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Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

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Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#61

Post by zred »

_zeo8 wrote: post #50

It started trading at $43.00 and ended at $38.23 which is a -8.39% loss. Why is the IPO price $38.00 if it started trading at $43.00?

Facebook's IPO was yesterday (while it started active trading today). If you were one of the blessed investors, you could buy the shares yesterday at $38. It seems like there were a lot of orders early today (probably entered in before Facebook started trading) that were executed early and by the time 3pm rolled around the pent-up demand had subsided.

So, this morning when it started trading, the first order seems to have been $42.05 (according to Google) with subsequent orders fluctuating from there. The LA Times is reporting (http://www.latimes.com/business/technology/la-fi-tn-facebook...) that the companies who underwrote the IPO (for example, Morgan Stanley) had to defend the price so that it didn't drop below $38 during trading today. Basically, one can do this by offering to buy shares at $38. That way, their clients who bought yesterday at $38 don't suffer a loss today as the stock is actively traded.

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#62

Post by Klinky »

tazzy531 wrote: post #16
gojomo wrote: post #10

Earlier quoted context omitted.

More evidence of artificial support, a tweet and screen capture from Paul Kedrosky: http://lockerz.com/s/209964861 It's easy to overlook the graphic; it's the thin black bar with faint text. It shows: Bid (size): 38.00 (x9999900) Ask (size): 38.01 (x146300) ...and the tweet referencing it was about 20mins before the close. The earlier tweet was: @pkedrosky: Watching certain underwriters try to keep certain IPOs above…

What's going to be interesting is how long they can hold this support. Banks can't take on too much risk on their books.. especially in the post Dodd-Franks world.

Didn't JPMorgan Chase just lose $3 billion? Seems like they're still a little too good at taking on risk.

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#63

Post by ben1040 »

[deleted] wrote: post #54
felipemnoa wrote: post #42

Stupid question: How much money did Facebook (the company) actually raise? A lot of shares where sold but not all of that money goes to Facebook. It goes to whomever was selling those shares.

[deleted]

A number of early investors sold some of their shares in this IPO.

Of note from this SEC filing (look at the "Principal and Selling Stockholders" heading), Zuckerberg himself put 30 million shares into the IPO, shares from some early angels were offered, Goldman Sachs offered half their stake, as did DST.

http://investor.fb.com/secfiling.cfm?filingID=1193125-12-235...

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#64

Post by fennecfoxen »

[deleted] wrote: post #54
felipemnoa wrote: post #42

Stupid question: How much money did Facebook (the company) actually raise? A lot of shares where sold but not all of that money goes to Facebook. It goes to whomever was selling those shares.

[deleted]

Facebook sold some new shares to raise money, but previous investors were also selling their shares through the IPO (including some insiders exercising stock options and then selling the exercised shares to cover the taxes). The SEC filings will tell you the grimy details.

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#65

Post by [deleted] »

rmATinnovafy wrote: post #33
dsil wrote: post #20

Earlier quoted context omitted.

Buying stock is generally about what you think will happen in the future, not what has happened in the past.

No, sir. Speculating is about what you think will happen. Buying stocks in a business is about buying into something that has shown to be profitable, and stable. Enough to exchange your hard-earned money for it. Read "The Intelligent Investor" by Benjamin Graham to gain a better picture of what investing really is.

[deleted]

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#66

Post by fennecfoxen »

mratzloff wrote: post #45
sukuriant wrote: post #29

Earlier quoted context omitted.

The more interesting thing is: "It didn't plummet like some people were expecting!!!"

Wait until employees start dumping their stock.

The flip side of that sentiment is "wait until a bunch of sector-specific ETFs and other mutual funds start buying their stock". You know, QQQ Trust, S&P500 index funds, et cetera.

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#68

Post by cookiecaper »

mratzloff wrote: post #38
loumf wrote: post #2

On the one hand, this indicates that the underwriters did a good job of maximizing FB private shareholder value on the IPO. On the other, the shape of the daily curve looks like it was supported at that level artificially. Even if not, it doesn't look like there's a lot of market confidence for it at this level.

> On the other, the shape of the daily curve looks like it was supported at that level artificially. Facebook's too big to fail!

The prospect of that reality is frightening. Facebook is so large now that if it went away the amount of civil discontent would be a point of concern for politicians (primarily if Facebook's disappearance gets pinned on them).

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#69

Post by gdubs »

state_machine wrote: post #17
loumf wrote: post #2

On the one hand, this indicates that the underwriters did a good job of maximizing FB private shareholder value on the IPO. On the other, the shape of the daily curve looks like it was supported at that level artificially. Even if not, it doesn't look like there's a lot of market confidence for it at this level.

This is the greenshoe option at work: When the price is determined, the shares are ready to publicly trade. The underwriter has to ensure that these shares do not trade below the offering price. If the underwriter finds there is a possibility of the shares trading below the offering price, they can exercise the greenshoe option. http://www.investopedia.com/articles/optioninvestor/08/green...

Ugh. What is it about finance that I find so hard to grok... So, essentially they're able to offer more shares than they originally agreed to, correct? Where do those extra shares come from, and how exactly does that help keep the price above water?

Re: Facebook closes at $38.23 first day NASDAQ trading, above IPO price $38.00

#70

Post by JamesPeterson »

zmj wrote: post #59
cletus wrote: post #55

I'm glad about this. If we had trading that quickly doubled or tripled the market cap then that may well be evidence of unsustainably high valuations (I hesitate to use the word "bubble" [1] as it's largely a baseless pejorative at this point). That being said, some say this is evidence of FB being fairly priced. I disagree on two points: 1. Pre-IPO investors expect an immediate return. Investment banks ("IBs") under…

Layperson question: what does it matter? What impact does Facebook's valuation have on its day-to-day business, now that they have the IPO cash in hand?

The shareholders control the board, and the board controls management. Thus, unhappy shareholders will mean new management.

In FB's case however, Zuck still controls (through proxy) the majority of votes; Zuck cannot be ousted.

There are other problems with a non-performing stock too; employee morale may be (and is increasingly?) tightly related to the share options they own. If management is not performing well and costing their employees money (!) that can ruin morale.

This doesn't just involve Facebook; currently the market is pretty bullish on web companies. It can quickly turn bearish, restricting the capital that currently flows so free.

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