- Last Updated: 9:48 PM, May 18, 2012
- Posted: 10:19 AM, May 18, 2012
Facebook updated its status to "public company" on Friday.
After an anxiety-filled half-hour delay, its stock began trading on the Nasdaq Stock Market for the first time as investors were finally able to put a dollar value on the company that turned online social networking into a global cultural phenomenon.
By early afternoon, the stock was trading at around $41, an 8 percent increase for the day. That means Facebook is worth about $112 billion, more than Amazon.com, McDonalds and storied Silicon Valley icons Hewlett-Packard and Cisco.
But shares closed their first day of trading Friday only slightly above the company's IPO price of $38 a share, as investors cooled on the stock after its highly anticipated debut.
Facebook shares closed up 0.6 percent at $38.23.
The tech giant priced its IPO at $38 a share Thursday, the top end of its range, indicating tremendous investor appetite for the offering. Seconds after shares debuted Friday morning, the stock surged 13 percent to nearly $43 a share. But shares trimmed gains over the remainder of Friday's session and even threatened to dip below the IPO price several times.
But as many people looked for a big first-day pop in Facebook's share price, the single-digit increase was somewhat of a letdown.
"It wasn't quite as exciting as it could have been," said Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital. "But I don't think we should view it as a failure."
Indeed, the small jump in price could be seen as an indication that Facebook and the investment banks that arranged the initial public offering priced the stock in an appropriate range.
It's also a supply and demand issue. Facebook offered nearly 20 percent of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2 percent of its stock when it went public in 2004.
To IPOdesktop's Francis Gaskins, it means mom-and-pop investors are becoming "much more educated and careful" about not buying into hype. And he said that the banks taking Facebook public have learned from the 10 IPOs of social media companies in the past year and are better able to gauge how much stock to make available in an initial offering. He said a rise of 5 percent to 8 percent in this "tough market" is a success.
It might not have been possible for the social network to live up to the hype that led up to its IPO. It's Facebook, after all, a place where people are emotionally invested in endless online diversions and rekindled friendships, an endless depository of baby photos, favorite songs and fleeting memories.