Facebook IPO: Who Got Rich and Who Got Married
Facebook went public last week, after several months of preparing for this glorious moment in the life of every tech (and any other) company. A total of 421.2 million shares of Facebook were offered to the public on NASDAQ under the symbol FB – probably the most obvious ticker symbol ever.
Although it was announced like some historical event, Facebook’s IPO pretty much sank. Trading opened at $42 a share (coincidence?), opening share price was set to $38 and closed at $38.23 a share. Disappointing?
Keep It Real
Some analysts claim to know the reason why the stock price didn’t double or even triple: it was pretty realistic from the start. Sure, Facebook could have set its price to $10 a share, and have it worth probably $35-$40 at the end of the day – or – they could have set it to $100 dollars and sink even more. Mashable sums it up:
This assumes that a lot of thought went into that $38 price, and the reason that the stock didn’t double is that the esteemed underwriters at Morgan Stanley, J.P. Morgan Chase and Goldman Sachs did their job right and accurately priced the stock.
That, however, depends on what your definition of “accurately” is. James Brau, professor of finance at Brigham Young University, says that over the past 40 years of IPOs, the average first-day pop is 18%.
So, if Facebook was looking to perform along those lines, it should have priced its shares in the low 30s.
Is Social Media For Real?
You could say that Facebook’s IPO balloon burst on Friday. First the NASDAQ had to postpone the offering for about 30 minutes, and when the trading started, the prices went down. It’s completely understandable that old-school investors don’t really understand or trust a company which got its valuation up to hundreds of billions of dollars without making any actual product or something that you can actually buy, especially if it’s a young company like Facebook is.
If you take into consideration that a large number of users of Facebook are kids without any ability to pay for the service, you can see how those investors decided not to trust Facebook.
However, there are some people who trusted Zuckerberg enough to invest into his social network; they are now millionaires, when Facebook shared more than 500 million shares traded on the first day, The Next Web reports:
The Facebook IPO opened hot and heavy in trading on its first day, with an opening price of $38, a spike to $42 and a closing price of $38.37. According to CNBC, it also became the first IPO to see 500,000,000 shares change hands in the first day of trading.
Just 30 seconds after trading, some 82 million shares had changed hands, spiking to 100 million in just 5 minutes.
So, who are the fresh Facebook millionaires? Bono (yep, the U2 guy), whose Elevation Partners invested into Facebook. Eduardo Saverin, one of the co-founders is now worth about $2.7 billion. Sean Parker, the guy who invented the Napster, a popular P2P sharing network (and started the sharing revolution if I may add) has now $2.65 billion worth of shares. One of the earliest Facebook investors and a PayPal co-founder, Peter Thiel, now has a stake worth $1.7 billion.
It’s really amazing to follow a simple startup like Facebook was, expanding more and more and finally reaching its exit in a form of an IPO. There are some theories on why Facebook actually went public… They couldn’t figure out the privacy settings themselves. 😉
Will you trade with Facebook shares?
P.S. Congratulations to Mark for Facebook’s IPO and – let’s not forget – the wedding that followed the day after! The Forbes puts it nicely:
Mark Zuckerberg and Priscilla Chan are finally married after dating on and off for nine years, since the couple’s Harvard days.
