Facebook goes public, stock takes a hike at $41 and closes at $38.23

Normal
0

false
false
false

EN-GB
X-NONE
X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:6.0pt;
mso-para-margin-right:0in;
mso-para-margin-bottom:0in;
mso-para-margin-left:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,”sans-serif”;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:”Times New Roman”;
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;}

After a long wait of almost half a year, Facebook went public on Friday at NASDAQ in New York City, NY. Mark Zuckerberg and company unleashed the most anticipated stock in the recent history at a face value of $38 a pop. There were over 400 million shares that changed hands on the first day of operations.

Trading under the name of FB at the biggest stock exchange in New York, the first day of the internet company was not at all disappointing, giving it an extra value in tune of $16 Billion, raising its worth to $104 Billion. The final results at the day’s end were promising to the social network as the estimated overall value by financial experts was touted to be in the range of $80 Billion to $100 Billion. The current company value at $104 Billion is 107 times greater than the profits it churned out last year, $3.84 Billion.

There were mixed reports suggest the success or failure of the company for various reasons that made sense. In the light of the recent IPO of internet-based companies like Zynga, LinkedIn and Groupon, FB’s IPO can be considered a success.

Zuckerberg has long resisted making his enterprise a publicly held entity but his strategy of initiating the IPO was ingenious. Most what is seen in an IPO, especially in case of a technology- or internet-based company, is that the prices are kept low to beef up trading at the expense of the company’s loss. Trading companies and investments make good profits on the underpriced stock. This has created dotcom bubble in the past and can still be seen to date. LinkedIn, for example, underpriced its stock at the IPO last year.

What Facebook did is that it kept the price at the highest possible level and gave the company a major capital boost.

JP Morgan Chase, Morgan Stanley and Goldman Sachs Group were the official underwriters of the IPO. These companies along with pre-holding shareholders and company insiders traded stock on Friday.

The stock changed hands at the maximum rate of $41 a share in the afternoon but took a dip back to $38. At the day’s end the operations closed at $38.23, 0.6 percent over the book value, giving the company an extra capital of around $16 Billion.

Short URL: https://www.newspakistan.pk/?p=22823

Posted by Usman Khalid on May 19 2012. Filed under Business, Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.