22 May, 2012

Facebook shares fall 20% from IPO debut

Shares in Facebook, the social networking giant that debuted its stock last Friday, fell on its second day of trading, closing down at $34.03.

Facebook’s new investors were disappointed after the stock opened at $42.05 on Friday, but quickly fell to its issue price of $38, and then closed below the price at which it floated at $34.03 per share on Monday. The share price therefore fell 9.08% on Friday and 10.99% on Monday.

Meanwhile, investors are accusing facebook of taking advantage of enormous demand and for selling its shares at an inflated price. Last Thursday’s $16 billion listing came at the top of its projected price range, marking it as the biggest technology IPO ever. More than half of the capital raised went to pre-IPO shareholders, including Facebook’s founder Mark Zuckerberg, the venture capital firm Accel Partners and Goldman Sachs.

However, despite the controversy, experts believe that Facebook looks to live up to expectations after its long-awaited stock market debut. “A good IPO is where you sell it at the highest price that assumes orderly trading and liquidity in the market afterwards”, one commented.

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