It's official: Facebook has gone public and the highly-anticipated, second-largest IPO ended the day almost exactly where it started.
Facebook was off to a good start, jumping 13% in initial trading and then spiking as high as 18% above the original IPO price of $38 a share. However, the stock stayed around that original price of $38 a share for a lot of midday trading, and eventually closed essentially flat at just above $38.
All three U.S. indexes ended their worst week of 2012 today, and social media stocks were no winners. Shares of LinkedIn and Groupon both closed the day with losses.
Trading in shares of Zynga Inc. was halted twice throughout the day after the stock fell by as much as 14%, following the unstable debut of Facebook on the NASDAQ. Zynga's stock dropped 13% to $7.17 before trading was halted. It later resumed, but was then stopped a second time. But why do we care?
Well, do you know what Zynga is? If you don't know, it's a social network game development company that has a very close relationship with Facebook. If you already knew that, then you may not know this: In Facebook's SEC prospectus, a summary of the business, Facebook says that if Zynga has financial trouble, then Facebook could have financial trouble. This is how Facebook describes it:
"We currently generate significant revenue as a result of our relationship with Zynga, and, if we are unable to successfully maintain this relationship, our financial results could be harmed."
Shares of Facebook's stock began trading on the NASDAQ at around 11:30 ET this morning, and opened at $42.05, an 11% jump from the $38 IPO price.
Facebook rang the NASDAQ stock market opening bell from the comfort of its own headquarters in Menlo Park, California, this morning to celebrate the biggest tech IPO the U.S. will have ever seen. “FB” will no longer just be a text message abbreviation, but the public company’s trading ticker symbol. Of course, none other than 28-year-old Facebook founder Mark Zuckerberg is rang the bell.
The company is expected to raise about $16 billion by selling 421.2 million shares. However, underwriters (bankers selling the stock to investors) may purchase more shares if demand is higher. The social media giant could end up raising $18.4 billion, which would make it the second-largest IPO in the nation’s history, behind Visa.