FB new low (18.23), down 52% from 38 IPO price (opens in new tab)

The IPO price was $38. When it opened the price rose to $42 in early public trading before the price started to fall.

http://www.businessinsider.com/this-is-what-traders-saw-when...

I believe it IPOed at $38.

"The $38 IPO price is the rate at which Facebook's underwriters will sale shares to their clients."

http://money.cnn.com/2012/05/17/technology/facebook-ipo-fina...

38 dollars per share was the price that the institutions who participated in the IPO paid. Facebook received slightly less than that.

Investors who paid 42 per share at the IPO received shares from the underwriters.

The very first trade of a stock in the open market is by most accounts considered the IPO price or opening bid which for FB was 42.05. The IPO offer price was $38.

http://seekingalpha.com/article/217235-ipo-offering-vs-openi...

http://i.stack.imgur.com/35bNv.jpg

Worth to say thou that the real price was 42$ in fact. I bought via my bank and I could not get a trade confirmation for days (even big banks like UBS did sue about this) so it was more 42$ than 38$ for the few unlucky :)

Okay, I feel crazy but I definitely thought the IPO was $50, or I'm positive that I read that somewhere. Looking on google it seems like that was the expected price jump on the first day.

I bet it won't fall that low. $4 would be valuing the company at about 10x their 2011 income of $1B, which is extremely low for a company expected to grow. I wouldn't expect to see a valuation under 20x, or about $7-8 per share. My guess is ~$10 per share is the floor on this one.

http://www.forbes.com/sites/tomiogeron/2012/02/01/facebooks-...

I originally said the same at at $10, which it's on track to hit. Sentiment is making me reconsider...

It wouldn't be some, itd be most. What make FB appealing is that so many people use it. If most drop off, it would be less appealing and the amount of people willing to pay would be even less.

Or freemium servicing.

The reason why this cross is important is because it dropped more than 50%. Regulation T, which governs margin requirements in most accounts, says that you are allowed to borrow up to your cash balance to buy shares. So if you had 1900 dollars in your account (for simplicity of math), you could borrow 1900 more dollars to buy FB shares (3800 dollars = 100 shares). Now that FB dropped below 19 (and it looks like it'll close below 19), basically those investors lost ALL of their money (the value of the shares is now 1825, so your equity in the position is 1825[current value] - 1900[borrowed money] = -75) and we should expect another wave of selling pressure as those investors are forcibly closed out of their positions.

The importance is that institutions may decide not to participate in future IPOs (or may do so with weak uptake).

They were downgraded, that probably is partially leading to the drop: http://news.investors.com/technology/083112-624214-facebook-...

Let's compare, shall we? Last year, Splunk lost a few million dollars on revenues of 66M. Facebook profited $1BN on revenues of 3.7BN.

Guess there's something to businesses that generate lots of snarky comments.

Funny, I just today found Splunk, when I was searching for sparkline implementations and theirs was open sourced. I browsed a bit and thought this is a cool company, which I need to evaluate for investing. A tad too late to benefit from today's spike in SPLK's price...

this isn't super low. $1-2 will be super low.

> If you thought $38 was a good price, this must be a good time to buy some more with the prices low.

Only if you never factor in new information to your decision making.

If you $38 was good with the assumption that there would be a pop to $50 then now you wouldn't buy as it's now clear there won't be a quick pop that gets you to $50.

$4 - $7 might be a good price to buy at, might.

"Investors were looking at this company as they did many other things they invested in."

tl;dr: Investors were looking for the IPO pop and then dumping it. Problem is, if everyone follows that idea, there's no upside left.

It was obvious from when FB first started trading on SecondMarket that the "IPO pop" would happen before the IPO. The IPO pop stems from a supply/demand mismatch (lots of people want to get in but are unable to). And because the accredited investors got in before the IPO, the only people left were "retail" investors (and we know how that story ended). Many analysts and investors don't understand that key point, which is why a lot of people were caught with their pants down.

Yes. But the question is "how much?"

If I offered you FB stock at $10,000, what would you say? "Too much", I hope.

If I offered you FB stock at $0.05, what would you say? Probably, "Hell, yeah, that's a bargain".

So there's a rational price that the market agrees upon, within certain boundaries. The market seems to agree that the IPO overpriced the real market value of the shares. It's a real time machine that tells us what people think the shares are worth.

$5 it's a good price for me :)

The original prospectus quoted the 2.1B share count that google uses. I'm sure the difference will be corrected after a few filings ...