Facebook's public debut — the largest tech IPO inhistory — underperformed expectations Friday, jumping 13%to hit $43 just minutes after trading began, only to quicklyretreat to the initial offering price of $38. At that point, theIPO underwriters, including the largest banks on Wall Street,stepped in and bought shares in order to support the price, according to The Wall Street Journal . The IPO faced early technical trouble, as the NASDAQ stockexchange was forced to delay the offering for almost 30 minutes. Bymid-afternoon, the stock was back up 5% to about $40. |
Earlier Friday, twenty-eight year-old founder Mark Zuckerberg rangthe NASDAQ bell in front of hundreds of employees at thecompany's Menlo Park, Calif. headquarters. And in a clevertwist, a group of Facebook engineers hacked the NASDAQ button to automatically post the following statusupdate to Zuckerberg's Facebook page: Mark Zuckerberg haslisted a company on NASDAQ." Facebook raised $16 billion at avaluation north of $100 billion. Zuckerberg launched Facebook from a Harvard dorm room in 2004.Today, Facebook has over 900 million users.
Thanks to the IPO,Zuckerberg is now one of the world s richest men, worth about $20billion. Thousands of employees and early investors will reapbillions more. ( More : Facebook IPO: After the Hype, Investors are Betting on Hope ) Facebook investors are betting on steep revenue and earnings growthover the next few years. With $1 billion in profit last year, thecompany has an extremely high price-to-earnings ratio of 100-to-1,higher than Google s when the search titan went public in 2004.Facebook users have given the company a treasure-trove of personaldata ripe for targeted advertising.
Zuckerberg s challenge now isto use all that data to generate the kind of profit that willjustify Facebook s sky-high valuation. Despite the enthusiasm over Facebook's public debut, somecorporate governance experts are raising concerns about thecompany's controversial dual-lass ownership structure.Zuckerberg owns 55% of the company s voting control, meaning hewill be impervious to takeover attempts or activist shareholders. "Facebook swims against the tide of a global movement towardtransparency, engagement, and checks and balances," wrote Lucy P. Marcus, a Reuters columnist who covers corporate leadership issues. "It feelsas if we ve all stepped into a time machine and none of the pastcouple of years of governance lessons including the failures ofboards in the banking-sector crisis ever happened." More to come….
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