May 23, 2012
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Facebook’s continued fall has put the social network on pace to be one of the worst large U.S.
By David Benoit
Facebook’s continued fall has put the social network on pace to be one of the worst large U.S. IPO starts in the past five years.
- Bloomberg
The social network’s much ballyhooed offering was in the midst of its second-straight day of declines, dropping as low as $30.98 today. That would have been an 18.5% drop from its IPO of $38.
The stock has recovered somewhat, recently down 3% to $33. That also marks a 13% decline from its IPO price, equal to the worst three-day start for an IPO that raised over $1 billion since 2007, according to Dealogic.
There have been 23 U.S. IPOs over that size since 2007. Through the first three sessions, only asset-manager Och-Ziff Capital performed as poorly, losing 13% as well, according to Dealogic. In fact, only seven of the deals ended their first three sessions in the red, the data provider says.
Facebook would have to fall further to be worst first-week performer, given Och-Ziff ended its inaugural week down 24%. Overall the 23 IPOs averaged a 15.6% gain during their first week, according to Dealogic, meaning Facebook would have to hit $44 by Thursday’s close to catch them.
Among deals that raised over $500 million since 2007, Facebook would be on pace for the fourth-worst first week, behind Och-Ziff, Orbitz Worldwide and Clearwire. (Orbitz and Clearwire both lost 17%.)
To be sure, it is only midday Tuesday and Facebook’s shares could rebound.
But for now, the most-traded IPO in history has gotten off to one of the ugliest starts in recent history.
Here are the first three days for the $1 billion-plus IPOs since 2007 via Dealogic.
Comments (1)
I feel a little as if I have a second sense about such things, and for those young people who believe so deeply in Facebook, my heart goes out to them. I honestly told my husband that this situation was going to arise, and thank God, we sometime ago got out of this market anxiety as much as one cans who plans for retirement.
For those younger than I though and are not battle scared by years of economic trends, I can only tell them to beware when your product is so dependent on advertising, when there is potential for so many on line communications, but especially if the Chinese market is not going to open up for you. Make certain that your investments contain tangible assets which must be resupplied and can be marketed around the globe.
I have been finding the Facebook information most interesting, and it is still definitely King of social communications. I think though that there is a problem with people having a feeling that once an internet idea is owned; Then a better mouse trap is not a worry, but people are always going to find something new out there, for it is our nature, and we are merely in the frontier of possibility for a market which was unheard of two decades ago. I encourage all younger investors to avoid, “Eggs in one basket,” and I am not brilliant, certainly not rich by the standards of market barons, but we would encourage our own children to know that some old statements merely grow in importance with the years.
Bless all of you out there. We are in uncertain times, but learn to be joyful wherever and whatever you are doing. Blessings, Barbara Everett Heintz, Author, “Pinkhoneysuckle,” Amazon — Hope you will check out my book, my friend, for it is a world which I do not believe you know about; And I shall never have to go there again… Blessings, Barb Hz