Facebook shares rise 2.3 % after falling to half of IPO price
21 Aug 2012
Shares of Facebook inched up 2.3 per cent to $19.48 yesterday after touching a low of $18.75, less than 50 per cent below the price they were issued at three months ago.
The stock briefly traded at $19 after experts voiced concerns over the company's ability to expand revenue. Last week, also saw a number of early investors get the go ahead to sell for the first time since the social network company's initial public offering.
According to some analysts, it seemed to be down to around levels that people who had not liked the stock at the issue price now thought it was now a worthwhile buy.
Expectations were sky-high that early investors and employees would sell their shares to become millionaires or billionaires. However, with the stock down to almost 50 per cent below its offer price, disappointed shareholders have been cashing out.
The tech-heavy Nasdaq closed over 1 per cent to 3,062.39 while the Dow Jones Industrial Average was up 0.65 per cent to 13,250.11
Facebook's stock has been falling freely since employees announced they were leaving the company and institutional funds started selling. Times had been tough from the start for Facebook after its initial public offering on 18 May when technical glitches hit the Nasdaq exchange causing delays in confirming trades. In June, Nasdaq announced a $40 million fund to compensate investors "disadvantaged" by the technical problems.
Facebook's IPO was priced at $38 and stock opened in May at $42.05, closing that day at $38.23 however, it has since been down 36 days more than it has been up.
Facebook has lost around $40 billion in market value since the IPO, and has become the worst major IPO ever, according to Bloomberg.
