Facebook Averts SHAMEFUL IPO Record
Facebook (NASDAQ:FB) has its recent rally to thank for helping it avoid the embarrassment of being the biggest loser among the largest U.S. initial public offerings since the start of last year. The social network, which opened for public trading on May 18 at an offering price of $38 and tumbled to a low of $25.87 on June 5, has now rallied 22.86 percent over the last two weeks.
PetroLogistics LP (NYSE:PDH) dropped 20.4 percent in its first month of trading, or 3.1 percentage points more than Facebook, giving the propylene maker the worst return among the 30 largest IPOs since the beginning of last year, according to Bloomberg.
Since its slump first started over worries that the social network does not have strategies in place to keep adding revenue streams, Facebook has been working rapidly on unveiling new products and services. Last week, Facebook introduced a real-time bidding platform to better target ads to consumers.
The opening day of trading for its stock on Nasdaq was hit by technical delays and mishandling of certain orders, causing confusion and unease among investors. There were also concerns that the stock has been overvalued by the company and its underwriting banks. They were criticized for increasing the number of available shares by 25 percent just days before the offering and pushing the offering price to $38 from an earlier maximum of $35.
Facebook and its underwriters Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and JPMorgan Chase (NYSE:JPM) have been sued by investors who allege the group didn’t publicly disclose lower revenue estimates before opening the share sale. The underwriters are expected to release their first public reports on the company next week.
Facebook (NASDAQ:FB) is also likely to join the Russell 1000 Index soon and that may prompt the purchase of 11.7 million shares by investors tracking the gauge, Macquarie said on June 11.
However, analysts are not buying the recovery just yet. “We’ll continue to exercise caution,” Richard Greenfield, an analyst at BTIG LLC who has a neutral rating on the stock, told Bloomberg. “The path to mobile monetization is unclear. Brands are still learning to use the Facebook platform.”
The stocks of Zynga (NASDAQ:ZNGA) and Groupon (NASDAQ:GRPN) also declined right after their IPOs, with the former falling 7.8 percent in its first month of trading and the latter dropping 4.8 percent.
Shares of Facebook (NASDAQ:FB) closed Friday up 3.8 percent to $33.05 per share.