What little momentum Facebook felt on Nasdaq on Friday (NASDAQ:FB) was washed away over the weekend, because the company's stock plummeted more than 11% in the first few minutes of trading today, breaking below its $38 IPO price and hovered in the $34 range.
It looks as though the stock that was advertised as unsinkable is just as vulnerable as the Titanic.
Investors and technology industry watchers are closely tracking the Menlo Park, Calif.-based company’s shares because of how highly-anticipated this IPO was. With 461.2 million shares for sale in order to raise a hair more than $16 billion, Facebook definatley made its big splash on Wall Street -- but what water investors were excited about, dried up rather quickly.
Even the market debut for the social networking giant had some problems getting on the trading floor, since Nasdaq delayed the company trading for a half hour and issues with traders’ orders.
Nasdaq’s chief executive, Robert Greifeld, said he was “humbly embarrassed” by the technical missteps, brought on the record volume of trading that occurred in the moments when Facebook was ready to debut. The exchange has since announced that changes are in the works to adjust how it will handle initial public offerings in an effort to avoid problems in the future.
The stock closed Friday just 23 cents above where it priced Thursday night, only getting a 13% pop out of the gate, almost all of which was gone by the closing bell.
Analysts are pointing to the underwriters (led by Morgan Stanley), with a general consensus that the price range should not have been bumped up to $38 from the previously anticipated $34.
Sterne Agee analyst Arvind Bhatia said earlier this month that he expects the company's shares to increase to $46 over the next year.
Bhatia also referred to Facebook's Friday performance as "a little bit surprising and disappointing," but added, "At the same time, you could give kudos to the underwriters because they priced it pretty close to where it's trading."
Facebook wasn't alone, however, in feeling a drop Monday.
Other companies in the social networking space, extended the losses they saw on Friday, again, early on Monday.
Also Pandora, the internet radio service, lost 1.8% to $9.59 -- and Groupon, felt a 1.5% drop to $11.47 in the first 30 minutes of trading Monday.
(Image Source: sixhorizons.com)