t least Mark and Bono got their billions! Facebook's IPO doesn't live up to hype as stock closes only 23 CENTS higher than initial price
- 82million shares traded in first 30 seconds on market
- Zuckerberg's stake is valued at $19.1billion
Facebook’s much-hyped initial public offering fell flat by closing bell, finishing at only 23 cents more than its expected opening price.
Millions of new investors will be wary come next week amid fears as the $104billion initial public offering failed to match expectations.
Some market experts blamed trading problems and an anxiety-filled half hour where traders were having problems placing and cancelling orders for Facebook stocks.
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Ringing in: Facebook CEO Mark Zuckerberg, right, remotely rank the morning bell from Facebook HQ in Menlo Park, California; COO Sheryl Sandberg smiles as she watches
Happy moment: Zuckerberg signed a board at 6:30am local time at Facebook headquarters in Menlo Park, signifying Facebook's initial public offering
Face of a billionaire: Mark Zuckerberg grins after remotely ringing the Nasdaq's opening bell at the social network's headquarters
Status update: Shortly after ringing the morning bell, Zuckerberg added Nasdaq to his Timeline, listing several high-ranking Facebook staff
U2’s Bono, who owns a 1.5 per cent share of the social network, became the wealthiest rock star in the world, far surpassing former Beatle Sir Paul McCartney.
He earned an estimated $1.5billion today after investing $90million in Facebook in 2009.
Meanwhile, Zuckerberg – who owns 503.6million shares in his company – is worth an estimated $19.25billion and has become one of the wealthiest people in the world in a single day.
But as many people looked for a big first-day pop in Facebook's share price, the single-digit increase was somewhat of a let-down.
To IPOdesktop's Francis Gaskins, it means mom-and-pop investors are becoming 'much more educated and careful' about not buying into hype.
And he said that the banks taking Facebook public have learned from the 10 IPOs of social media companies in the past year and are better able to gauge how much stock to make available in an initial offering.
The closing price means Facebook is now worth about $105billion, more than Amazon, McDonald’s, and storied Silicon Valley icons Hewlett-Packard and Cisco.
Back to the beginning: The Times Square news ticker shows that Facebook fell back to its original price
A wash: A Nasdaq monitor shows stock before the closing bell; in late trading, Facebook shares were only a few cents above the company's initial public offering price of $38
Closing bell: Members of Internet Week closed out the market today in Times Square
It might not have been possible for the social network to live up to the hype that led up to its IPO.
It's Facebook, after all, a place where people are emotionally invested in endless online diversions and rekindled friendships, an endless depository of baby photos, favourite songs and fleeting memories.
Richest musician: U2 singer Bono surpassed Sir Paul McCartney in wealth after earning an estimated $1.2billion on Facebook's IPO
'It's probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome,' said Gartner analyst Brian Blau. While most Facebook users won't see a penny from the offering, they are all intimately familiar with the company.
'It wasn't quite as exciting as it could have been,' said Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital. 'But I don't think we should view it as a failure.'
However, a staggering 82million Facebook shares were sold within the first 30 seconds of trading today as the social network giant launched on the stock market with a value of $104billion.
Mark Zuckerberg rang the morning bell at 9:30 EST from Facebook headquarters in Menlo Park, California, to launch the second-largest IPO in U.S. history - and to instantly increase his personal wealth by as much as $20billion.
When trading began, shares were selling around 10 per cent higher than anticipated, around $42 per share, with 100million sold within the first five minutes.
By noon, trading had leveled out to the expected $38, and Facebook finished its first day on the market at a modest $38.23, only 23 cents higher than its initial estimated IPO.
Bull and bear: Facebook's IPO started high, at $42, dipping at its lowest point to $38, and leveling out at $39 by 3pm EST
Break even: The stocks jumped shortly after noon but quickly fell an hour before close
The small jump in price could be seen as an indication that Facebook and the investment banks that arranged the initial public offering priced the stock in an appropriate range.
It's also a supply and demand issue.
Facebook offered nearly 20 per cent of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2 per cent of its stock when it went public in 2004 - and rose 18 per cent on day one.
However, the $104billion valuation makes Facebook bigger than online rival Amazon, and far ahead of well-known institutions like Disney, Kraft, and even McDonald's.
Zuckerberg was perched on a stage at 6:30am local time outside of Facebook headquarters in what employees call 'Hacker Square,' and was joined by Facebook’s Chief Operating Officer Sheryl Sandberg, as well as dozens of other employees.
Appropriately, he turned to his creation to share the news, posting a status update that read: ‘Mark Zuckerberg listed a company on Nasdaq.’
He tagged Sandberg, as well as VP of Product Chris Cox, Cipora Herman, Dave Kling, and David Ebersman in the post.
By 11:32am EST, shares were officially on the market and opened at $42, a ten per cent increase from the estimated $38 opening.
Social network: Dozens of employees were there cheering and clapping as Zuckerberg signed the Nasdaq board
East Coast: Across the country in New York's Times Square, onlookers watch Zuckerberg after he rang the opening bell
Social network: People in Times Square take pictures of the historic moment
Initial trading: Facebook's share price opened at $42 - 10 per cent higher than expected
According to Mercury News, Facebook’s main campus was swarmed with news crews and their TV trucks as they awaited the historic moment.
Before the 6:30am morning bell, some employees could be seen blowing off steam on the treadmills, while others were continuing work or snacking.
Mercury News noted that the parking lot was full of both sports and luxury cars, and was being meticulously patrolled by private security guards.
Across the country, onlookers in New York gathered outside of Nasdaq's sign in Times Square to watch Zuckerberg remotely ring the bell.
Some were pictured capturing the moment on their smartphones, while others were happy to commit the event only to memory.
Zuckerberg, who created the website in his Harvard University dorm room in 2004, will have a stake worth an estimated $19.1billion - making him the 23rd richest person in the world at the age of 28.
As of this afternoon, his wealth is estimated at $20.76billion.
However, critics have questioned whether the valuation is too high for a company which had a turnover of $3.7billion last year and made profits of $1billion.
In contrast, Google had a market value of nearly $25 billion in 2004 when mainstream investors got their first chance to buy stock in the Internet search leader.
Now, the stock market will assign a dollar value to Facebook that will rise and fall with investor whims.
It will be subject to broad economic forces and held accountable for profit it earns -or loses- from one quarter to the next.
But Facebook is one a rare companies whose IPO transcends Wall Street's money lust.
It is a cultural touchstone for the way technology reshapes our lives.
Since its start as a scrappy network for college students, Facebook has come to define social networking by getting 900 million people around the world to share everything from photos of their pets to their deepest thoughts.
According to CNBC, There is a record-breaking demand for shares by small investors over any other IPO on record.
Before the initial trading, the business news channel predicted that individuals had the chance of obtaining as much as 20 per cent of Facebook’s public offering.
Game on: Reporters work in front of electronic screens during the IPO for Facebook at Nasdaq in New York
Good Friday: Passers-by walk by the sign for Facebook displayed at Nasdaq in Times Square ahead of the morning bell
Preparations: Two television reporters give live reports outside of Facebook headquarters just before Zuckerberg rang the bell
The IPO, expected to mint more than a thousand paper millionaires at the company, has received wall-to-wall media coverage and sparked hopes of a boom in sales of everything from San Francisco Bay Area real estate to automobiles.
Facebook employees marked the event with an all-night 'hackathon' at the company's Menlo Park, California headquarters starting on Thursday evening, a tradition in which programmers work on side projects that sometimes turn into mainstream offerings.
The $104billion valuation could rise by as much as 50 per cent in the first day of trading today.
The investment banks orchestrating the offering will sell the stock to their clients for a price of $38 per share, on the higher end of the expected offerings.
Facebook's stock began trading on the Nasdaq Stock Market under the ticker symbol 'FB'.
At $16billion, the size of the IPO is the second-largest for a U.S. company, behind Visa, which raised $17.86billion in 2008. Around 420billion shares have been made available today.
It will bring in many millions of dollars for Facebook's earliest employees, such as Mr Zuckerberg and co-founder Eduardo Saverin.
Food for thought: Facebook employees (from left to right) Vivian Wang, Robyn Morris, Russ Maschmeyer, Nathan Borror, Jasper Hauser, Brian Zeitler and Andy Chung enjoy some food by the fire
Up all night: Last night, Zuckerberg held a Hackathon at the Facebook Headquarters in Menlo Park California - the employees hold one every few months to generate ideas
No sleep: Hundreds of software engineers and technicians at the Facebook HQ held an all night 'Hackathon' fueled by crates of Red Bull
Beverage break: Some engineers took some time away from programming to enjoy a cold one
Heroes for a day: While some workers were seen in their daily wear, others decided to dress up for the occasion
Mr Saverin, who has courted controversy with the announcement that he is to give up his U.S. citizenship and settle in Singapore, defended his decision on Thursday.
He insisted in a statement: 'I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.'It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation.'
The IPO will also make U2 front man Bono, who owns 2.3 per cent of Facebook's shares, the wealthiest musician in the world – even over Sir Paul McCartney.
Music website NME reported that Bono’s share worth in the company hovers around $1.5billion, in addition to his existing wealth.
Sir McCartney is worth an estimated $1.05billion.
For the Harvard dorm-born social network that re imagined how people communicate online, the stock sale means more money to operate the data centres that hold the trove of status updates, photos and videos shared by Facebook's 900million users.
It also means more money to hire the best engineers to work at its sprawling headquarters in Menlo Park, California, or in New York City, where it opened an engineering office last year.
And it means early investors, who took a chance seeding the young social network with start-up funds six, seven and eight years ago, can reap big rewards.
Peter Thiel, a venture capitalist who sits on Facebook's board of directors, invested $500,000 in the company back in 2004.
He is selling nearly 17million of his shares in the IPO, bringing him around $640million.
The offering values Facebook, whose 2011 revenue was $3.7billion, at as much as $104 billion. Google, whose revenue stood at $38billion last year, has a market capitalization of $207billion.
There are a few reasons for the exuberance.
One is the IPO's sheer size.
Investor appetite for the stock will probably propel Facebook's valuation above some of America's most venerable firms.
Secondly, it's personal.
'It's probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome,' says analyst Brian Blau.
High five: Two Facebook employees share a happy moment outside of Facebook headquarters 12 in Menlo Park; many will become millionaires today
IFacebook's $104bn valuation will make it worth more than Hewlett-Packard and Dell combined - not bad for an internet start-up which began life in a university dorm room eight years ago.
But critics have said that the $38 share price is much too high for a company which made profits of just $1bn last year on a $3.7bn turnover last year.
In contrast, Google had a market value of nearly $25 billion in 2004 when mainstream investors got their first chance to buy stock in the Internet search leader.
Facebook's staggering market value makes it bigger than US manufacturing giants Ford and Boeing combined, and all the more incredible given that currently earns a fraction of what those ‘old world’ companies do.
With a valuation of more than 25 times its turnover, it is way out of kilter with stock market realities. In contrast, Google, worth almost $200bn is worth only six times its turnover.
But despite this investors will snap up Facebook shares today - based on the company's potential.
The chances of Facebook's stock doubling or tripling during the next five years look promising, given that the company is sitting on a gold mine of personal data prized by advertisers looking to peddle their products and services to the people most likely to buy them.
Apple debuted with a market value of less than $2 billion in 1980, while Microsoft took its bow in 1986 with a market value of less than $1 billion.
Facebook shares could easily soar today - and end the day 50 per cent above their $104bn valuation.
Last year, LinkedIn's shares rocketed from $45 in its IPO pricing to $122.70 within the first few hours of trading. A year later, the stock hasn't touched that price again.
But a month after the IPO, patient investors were able to snap up LinkedIn's shares for under $64. The stock has bounced back above $100, now that LinkedIn has proved it can be more profitable than analysts anticipated.
Forced out: Co-founder Eduardo Saverin (left) had his shareholding in Facebook diluted - however he still has a 4 percent share in the company worth $4.2billion. His departure was dramatised in the film The Social Network when he was played by Andrew Garfield (right)
HQ: The deal will enable the firm, based in Menlo Park, California, to engage in further expansion
BIGGEST WEB IPOs OF ALL TIME
Facebook Inc., IPO in May 2012, at least $16billion
Google Inc., August 2004, $1.67billion
Yandex N.V., May 2011, $1.3billion
Infonet Services Corp., December 1999, $1.08billion
Shanda Games Ltd., September 2009, $1.04billion
Zynga Inc., December 2011, $1billion
Giant Interactive Group Inc., October 2007, $887million
Renren Inc., May 2011, $743million
Groupon Inc., November 2011, $700million
Orbitz Worldwide Inc., July 2007, $510million
While most Facebook users won't see a penny from the offering, they are all intimately familiar with the company.
And the
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