Facebook Loses Big Following IPO

By Steve Anderson May 21, 2012

There were some who believed when the Facebook IPO was still only set to occur, it was a stock largely trading on hype. And given that the stock price dropped as far as 25 percent from its trading range on Friday, they were probably not far from wrong.

Facebook's IPO, according to NASDAQ officials, was fraught with problems almost from the start, leading them to announce plans to change procedures involved in launching the IPO. In fact, there were reports that the only reason Facebook managed to close around the $38-per-share price was because of support from underwriter Morgan Stanley, who stepped in to defend the share price.

Without Morgan Stanley's support today, shares of Facebook lost as much as a quarter of their value at one point.

Some brokers, like analyst Frank Lesh of FuturePath Trading LLC in Chicago, described the Facebook stock as "not living up to the hype," saying that some may have pulled out from the highs in a bid to buy on the dips, as the practice is sometimes called, and wait for the stock to hit a more reasonable level where it has room to grow.

Others, like Chief Derivatives Strategist JJ Kinahan of TD Ameritrade, described an overall unfavorable environment for the Facebook stock, with lots of negative media coverage and plenty of investors pulling out as a result.

Moreover, Brian Wieser at Pivotal Research Group, came out with a serious warning for Facebook, both buyers and sellers alike: "Investors are increasingly aware of the risk embedded in the stock price,” he said. “There are real concerns about growth and advertisers' frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk."

His target price for the stock was $30 – a far cry from the opening valuation of $38 or the intra-day high of $45.

While the Facebook stock launch captured the imaginations of some traders, who no doubt remembered Google's, Microsoft's or even Apple's IPO, other traders likely recalled the host of Web-based businesses whose IPOs ended up cratering.

It remains to be seen just how Facebook's stock will do in the long haul, though, and those who bought shares may very well go on to scorn all those who scoffed in the early going.




Edited by Braden Becker

Contributing TechZone360 Writer

SHARE THIS ARTICLE
Related Articles

Consumer Privacy in the Digital Era: Three Trends to Watch

By: Special Guest    1/18/2018

Digital advertising has exploded in recent years, with the latest eMarketer data forecasting $83 billion in revenue this year and continued growth on …

Read More

CES 2018: Terabit Fiber - Closer Than We Think

By: Doug Mohney    1/17/2018

One of the biggest challenges for 5G and last mile 10 Gig deployments is not raw data speeds, but middle mile and core networks. The wireless industry…

Read More

10 Benefits of Drone-Based Asset Inspections

By: Frank Segarra    1/15/2018

Although a new and emerging technology, (which is still evolving), in early 2018, most companies are not aware of the possible benefits they can achie…

Read More

VR Could Change Entertainment Forever

By: Special Guest    1/11/2018

VR could change everything from how we play video games to how we interact with our friends and family. VR has the power to change how we consume all …

Read More

Making Connections - The Value of Data Correlation

By: Special Guest    1/5/2018

The app economy is upon us, and businesses of all stripes are moving to address it. In this age of digital transformation, businesses rely on applicat…

Read More