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article imageFacebook day 2: Early trading shows shares drop below IPO price

By Leigh Goessl     May 21, 2012 in Business
After Facebook's highly anticipated and heavily watched stock market debut this past Friday, the second day of trading isn't shaping up to be so hot in the early morning hours.
Several media reports surfaced before 9 a.m. that indicated the price of Facebook stock tumbled down between 7 and 13 percent, depending upon which report you read.
According to the Associated Press, Facebook had closed on Friday at $38.23, only 23 cents above its initial price.
The New York Times reported that as of 10:08 a.m., Facebook's stock was down more than 10 percent, trading around $34 a share; the IPO had opened at $38.
Several media reports noted the banks that underwrote the IPO for Facebook ended up buying stocks on Friday to ensure the stock closed above its initial offering price. Whether the banks step in again today remains to be seen.
Reportedly, there were some technical glitches on Friday with Nasdaq, but it indicated that this had no impact on Facebook trading, and that Facebook's stock was aligned to other market trades. Although, the AP reported the U.S. Securities & Exchange Commission (SEC) is investigating any problems which may have occurred.
Facebook had been a long speculated and awaited IPO, with lots of hype. Only time will tell whether or not the company's stock flourishes, although some industry insiders note either way Facebook is a huge success.
"What is important is how much money Facebook raised and at what valuation, rather than what sort of Day One, short-term frenzy may or may not have occurred. North of $100 billion -- actually, anywhere near $100 billion -- is a more than respectable consideration for a company with Facebook's underlying fundamentals," Lisa Buyer, a Class V Group venture capitalist who counsels startups on the IPO process, told the Mercury News this past Friday.
Facebook emerged in 2004 and has now grown to over 900 million members worldwide.
At time of Digital Journal's publish, Facebook's stock was last sold at $33.75, down 11.72 percent.
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