CHART OF THE DAY: Why Facebook Never Fell Below $38 Per Share

button more charts
button chart prev
button chart next

After a white-knuckle final 20 minutes of the day, shares of Facebook managed to just keep one nostril above $38, the level where the IPO priced last night.

Why did it never fall below $38?

Basically, because the underwriters of the IPO (Morgan Stanley, et. al.) bid heavily right at $38 to make sure there was no chance that selling pressure would drive the stock lower than that level. It would be an embarrassment if their clients lost money on their first day of the IPO.

The below table gives a good look at what’s going on.

On the left side, you see the “bids” that are in the market for the stock. Those are the offers to buy. On the right you see the “asks”, which are asking prices by sellers.

Note that next to each bid or ask there’s a “size” which is the size of the offer to buy or sell.

Note two things: At the top of the left column, you see lots of bids at $38.00 on variousĀ  trading platforms. (The BATS exchange, Arca, etc.). What’s more, the size of those bids are HUGE. Hundreds of thousands of shares compared to relatively tiny asks and bids everywhere else.

So basically, there were really big, honkin’ buyers ready to stand and protect $38, no matter what.

(Thanks to Twitterer @bourbon_meyer for the chart)

chart of the day, facebook stock performance, may 2012

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.