Highlights from Facebook's debut

May 18, 2012 

Facebook IPO

Electronic screens inside the Nasdaq stock market announce the listing of Facebook shares before the start of trading, Friday, May 18, 2012 in New York. The world's definitive online social network raised $16 billion in an initial public offering that values the company at $104 billion.

AP PHOTO/MARK LENNIHAN — AP

Facebook's debut on the stock market was preceded by epic hype, delayed by a technical glitch and tracked minute-by-minute by investors around the world. In the end, the fuss was over a gain of 23 cents.

Here are some highlights of the day, as gathered by reporters from The Associated Press:

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STATUS UPDATE

On Mark Zuckerberg's Facebook page, under recent activity, was this, posted shortly after 9:30 a.m. EDT:

"Mark listed FB on NASDAQ."

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STAT CHECK

Facebook closed at $38.23, a gain of 23 cents, or 0.61 percent.

About 570 million shares were traded on its first day as a public company. For perspective, that is roughly equal to the combined trading volume of 28 of the 30 stocks in the Dow Jones industrial average - every Dow stock except Bank of America and JPMorgan Chase.

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'LIKE KISSING YOUR SISTER'

All that excitement for 23 cents. And it took a rush of buyers in the final minutes to achieve even that. Facebook was hugging the $38 mark for much of the final hour of trading.

In theory, closing near the IPO price is good. It means that the banks that took the company public judged demand almost perfectly, and got the most money possible for selling stockholders.

But in practice, it's bad: The institutions that buy from the sellers - typically big investors like hedge funds, mutual funds and pension funds - have come to expect big profits on the first day.

"This is like kissing your sister," said John Fitzgibbon, founder of IPO Scoop, a research firm. "With all the drumbeats and hype, I don't think there'll be bar room bragging tonight."

- Bernard Condon, AP Business Writer

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THE EARLY INVESTOR

Alper Aydinoglu, a student at DePaul University in Chicago, got 50 shares via Etrade at $38, the offering price. He said that he was "disappointed with the first day of trading."

His gain on paper: $11.50.

And that was before Etrade's standard commission of $9.99.

He called it an excellent learning opportunity, though. "On top of everything," he added, "I now have the bragging rights that I participated in one of the most popular IPOs of all time."

- Pallavi Gogoi, AP Business Writer

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VIEW FROM THE NASDAQ

In Times Square, home of the Nasdaq, people took pictures of the giant Nasdaq billboard, which featured the Facebook logo. Some were "checking in" to the Nasdaq on Facebook.

As they waited for Facebook stock to start trading, people huddled outside the windows of the Nasdaq site holding up cellphones and cameras to take pictures of the first price change.

Nasdaq is an electronic market, and the site is a TV studio featuring monitors with constantly changing stock prices.

Frederick Nolde, 31, of Richmond, Va., was in New York for meetings and said that he bought 100 shares of Facebook through Etrade. He thinks the company is worth $100 billion, but he said the real question is how Facebook performs with mobile users.

"If they can figure that out, they'll do well," he said.

Dennis Hitchings, a retiree from Columbus, Ohio, said that he did not think Facebook is worth $100 billion - "They don't have the revenue" - but he did say he would buy the stock at $38.

- Joseph Pisani, AP Business Writer

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ABOUT THAT $38 FLOOR

For most of the last half-hour of trading, Facebook was at, or pennies above, the offering price of $38 per share. But it never traded at $37.99, or at any other price that would have put it in the red for the first day.

No coincidence, said Jay Ritter, a finance professor at the University of Florida: The banks that underwrote the IPO put in enough "buy" orders at $38 to keep the price from dropping below that level.

Underwriters are allowed under regulatory rules to buy back, for 30 days, a certain amount of the shares they sell on the open market.

Ritter said that his research showed 9 percent of IPOs close at exactly the offering price on the first day, 16 percent of IPOs fall, and 75 percent increase in value.

Facebook made it into the "increase" category, but just barely.

- Pallavi Gogoi, AP Business Writer

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ZUCK: DOING THE MATH

The closing stock price of $38.23, multiplied by a holding of 503,601,850 shares, gives CEO Mark Zuckerberg a stake worth $19,252,698,725.

And 50 cents.

In Menlo Park., Calif., Zuckerberg addressed Facebook employees Friday morning and said: "Right now this all seems like a big deal. Going public is an important milestone in our history. But here's the thing, our mission isn't to be a public company. Our mission is to make the world more open and connected," Zuckerberg said. "In the past eight years, all of you out there have built the largest community in the history of the world. You've done amazing things that we never would have dreamed of and I can't wait to see what you guys all do going forward."

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MAD MONEY

Earlier this week, Mad magazine imagined a Facebook stock certificate, complete with a photo of Mark Zuckerberg smiling from inside an oval, like George Washington on the dollar bill.

"Thank you for funding our ongoing effort to collect and control every single piece of personal information on the Internet," the certificate said. "Every photograph, every song, every social cause, every event listing, every opinion, every breathless description of a recently eaten pulled-pork sandwich."

Facebook is drifting back toward its offering price of $38. It's up just 10 cents for the day now as volume nears half a billion shares.

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THE RUSH FROM SMALL INVESTORS

TD Ameritrade, the online brokerage, reported that in the first 45 minutes that Facebook was trading, it accounted for a record 24 percent of trades executed by its customers.

By comparison, on its first day back on the stock market, in November 2010, General Motors represented 7 percent of overall trades on TD Ameritrade. For the LinkedIn IPO, in May 2011, the figure was 5 percent.

Steve Quirk, who oversees trading strategy at TD Ameritrade, said that about 60,000 orders were lined up before Facebook opened.

"The volume has been unbelievable even though the stock hasn't moved dramatically," Quirk said. "It's a hot topic in our chat rooms, and most people expected to see the stock move more than it has."

- Pallavi Gogoi, AP Business Writer

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BUT SERIOUSLY, FOLKS

Twitter users were joking about the Facebook IPO.

From Conan O'Brien: "Today, Facebook went public, just as MySpace's last user went private."

And from the Twitter feed of the website Someecards: "My favorite Facebook public offerings are still your beach photos."

- Peter Svensson, AP Technology Writer

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CALIFORNIA DREAMING

Gov. Jerry Brown of California must not have seen "The Social Network."

In an appearance on "CBS This Morning," Brown said that his state is the land of innovation and that it was where Facebook was invented. He added: "Not in Texas, not in Arizona, not in Manhattan and certainly not, you know, under the White House or the Congress."

But interviewer Charlie Rose pointed out that CEO Mark Zuckerberg and others developed the site at Harvard University, all the way across the country in Cambridge, Mass.

Brown responded that the Facebook inventors quickly came to California, "where all the other innovative people are."

- Juliet Williams, AP Sacramento bureau

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WE ARE THE ONE-QUARTER PERCENT

Conversations about the Facebook IPO accounted for 0.25 percent of all online discussion during the first part of the workday, until about 1 p.m., according to NM Incite, a company that tracks social media traffic.

That may sound small, but it's an increase of 5,000 percent compared with the buzz about the Facebook IPO a month ago. It is also four times greater than the chatter for the LinkedIn IPO and 10 times greater than the Groupon IPO.

- Scott Mayerowitz, AP Business Writer

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EXPERIENCING THE FACEBOOK IPO ON FACEBOOK

Facebook's IPO has Wall Street abuzz. But what about Facebook's 900 million users?

Some were debating whether they should get in on the buying frenzy. Others were guessing the closing price. Several were lamenting that they hadn't thought to invent the social media site themselves.

A few treated even the company like a person, congratulating it on the public offering as they might a friend on the birth of a child.

"Hey Facebook! Have a good first day on the stock market," a swimming pool maintenance and repairman from Petaluma, Calif., wrote from a mobile device. Within two hours, eight other Facebook users had "liked" the post.

Not all Facebook users were obsessed with the company's entrance to the stock market. The went along with their everyday lives, posting photos of drunken debauchery that they might one day regret, weighting in on the presidential election, celebrating Haitian flag day or just welcoming the start of the weekend.

- Scott Mayerowitz, AP Business Writer

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POP CULTURE

Francis Gaskins, president of IPOdesktop, a market research company, said that it wasn't a bad thing that Facebook didn't get a "pop" on its first day similar to what happened during the 1990s dot-com frenzy.

He said that most tech companies going public want a big rise in their debut to show they're "strong, dynamic companies standing out in the crowd" but that Facebook already has that image, and so may not care.

Gaskins said that the banks taking Facebook public have learned from the IPOs of social media companies in the past year and are better able to gauge demand and supply for a new stock.

- Bernard Condon, AP Business Writer

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THE OUTSIDER'S VIEW

"I'm part of the 99 percent. I don't buy stock shares," Jerry Urban said as he waited for a bus in Baltimore. "I wish them good luck. Tell them to stop selling my information."

Facebook stock is at about $40.50, or $2.50 higher than its offering price.

- Alex Dominguez, AP Baltimore bureau

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TILL THURSDAY

Bruno del Ama, the CEO of asset management firm Global X Funds, said that he will wait five full trading days, until after the market closes Thursday, to get in on Facebook.

"On the first day you see a tremendous amount of volatility," he said. By the fifth day, investors should see more stability, he said.

He believes Facebook is here to stay: "Once companies have built a network, it's really difficult to displace them," he said. He added that while massive companies such as Google are trying to compete with Facebook, and may even have better technology, "we care about where our friends are."

- Barbara Ortutay, AP Technology Writer

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A WARNING FROM GERMANY

A German data protection official warned Facebook investors that the site's $38 starting share price is based on practices that may breach European privacy rules.

Thilo Weichert, data protection commissioner for the northern German state of Schleswig-Holstein, said shareholders should be aware that if European privacy authorities have their way, "Facebook's business model will implode."

Weichert was quoted by German daily Frankfurter Allgemeine Zeitung on Friday saying Facebook could be ordered to stop transferring user information to the United States.

Facebook's IPO prospectus warns investors that its business is subject to "complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters" that could harm its business.

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SOME PERSPECTIVE ON MARKET VALUE

The IPO price valued Facebook at $104 billion. By comparison, here are the top five companies in the Standard & Poor's 500 index by market value, based on Friday's closing stock prices:

Apple, $496 billion

Exxon Mobil, $381 billion

Microsoft, $245 billion

IBM, $227 billion

Wal-Mart Stores, $212 billion

- Seth Sutel, AP Business Writer

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THE RIPPLE EFFECT: CALIFORNIA CASH

Besides minting Internet billionaires, the Facebook IPO should provide a little help for the cash-starved state of California.

The state's nonpartisan Legislative Analyst's Office says the IPO will generate $1.6 billion to $2.6 billion for the state through the middle of next year as shareholders cash in their stock.

California badly needs the money: Gov. Jerry Brown said over the weekend that the projected state deficit has swelled to $15.7 billion for the coming fiscal year. In January, it was projected at $9.2 billion.

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A FUND MANAGER WEIGHS IN

Chris Brown, manager of the Pax World Balanced mutual fund, made a roughly $14 million investment when his $1.9 billion fund acquired private shares of Facebook on a secondary market before the IPO.

As shares traded for about $40 at midday Friday, Brown said the rise from the stock's $38 opening price was unsurprising.

"Going into the IPO, there has been a lot of skepticism from investors, in particular institutional investors, questioning anything from whether the price of the stock is fair, to whether Facebook can successfully monetize and sell ads," he said.

"We're long-term investors. It's nice to have the stock up for one day, but it's only one day. It's hard to extrapolate much as to the future of the company."

In coming days, Brown expects plenty of ups and downs for the stock, as investors assess a company whose prospects are hard to pin down because of its evolving business model.

"You're going to see obviously an extreme amount of volatility over the next week as people evaluate the stock," Brown said.

- Mark Jewell, AP Personal Finance Writer

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A BANKER WEIGHS IN

Blessing Oguguam of Nashville, Tenn., a vice president in business banking for Wells Fargo who has worked in commercial lending for 15 years, said he was not comfortable buying Facebook stock:

"I'm thinking it's great for now. But 10 years from now, is that crave still going to be there? So if I go ahead and invest now, I know Facebook is not producing any product. It's just a social media site. So in 10 years to come, if this hype dies down, then what happens to my investment?"

- Lucas L. Johnson II, AP Nashville bureau

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TEACHABLE MOMENT

As Facebook hovered near its $38 offering price toward the end of the day, Ann Sherman, an IPO expert and associate finance professor at DePaul University, said that even the best stocks can be over-hyped.

Sherman added: "From now on, I'll be able to use Facebook as the perfect example of what I tell the students in my IPO and venture capital class - that even apparently hot IPOs can be risky to price, and that no company can perfectly control the timing of their offering."

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