The morning of Friday, May 16th Facebook (FB) launched its Initial Public Offering (IPO) to eager traders on the New York Stock Exchange (NYSE). Things seemed to take off to a great start as the opening trade came in at $42.05 per share, an 11% gain from the debut price of $38 per share. However, despite the early jumpstart, as the day of trading progressed prices soon plummeted back to the $38 initial offering price, and closed at $38.23 (up 0.23/0.61%). Current prices are significantly less than predicted, hovering around the $27 mark as the month closes. Despite the meager performance so far since the offering, it wouldn’t be true Facebook style without setting a few records along the way. According to CNN Money, more than 80 million shares changed hands in the first 30 seconds and upon closing 576 million shares had been traded in all. This is the highest trading volume for an IPO since General Motor’s IPO in 2010 with a trading volume of around 450 million shares. In addition, at the $38 share price, Facebook was predicted to raise $16 billion, making it the largest tech IPO on record with a valuation of more than $100 billion.
In light of the recent performance by Facebook, the travel website Kayak has decided to stall their own IPO until market conditions improve. Kayak itself doesn’t directly sell travel arrangements but offers a comparison of rates from leading travel sites like Expedia and Priceline. The site is funded through advertising.
The sheer size of its net-worth won’t guarantee success for Facebook as it joins the likes of Google, Apple, and Amazon.com Inc as one of the giants shaping the future of Internet economy. Google has already begun building walls to protect itself from the ever-evolving Facebook by integrating social networking across its products to try and combat the further proliferation. Additionally, more and more start-ups are turning to the Facebook platform to launch their own products and services, while others are developing and launching parallel platforms. Both outcomes attract significant amounts of investment capital potential. Pinterest is an example of a company funded exclusively by venture capitalists and investors that see the enormous potential and profitability of Web 2.0 companies.
Aside from Facebook’s monetary assets, the company has 900 million users worldwide, many of whom spend countless hours on the site exchanging enormous amounts of personal information. This enables Facebook to hone and target its advertising to the specific interests of its users. This is believed to be a competitive advantage, and one that Google has not been able to match. Google does, however, tailor its advertising to specific Internet searches, which many skeptics believe to be more relevant and more attractive to advertisers.
What will happen with Facebook’s stock value moving forward? Your guess is as good as ours…you never can tell what’s right around the corner with all things Facebook related!