Despite media hype and early projections for the initial public offering of Facebook stock, the IPO was a dud.
The national media predicted hundreds of millions of Facebook users would snap up the stocks in an uncontrolled feeding frenzy, making the IPO even more successful than Google and Apple's initial stock offerings.
But the forecasted estimates fell short of expectations, and the media was left with egg on their faces.
Initial stockholders (who bought into the company years ago) unloaded 421 million shares today for earnings of about $9 billion. CEO Mark Zuckerberg was among those dumping his shares today. He walked away with an estimated $1.15 billion -- on paper, at least.
Despite selling off his shares, Zuckerberg remains Facebook's biggest shareholder with 56% control over his company (503.6 million shares).
According to the LA Times, Wall Street underwriters were forced to save the stock from falling below the initial opening price of $38 by snatching up shares.
“When a deal gets priced and breaks price on the first day, that’s definitely a major embarrassment," said trader Andrew Frankel, co-president of Stuart Frankel & Co.
Problems started early for Facebook when NASDAQ reported delays processing the trades due to technical problems. The stock was set to begin trading at 11 a.m., but technical problems caused nationwide delays.
Many traders "backed away from trading Facebook because Nasdaq had such system issues,” according to a LA Times source.
The stock began trading at a peak of $42 (due to wealthy investors unloading their shares for a profit). But the price dwindling to below $38 before leveling off at $38.23 for the day -- way below early estimates.
Analysts predicted that the overinflated stock price, along with the announcement that General Motors pulled their ads from Facebook, would contribute to the poor performance of the Facebook IPO today.
Meanwhile, the Facebook IPO didn't rally the market as expected. The Dow Jones average closed down -73.11 (0.59%).
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