Facebook shares drop below flotation price
Baku, May 21 (AZERTAC). Shares in Facebook have fallen in early trading on Wall Street to below the price at which they were floated, BBC reports.
On Friday, Facebook debuted on the Nasdaq stock exchange at $38 a share.
Despite the wider market in a buoyant mood, Facebook slid 12% immediately at the opening bell. They are currently around the $33-34 range.
Analysts suggested the shares would have fallen on Friday, had it not been for underwriters stepping in to buy up stock.
The offer price valued the site at $104bn (£66bn).
"It`s early days yet but it doesn`t look good," said BBC business correspondent Mark Gregory in New York.
"There`s talk that Facebook`s advisers set the price too high. And there are doubts about whether the firm can produce the revenues and profits required to justify its enormous valuation," he said.
Analysts said Facebook shares were the most frequently traded on Wall Street, but sentiment had changed since Friday.
"One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors` decisions to get out of the stock," said JJ Kinahan from stockbrokers TD Ameritrade.
Strong demand in the run-up to the flotation had led the company to increase both the price and the number of shares available for sale.
Other internet companies have had mixed experiences recently when they have started selling shares.
Shares in business networking site LinkedIn more than doubled from their $45 offer price on their debut in May 2011. They peaked at $117 and are now trading around the $100 level.
Discount voucher firm Groupon`s shares jumped 30% on their debut in November. But they are now at about $12, well below their $20 flotation price.
Online games maker Zynga`s shares fell 5% on their first day of trading in December 2011. They are currently around $7, below their $10 offer price.
Google, however, is the star performer of the technology IPOs. Launched in 2004 at $85 a share, it is now trading above $600.
The start of trading in Facebook shares on Friday, one of the most high profile stock market Initial Public Offerings (IPOs) in recent years, was delayed by technical problems on the Nasdaq stock exchange.
Nasdaq boss Robert Greifeld said he was "humbly embarrassed" by the glitch.
Trading was delayed by about 30 minutes due to late order cancellations, and the shares closed on Friday at $38.23, having hit $45 earlier in the day.
"This was not our finest hour," said Mr Greifeld. As a result of the glitch, a number of investors were unsure whether their buy and sell orders had actually gone through.
However, Mr Greifeld said that once the glitch had been fixed, trading had been "successful".
More than 566 million shares in the company changed hands, a record volume for US market debuts.
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