IPO values Facebook at $105B Firm's stock closes just 23 cents up from opening

NEW YORK -- After all the hype, Facebook's first day as a public company ended where it began. Its stock closed at $38.23, up 23 cents after pricing Thursday night at $38 per share.

After an anxiety-filled half-hour delay, Facebook stock began trading on the Nasdaq stock market for the first time as investors were finally able to put a dollar value on the company that turned online social networking into a global cultural phenomenon.

The stock opened at 11:32 a.m. at $42.05, but soon dipped to $38.01. By noon, it was up again at $40.40, a six per cent increase. It fluttered throughout the afternoon, but it never hit the double-digit jump many Facebook-watchers had expected. By the end of the day, more than 500 million shares had changed hands.

The closing price means Facebook is worth about $105 billion, more than Amazon.com, McDonalds and Silicon Valley icons Hewlett-Packard and Cisco.

But the single-digit increase was somewhat of a letdown.

"It wasn't quite as exciting as it could have been," said Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital. "But I don't think we should view it as a failure."

The small jump in price could be seen as an indication Facebook and the investment banks that arranged the initial public offering priced the stock in an appropriate range. It's also a supply-and-demand issue. Facebook offered nearly 20 per cent of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2 per cent of its stock when it went public in 2004 -- and rose 18 per cent on Day 1.

To IPOdesktop's Francis Gaskins, it means mom-and-pop investors are becoming "much more educated and careful" about not buying into hype. And he said the banks taking Facebook public have learned from the 10 IPOs of social media companies in the past year and are better able to gauge how much stock to make available in an initial offering.

It might not have been possible for the social network to live up to the hype. It's Facebook, after all, a place where people are emotionally invested in endless online diversions and rekindled friendships.

"It's probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome," Gartner analyst Brian Blau said. While most Facebook users won't see a penny from the offering, they are all intimately familiar with the company.

Earlier Friday, 28-year-old CEO Mark Zuckerberg smiled as he rang the opening bell from Facebook's headquarters in Menlo Park, Calif. Surrounded by cheering employees and wearing his signature hoodie, he pushed the button that signals the opening of the stock market in New York. The morning's events followed an all-night "hackathon" at the company, where engineers stayed up coding software and conjuring up new ideas for Facebook's 900 million users.

"Right now this all seems like a big deal. Going public is an important milestone in our history. But here's the thing: Our mission isn't to be a public company. Our mission is to make the world more open and connected," Zuckerberg said.

Afterward, employees tried to get back to business, building the company under immense new pressure to meet shareholders' expectations. The employees were given T-shirts that read "Stay focused & keep hacking."

On Thursday, Facebook and the investment bankers settled on a price of $38 per share. The company and its early investors raised $16 billion in the offering, which valued Facebook at $104 billion -- the most valuable U.S. company to ever go public.

Facebook is one of the few profitable Internet companies to go public recently. It had net income of $205 million in the first three months of 2012, on revenue of $1.06 billion. In all of 2011, it earned $1 billion, up from $606 million a year earlier. It makes most of its money from advertising.

-- The Associated Press

How other recent launches have fared

Facebook's public debut Friday was the most anticipated tech IPO since Google went public in August 2004. Here is a look at how the stocks of some recently public companies are faring. The companies are all loosely Internet-related.

-- Yelp Inc., developer of online games, first day of trading on March 2, 2012

Pricing: $15 per share

First day's close: $24.58, up 64 per cent from IPO price

Friday's close: $18.64, up 24 per cent from IPO price

Trading range since IPO: $18.64 to $31.96

-- Angie's List Inc., consumer-reviews site, first day of trading on Nov. 17, 2011

Pricing: $13 per share

First-day close: $16.26, up 25 per cent from IPO price

Friday's close: $13.07, up less than one per cent from IPO price

Trading range since IPO: $10.77 to $19.82

-- Groupon Inc., online deals company, first day of trading on Nov. 4, 2011

Pricing: $20 per share

First-day close: $26.11, up 31 per cent from IPO price

Friday's close: $11.58, down 42 per cent from IPO price

Trading range since IPO: $9.63 to $31.14

Republished from the Winnipeg Free Press print edition May 19, 2012 B5