The NASDAQ was embarrassed today as the Facebook stock IPO ended the trading day on a thud. Thanks to underwriters, like JPMorgan and Goldman Sachs, the price of Facebook shares finished slightly higher than the initial public offering price of $38 per share at $38.23. Mark Zuckerberg is now worth north of $19 Billion dollars with hundred of company employees instant millionaires. At one point, Zuckerberg was worth $21 Billion when Facebook stock hit $42.05 just minutes after trading began. But the price dropped as the day wore on while all of the stock markets lost due to renewed concerns over the European Union debt crisis. Still, Zuckerberg, his employees and the State of California were big winners today, with California looking to collect an extra $2 Billion in taxes. Where is Jamie Dimon?
Many analysts were trying to compare Facebook with the Google IPO. Google opened at $85 and jumped to $107 as trading started, ending at $135 a share its very first day. Google now trades at about $600 a share. Even with the disappointing start, the Facebook IPO made it the second largest in US history after VISA. The king of social networking is now worth some $104 Billion dollars, putting it ahead of corporations like General Motors. Is Facebook really worth it, or could it become another MySpace?
The test of time will tell the tale. For starters, Google has a better revenue stream from advertisers, averaging one advertising ′click′ for about every 2,000 clicks on their webpages. Facebook′s ratio is closer to one in 250,000, not exactly a good sign. Yet, some 900 Million users are on Facebook, making it a major player on the Internet. The problem Facebook faces, if you pardon the pun, is the future as society moves more and more towards mobile apps, an area Facebook is still struggling with.
With some 500 million shares traded on the NASDAQ today, the Facebook IPO could be considered a success. Mark Zuckerberg with his $19 Billion and the hundreds of employees who are now instant millionaires are certainly happy. But will investors be happy if the Facebook stock price does not perform well in the upcoming days and weeks? Th next six months will be crucial as current holders of the stock prior to the IPO cannot sell and reap their rewards. The failure of the Facebook opening price to skyrocket helped dragged down other related stocks, like Zynga, which runs many game apps on Facebook, lost 9% today and had trading suspended twice due to the sell-off.