To say the recent Facebook initial public offering of stock failed to impress is like saying the Titanic was a boat that sank.
The stock opened at around $38 and pretty much stayed there all day Friday. Today (as of this posting) the stock had fallen off its opening by about 11% to around $34 a share even though the wider market has risen more than 1%.
So, does this mean that Facebook is a major “fail” and the company is headed for doom? Not at all. In fact, already some are predicting the fact that the Facebook price has not dropped even further (some analysts predicted it would lose half its value after opening) is a sign of its strength. Also, the price of a company’s stock is hardly a sign of its ability to be successful.
Instead, a stock price has more to do with public perception. And public perception about social media in general is still decidedly a mixed bag. Some folks, in fact perhaps as many as half of all adults in the United States, still think it’s just a “fad” that is likely to go away sooner rather than later. So despite the hundreds of millions of dollars Facebook has accrued, and the 900 million people who use it every day, there are a good number of people who still just don’t get it.
Also, Facebook just bought Instagram for $1 billion. Instagram is a popular photo sharing iPhone (and now Android) app which has a handful of employees and no revenue. Facebook‘s exorbitant purchase price has some insiders questioning whether or not Facebook‘s leaders (Mark Zuckerberg in particular) truly know what they are doing and are the best candidates for leveraging the true power of the world’s largest social media network.
The fact is, you cannot judge a company its stock price. If that were true Apple would have been abandoned when its stock price was in the toilet not so long ago. Today that $15 “dog stock” is now worth $600 a share. That’s quite a turn around and more than enough proof for some to believe that Facebook is only just getting started.
How about you. What do you think of the Facebook IPO fiasco?
Though Facebook was one of the most highly anticipated initial public offerings in recent memory, the stock closed with a gain of just 23 cents on Friday after trading was delayed.
Shares barely breached $42 at their peak on Friday — which came at the start of trading — and spent most of the day floating between $40 and $42 each.
More than 80 million shares changed hands in the first 30 seconds of trading on Friday. Volume spiked to about 567 million shares by the end of the session, setting a new volume record for IPOs.
“When some people didn’t see a pop on day one, they got out,” said Nathan Drona, a senior vice president of equity research at ABR Investment Strategy.