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Facebook stock opens at $42, but slumps back toward it’s pre-opening price of $38

Published: Friday, May 18, 2012

Updated: Friday, May 18, 2012 13:05


SAN JOSE, Calif. — The most successful technology IPO in history roared to a start Friday morning, with sales of Facebook shares opening at $42, well above the pre-set price of $38. But the stock’s price bounced around in early trading, dropping several times back to $38.

The company’s long-anticipated Wall Street debut had been held up a few minutes after Nasdaq OMX Group said it was “experiencing a delay” in opening shares of Facebook, according to Bloomberg. But now that the stock is officially trading, investors could quickly boost the company’s record $104 billion valuation even higher.

Barron’s reported that Facebook shares were being quoted at $45 on Nasdaq before trading began. And the Associated Press said Intrade, the online betting market, was predicting a 77 percent chance that the stock would close at $45.

Facebook co-founder and CEO Mark Zuckerberg rang the opening bell for the Nasdaq stock exchange on a stage set up outside at the company’s Menlo Park, Calif., headquarters at 6:30 a.m. Pacific time Friday, after employees spent all night coding in one of the company’s regular “hackathons.” Zuckerberg was joined on the stage by Chief Operating Officer Sheryl Sandberg and dozens of other employees.

Zuckerberg then turned to his own creation to celebrate the moment, posting a Facebook status update that read “Mark listed FB on Nasdaq,” tagging Sandberg, Vice President of Product Chris Cox and three other executives.

Facebook completed its initial public offering Thursday, pricing the stock at $38 and selling 421 million shares, which raked in $16 billion at a record valuation for a U.S. company at IPO time. The world’s most popular social network is likely to sell another 63 million shares, known as an overallotment, to bring the total proceeds to $18.4 billion, the second highest total in history for a U.S. company.

Early interest in the new stock was so feverish that Facebook this week raised the potential range of its IPO price, which was originally listed as $28 to $35. At the final price of $38, most of the shares sold in the IPO went to institutional funds and other big clients of the IPO’s underwriters.

There is little doubt the stock will rise from the $38 price investors paid for IPO stock once it appears on the Nasdaq under the ticker symbol FB, but how much is anyone’s guess.

“Given the demand that they had, it doesn’t take a genius to predict the stock is likely to have a pretty good day,” said Sterne Agee analyst Arvind Bhatia. “How high does it go? It’s hard to tell.”

The frenzy for Facebook’s IPO began while engineers were hacking away in the wee hours of Friday morning, with several satellite and TV truck set up at the company’s Menlo Park campus just after midnight.

Around the grounds, thousands of cars, including luxury and specialty sports cars, filled the massive parking lot as private security guards patrolled the campus in pickup trucks. Employees could be seen inside the buildings working, eating and running on treadmills, with some working in roped-off sections of the parking lot under large flashlights.

Chefs were outside taking cigarette breaks while the kitchens were open behind them. Large luxury buses shuttled people to and from the headquarters’ entrance.

Press and employee parking lots were full by 6 a.m. and there were 13 satellite trucks parked at the company’s headquarters, with three helicopters hovering overhead. By 6:45, after Zuckerberg had rung the bell that would presumably change all their lives for the richer, Facebook employees who had spent the night at a “hackathon,” killing time until the company’s big moment, began piling out of the campus. A steady stream of BMWs, Lexuses and Audis poured out of the employee lots onto Willow Road, some headed for new homes on which, according to local realtors, they had reported been putting cash down payments of $1 million or more.

Menlo Park Mayor Kirsten Keith arrived wearing a Facebook blue business suit at 7:30, not in time for the bell ringing ceremony, but she did get to watch several newly-minted paper millionaires driving off the lot into her tax base. “We’re just excited to have them here,” said the mayor, following a hasty visit of about 10 minutes. She declined to say who she spoke to while she was inside.

The morning network news shows had gotten their money shots from the press parking lot, and they too began to disperse, with the three helicopters that had been hovering over the scene being the first to depart.

Zuckerberg was not the only person talking about Facebook’s IPO on the social network: Co-founder Eduardo Saverin, whose relationship with Zuckerberg was at the center of the Oscar-winning film “The Social Network,” congratulated his college classmate in a Facebook post that included a picture of an “About” page from the nascent social network in 2005.

“Congrats to everyone involved in the project from day one till today, and I especially wanted to congratulate Mark Zukerberg (sic) on keeping tremendous stead-fast focus, however hard that was, on making the world a more open and connected place,” Saverin wrote.

Zuckerberg still owns 503.6 million shares and options after the IPO, which are worth $19.1 billion at the IPO price. That wealth would make him the 29th richest person in the world, Bloomberg News reported Friday, just ahead of Google (GOOG) cofounders Larry Page and Sergey Brin.

San Jose Mercury News staff writers Mike Rosenberg, Brandon Bailey and Bruce Newman contributed to this report.

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