Facebook Initial Public Offering

Facebook Initial Public Offering

The Facebook Initial Public Offering was gaining a measly 0.61%, to $ 38.23, from its starting price. Facebook’s first IPO day of trading on the Nasdaq did not give rise to the surge in the stock that some observers were anticipating.

By comparison, professional networking site Linkedln closed its first trading session up 109%. Social media video game publisher Zynga was down 5%.

At the start of the session, the Facebook stock was up 13% to US $ 42.99. The price then fluctuated, but never fell below its introductory level of US $ 38.

While many analysts predicted a crashing entry, investor restraint showed with slight disappointment. “The reaction is a little less good than we had hoped,” commented Gerard Hoberg, professor of finance at the University of Maryland. He estimates of 15% in the first days of a stock on the stock market.

IPO Timing

According to Darren Hayes, professor at Pace University and former investment banker, “the global negativity of the market put a snuffer on the deal.”

Others questioned the Nasdaq market, which delayed the first exchanges. Scheduled for 11 am, they finally took place around 11:30 am Facebook founder Mark Zuckerberg himself rang the Nasdaq opening bell remotely from the group’s headquarters in Menlo Park, California.

With the issuance of over 400 million shares on the Nasdaq, Facebook raised US $ 18.4 billion, becoming the highest-valued US company when it went public.

Facebook’s numbers

Created in 2004, the networking site boasts more than 900 million members worldwide, or nearly one in seven human beings. Eight years later, Facebook’s value reached $ 104 billion when it went public, ahead of as well Amazon, Disney and Kraft, which represents 104 times its profits of 2011.

Investor demand for its shares was such that after markets closed on Thursday, the company announced that the Nasdaq IPO price would be the top of its revised upward range earlier this week of US $ 38. the action. Initially, Facebook expected to sell its shares for between $ 28 and $ 35 per unit.

Facebook’s business model

However, Facebook’s business model is not perfect, among other things for its advertising revenue. Earlier this week, the automaker General Motors said it no longer wanted to advertise the networking site because its Facebook ads had little influence on car purchases.

Moreover, the growth of its online advertising revenue, which generates most of its turnover, has slowed in recent months. Facebook must also adapt to changes in Internet users’ habits with the growing popularity of mobile devices, such as smartphones and tablets.

“The growth of mobile use exceeding that of fixed terminals, monetization could decrease in the short term since the mobile allows little or no advertising, due to the limited size of the screens”, underlined last week a Susquehanna Financial Group study.

With information from Agence France-Presse, Associated Press, Bloomberg and Wall Street Journal

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