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Facebook opens to public for trading

May 18, 2012 at 5:33 PM   |   Comments

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NEW YORK, May 18 (UPI) -- Underwriters stepped in to defend U.S. Internet firm Facebook during its initial day of trading, market analysts said.

Facebook stock prices jumped quickly after its delayed start of trading Friday to reach $42.05 per share. However, prices eased back to $38 on several occasions, at which point, "the underwriters defended it," Barry Rithholtz, head of investment research firm Fusion IQ told the Los Angeles Times.

Facebook ended the day up 23 cents to $38.23.

Banks handling the IPO, in other words, swooped into buy shares and keep the price propped up.

"When a deal gets priced and breaks price on the first day, that's definitely a major embarrassment," said trader Andrew Frankel, a co-president of Stuart Frankel & Co.

The Wall Street Journal reported Friday Nasdaq officials sent out a notice near noon that said it was "investigating an issue in delivering trade execution messages."

About an hour later, Nasdaq, which had competed fiercely with Standard & Poor's to list Facebook, said it would resort to a "manual report," to confirm trades with brokers.

Meanwhile, the reaction among investors varied. Theophilus Hodges, a property manager, opened an E*Trade account just to participate in Facebook's IPO.

"I missed out on Groupon when it went public, so I'm not going to miss the boat this time," he said.

Others were less impressed. Vice President and Chief Investment Officer for Fiduciary Trust in Boston Michael Mullaney said he was bidding on shares on the open market, rather than sending orders directly to underwriters. Nevertheless, after getting the shares he was after, he said the IPO was basically "a dud," the Journal reported.

Facebook Inc. was expected to end its first day of public trading on New York's Nasdaq Stock Market worth as much as $104 billion.

The figure would make the social network's market value higher than those of McDonald's Corp., Citigroup Inc. and Amazon.com Inc., analysts said.

High tech companies that have captured investors' attention like Facebook often achieve double-digit gains in a one-day pop, The New York Times reported. But for Facebook, the pop came early and was fairly muted.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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