Facebook closes at—its IPO price?!First the scoreboard:
Dow: 12,369, -73.1, -0.5%
S&P 500: 1,295, -9.6, -0.7%
NASDAQ: 2,778, -34.9, -1.2%
And now the top stories:
- Facebook finally went public today. However, the IPO didn’t go flawlessly. After some delays at the NASDAQ, the stock opened at $42.05 at 11:31 AM, up 13 per cent from its $38 offering price. From BI’s Nicholas Carlson: “A theory from a source close to FB’s IPO bankers: The volume that caused NASDAQ to delay the IPO for more than a half hour, also prevented Nasdaq from informing big bank trading desks whether or not their trades on Facebook had gone through. This left trading desks in a position where ‘you don’t know whether you bought it, and you think you did at $42 but you’re not sure,’ says our source.”
- Facebook’s trading action was all but exciting. Shares traded as high as $45, but stayed near $40 for most of the day before tumbling to $38 on the dot during the last hour of trading. Many watched closely to see if FB would breach that $38 level. One trader forwarded us an image of the Facebook order book that showed a gigantic number of bids at $38, which certainly provided some support to the stock prices.
- Sure, Facebook shareholders would’ve loved to see the stock soar. But some experts wouldn’t exactly characterise this as a disaster. In fact, a stock that trades right at its IPO price is a stock that was efficiently priced. Thursday, NYU’s valuation guru Aswath Damodaran wrote: “I would be very surprised, if the stock were overpriced; the bankers and the company have too much too lose. I would be equally surprised if the stock were dramatically under priced; a pop of 50 per cent or even 25 per cent would reflect very badly on the bankers’ pricing skills. In short, this is shaping up to be a Goldilocks IPO.”
- A number of notable tech names tumbled. Groupon, LinkedIn, and Zynga all tanked.
- Meanwhile, in Europe, rumours circulated that German Chancellor Angela Merkel was in favour of a referendum on Greece’s membership in the eurozone, which echoed a move made by Greek Prime Minister George Papandreau. However, the German government quickly denied that.
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