Facebook IPO fizzles on first day

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by Dantanner

Facebooks much hyped and marketed IPO debuted on the big screen at 38 dollars a share and immediately ran up to 45 and tanked.

I was waken up at 5 AM by friends excited about investing in Facebook. They were watching Times Square neon signs on TV where crowds have gathered in anticipation. The buzz was unbelievable.

It never recovered from the initial minutes of trading. The hype marketing was great, created a buzz on the Internet and whopped the news cycle from CNN to local TV stations. The stock was trading near 38 at the time of this writing which is near the close of the trading day. The social butterfly couldn’t fly in this market.

Why did this biggest IPO of the century which created 100 billion dollars and made many millionaires didn’t take off ? Simple. This is a down market where 90 percent of stocks follow the market and when that happens what are the chances of a new stock making it ? Slim to none. There are no buyers in sight even though 500 million shares traded yet they failed to lift the stock.

The IPO was priced at $38 so any Joe Blow down the street can own 100 shares and get in, but  the market is so scary  and angry in the wake of Greece debt woes and lackluster data on the US economy and has been coming down hard in the last 13 sessions. Retail buyers are either losing money or sitting in cash on the sidelines enjoying a spectacle and postponing any decisions to buy an unproven stock. The hype and hoopla was good enough and they swallowed it, but when it came to clicking the mouse they froze to death. Whoa !

Has anyone underwriting this IPO at Morgan Stanley and other Big wigs firms figured this out ? Apparently not. They thought, we can smooth this over with the extra kick and that extra advertising muscle  power and it will fly. But the forgot the basic equations stocks dont move higher unless there is big volume to the upside and the general market is healthy place to be and thus they were proven wrong as this IPO tanked at 38 or change at the close of the day. It completely fizzled so as to speak.

This IPO is going to sit there in the doldrums until a healthy market emerges. Its a flop, there is no wind in the sails.

On the other new items, If this was not enough and to rub salt in the wounds Face book users and their attorneys chose to file a 16 billion dollar lawsuit against Facebook in San Jose, as the bell was ringing on Nasdaq !  Their timing  couldn’t have been better, they took the thunder off the clouds.  Los Angeles Times reports “ Face book users have sued the company for $15 billion for tracking members’ online activity even after they leave the site. The class-action lawsuit was filed Friday in federal court in San Jose, Calif., and it combines 21 similar cases from around the country”.

These news is hardly a recipe for success on the first day and the stock ended the day at 38 supported by a team who resisted its price at 38 come hell or high water. How would it trade next week you be my guess.

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