Facebook closed its first day of public trading Friday just a fraction above the opening share price of $38, dashing expectations that the social networking giant would ignite a buying frenzy among its millions of users.
In the largest-ever opening of a tech company initial public offering (IPO) in US history, Facebook shares opened just 10 percent higher than the offer price Friday morning and quickly slid back to
just above the $38 level amid wider negative sentiment on world stock markets.
Trading closed at 38.23 dollars, just 0.61 percent above its offer price.
Facebook's IPO valued the company at $104 billion. The stock is trading under the sticker symbol FB.
The day has started in a celebratory air as hundreds of Facebook
employees gathered at the company's campus to watch founder and CEO signal the start of the day's trading on the Nasdaq stock exchange by pressing a special buzzer.
In a gesture signifying the company's desire to remain true to its startup spirit, many of those attending the start of trading had participated in an all-night "Hackathon" designed to come up with new
products.
But glitches intervened as trading in Facebook shares was about to begin. The Nasdaq stock exchange was forced to delay the start of trading as its computerised system struggled to match the huge volume
of buy and sell orders.
When trading did start the opening price showed only a moderate bump to $42, but within minutes the stock price had dropped to $41 and was soon hovering at just below the offer price of $38. Analysts said that the IPO's underwriters had stepped in to buy shares to prevent the price falling below the IPO price on its first day.
Financial analysts had predicted a sharp initial rise in Facebook's share price, but warned that the price could quickly plummet if the company fails to increase revenues by developing effective advertising products targeting its more than 900 million users.
That prognosis was reinforced Thursday when many of the company's early investors said they were increasing the number of shares they were offering for sale, boosting the total shares on offer by some 25
percent to 421 million from the previous figure of 337 million.
Altogether the shares sold by the company and private investors raised $16 billion, with a further $2.4 billion coming from an over-allotment tranche.
Facebook last year made a profit of $1 billion on revenue of $3.4 billion, but recently warned that profits might suffer because of a migration of users to mobile platforms where advertising was less successful than on traditional computers. Further doubt was sown Wednesday when auto giant General Motors said it was suspending its advertising on Facebook citing its low effectiveness.
The stock launch marks a personal triumph for Facebook head Mark Zuckerberg, who launched the company in 2004 from his Harvard University dorm room and who still controls some 57 percent of Facebook's voting stock. His share in the company at the IPO was worth more than $19.1 billion.
