On May 18, 2012 many thought they were watching the tech bubble burst.
Facebook debuted on the stock market at $US38 per share, and after an agonizing first day with very little trading, the market closed with the social media company clinging to its valuation, CNN Money reported on that Friday.
In the days that followed, Facebook dipped. On Monday it closed $US4 lower than the IPO. Tuesday it continued to dive. For a hot and profitable tech giant, this was unusual, CNN Money wrote, as even unprofitable companies like Yelp scored boosts during their IPOs.
For many watching the industry, this spelled bad news. The New York Times called the IPO a disaster.
Fortune used such colourful words as “bungled” and “blunder” to describe the offering.
Fox Business predicted that the “Facebook fiasco” would discourage other tech companies from pursuing IPOs.
Forbes cautioned readers not to buy shares, saying “Facebook is hitting the IPO market at its zenith, and it has nowhere to go but down.”
And at the time, they weren’t exactly wrong. Facebook’s stock value continued to dive, losing another 10% over the course of that first month, the Times reported. High-profile tech IPOs did drop off.
However, Facebook did eventually climb up. Today, in 2014, the company reported earning close to $US1 billion per month for the last quarter. The stock is up to close to $US74 after hours.
But still, the earnings out of Palo Alto on Wednesday show just how bad some predictions can turn out. It’s safe to say this one is far from popped.