical that some of the challenges in the long-term prospects of the company."

Gerard Hoberg, an economist at the University of Maryland said there was enthusiasm for some buyers, but the skepticism of professionals.

"What I think happens is that you have a lot of bullish retail investors, people who use Facebook, and there are many of these investors creating a lot of buying pressure," he said .

Hoberg said the launch on the market "is not a disaster by any stretch, and you could also say that the owners of Facebook are very happy because they did not leave a lot of money on the table . But it will not be a pleasant taste in people mouth, if Facebook falls below $ 38 anytime in the near future. "

A report on the blog Financial Business Insider says that the price does not fall below $ 38 because of a large number of standing orders at the offering price. The Wall Street Journal reported that investment banks underwriting has also decided to support the price.

This brings up questions about trading Monday on Facebook.

James Hughes, market analyst at Alpari London said "the real value of Facebook is not likely to be known until the hype of the IPO has faded and investors were able to digest how the business will evolve to be the make money machine many expect it to be. "

Investors were hungry for a piece of Facebook, which became a worldwide phenomenon since its inception in 2004 as a project of Harvard student Mark Zuckerberg while Mark and his classmates.

Zuckerberg, wearing a hooded sweatshirt brand, remotely rang the bell to open Nasdaq, marking the historic share offer which confirms the growing importance of social networking giant.

"Going public is an important milestone in our history," Zuckerberg told the crowd on the corporate campus in Menlo Park.

"But here's the thing. Our mission is not to be a public company. Our mission is to make the world more open and connected."

Zuckerberg and hundreds of employees cheered as the 28-year co-founder struck by video for the New York-based Nasdaq. He wore a black hoodie, unfazed by criticism from some on Wall Street about his casual attire.

The first market was disappointing in comparison with some recent IPOs: technology social network LinkedIn has doubled from the first day last year and Groupon has jumped 30 percent. But Pandora rose a more modest 8.9 percent and Zynga has lost five percent on its first day.

Trip Chowdhry, who follows Facebook Global Equities Research, said the "dull" opening because Facebook did not respond to questions about how it will increase revenues and to adapt to the mobile Internet .

"Management can not sing and dance around key issues," he said.

The IPO valued Facebook staggering $ 104 billion market in its infancy.

He has raised more than $ 16 billion, making it the richest after the financial giant Visa in 2008, according to Renaissance Capital. The addition of a stock as possible "over-allocation" could boost the total to $ 18.4 billion.

Facebook has sold 180 million shares and investors at the beginning of the rest 241 million company.

With its current market value, Facebook is now among the most valuable U.S. companies, ahead of industry giants Amazon ($ 97 billion) and Cisco (89 billion), and more than twice the value of Ford Motor Co . (38 billion).

But it remains behind Google (201 billion) and Apple (498 billion).

Under the plan, Mark Zuckerberg held 55.8 percent of the voting shares of Facebook, and more than 18 percent of the value of the company.

One of the shadows hanging over Facebook's concerns about privacy.

Some consumer advocates and privacy say Facebook was too loose with user data, and we hope that as a publicly traded company, he can change his tune.

The net proceeds of the IPO of Facebook were about $ 6.8 billion. The rest of the money goes to insiders Facebook and others who have made early investments in the social network, and to cover the cost of IPO.

Facebook has posted a profit of $ 668 million last year as revenue vaulted to 1.06 billion.

- AFP
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