Facebook IPO falls flat of expectations after hype
The IPO was the third-largest in U.S. history and valued eight-year-old Facebook at $104 billion.
The historic initial public offering of Facebook Inc. did not go as planned on Friday, as the social networking company's sky-high valuation combined with trading glitches left the stock languishing near its offering price at the market close.
Facebook shares began trading late Friday morning and opened 11 percent above the $38 offering price, but after peaking at about $45 slid rapidly at the end of the day to close at $38.23. The IPO was the third-largest in U.S. history and valued eight-year-old Facebook at $104 billion.
The surprisingly weak debut of a stock that analysts had predicted would climb between 10 and 50 percent is not likely to dent the business prospects of Facebook, which boasts 900 million users and is upending business practices and social relationships around the world.
But the unexpected developments were a clear setback for Morgan Stanley, the lead underwriter on the deal, which sources said was forced to defend the $38 price level by buying shares on the open market. Many market participants said they expected the stock to remain under pressure.
The offering also proved an embarrassment for the NASDAQ: the opening was delayed as the exchange struggled with a huge volume of orders, and for much of the day there were long delays in order confirmation.
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