Facebook's IPO splutters as bankers struggle to prevent first day loss

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Grand Master

Hum

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Facebook took eight years to stage one of the most anticipated initial public offerings ever. The anticlimax came Friday, as Wall Street bankers struggled to prevent the stock from ending its first day with a loss.

The stock had been widely predicted to soar on its first day. Instead, up until the closing moments of the trading session, Facebook's underwriters battled to keep it from slipping below its offering price of $38 a share. Such a stumble would have been a significant embarrassment, particularly for a prominent new issue like Facebook, the most heavily traded IPO of all time.

In the end, the bankers succeeded. When trading on Nasdaq ended at 4:00pm, the social network's stock was up just 0.6 percent at $38.23.

The roller-coaster day -- Facebook's shares started out jumping roughly 11 percent, before cooling off -- was also beset by trading glitches and a 30-minute delay in the opening of trading. Nasdaq OMX Group Inc. did not respond to requests for comment.

Facebook was also hurt by investors' high expectations of a healthy first-day pop in the price, according to people familiar with the matter. When that pop did not happen, it prompted a selloff, these people said.

That is when Facebook's underwriters had to step in to support the company's share price, people familiar with the matter said. In particular, lead underwriter Morgan Stanley was assigned to be the deal's "stabilization agent" -- meaning it was the firm's job to keep the shares above the offering price, these people said.

In that role, Morgan Stanley was forced to buy Facebook shares as the price slid toward $38 in order to prevent the price from crossing into negative territory.

Facebook's price began falling almost immediately after shares began trading. It is unclear exactly when Morgan Stanley stepped in, but traders said that the price movements throughout the day, with the shares occasionally touching the IPO price but never crossing below it, suggested the firm was active throughout much of the session.

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Grand Master

threetonesun

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Well, you want your IPO to open at the right price. They wanted $38, and they got $38, so they priced it right. The "pop" is to attract "investors", but it's possible Facebook went in not caring about that.

Be interesting to see what happens Monday, and where it is 6 months from now. The trend lately for .com IPOs is to not give them long to prove themselves.

Grand Master

Anibal P

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Sites like Facebook and Twitter are a cancer on society. Nobody talks face to face to people anymore.

Have you been outside lately? People suck in general, not that FB or twitter make it any better

  • TEX4S and Phouchg
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ShMaunder

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Sites like Facebook and Twitter are a cancer on society. Nobody talks face to face to people anymore.

I agree to some extent. Well, maybe not Twitter in my experience as I find that messages on Twitter are of a professional, advertising or celebrity purpose.

Though I found Facebook to be a replacement of social conversation back when I used it. Also, I built up too many "artificial" friends on there which at the time, I didn't realise until after I deleted it.

However, Facebook employees a lot of people and I certainly don't want it disappearing because they went public. I hope they carry on and bring out new services to the table.

Grand Master

FloatingFatMan

Posted
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Have you been outside lately? People suck in general, not that FB or twitter make it any better

Ever considered that at least SOME of the reason why people suck in general, is because they spend too much time staring at a computer screen and not interacting with actual people? We're breeding a new generation of people who just don't know how to socialise properly...

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