Rocky start as Facebook makes Wall Street debut
No big gain for social network's opening day
- Duration 7:46
- Date May 18, 2012
No big gain for social network's opening day
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What box on top of the face off over FaceBook as a social networking site brings thrills chills and spills.
To Wall Street.
Well it's all over but the counting -- welcome -- Neil Cavuto and did FaceBook does lose today's charges.
Kinda lose face because if you were hoping for -- double on this giant.
Well you might be a tad disappointed the stock surged 11% -- they opened and quickly dropping struggling much of the day to hold on to what it came in act.
38 dollars as there and I haven't got to the -- -- -- the proverbial tees on this but it 38 dollars.
Eighteen is -- is here eight -- heads north of where it came in that at the start of the day.
It makes Mark Zuckerberg.
The man who runs this company came up with the idea this company.
In -- room little more than eight years ago a billionaire many times over on paper at least worth north of nineteen billion dollars.
Enough to propel him into one of the richest people.
On the planet so what is the -- from Facebook's first trading day we are all over it with champions -- -- -- lot of folks got swept up in it and may be too much into it market -- -- to taos ski on why today's relatively lackluster performance.
Could be a very good thing Lawrence have been -- on -- Facebook's newly minted millionaires reacted to all of this and -- Michael Reagan on why they should fear that tax that they're gonna be getting.
After all of -- we begin.
-- -- -- -- -- -- -- -- day of frenzy today and a rough day of or Facebook.
Priced at 38 dollars a share it was still the most valuable -- American company ever.
-- -- time of a market debut and a record number of shares traded hands.
-- -- market debut more than half a billion shares.
Let's start with that the beginning of the day the stock opened half an hour late 11:30 AM eastern time traders -- a tough time.
Getting information about those very trades but to stop pop at the Oakland.
It it was -- more than 42 dollars a share that was up almost 11%.
From that 38 dollar price.
-- it fell back to that level within half an hour and you see it close there about that level.
At 4 PM this afternoon and -- no major pop to talk about but this company has more than 900 million users thieves won't know its story.
They know it's history they know it's -- billionaire babyface co-founder and they were still excited.
About this IPO we.
38 -- a -- -- -- -- public.
Is pretty unique 900 million people how to.
That's why everybody uses.
I haven't -- the -- but I definitely -- That's a huge deal -- biggest -- -- history that's.
Strike price shot in the I'm -- capital markets -- Charlie for the united side.
But clearly still people were cautious and we heard from some of those people out here and the streets.
And they were taking a wait and see attitude about buying the stock.
Are you excited about FaceBook gone public today -- are -- strain on.
Now I'm gonna wait to see what happens to it.
Before I can't put any attention I think it is a little overhang and I thought about it but I've decided that's it.
Too much right but -- the price might run up and then -- Well now what we do know is the all the size of this offering was up by 25% this past week it was priced at the very high range.
So you didn't get a pop but he did get a whole new crop of millionaires and billionaires back.
You're right -- about a thousand of -- imagine that a great job has always taken.
You don't know big -- -- -- on its opening day but a state imported -- remembered this tent getting ratcheted up.
Ahead of the offering remember they first talked about it they're being offered in the ground its -- it's there.
And thirtieth and 32 -- 34 than it was ratcheted up to 38 houses there so you know.
Kind of the eye of the -- so while investors might be disappointed by the ultimate performance market watcher at the task he says -- is actually a good thing explained that.
And well what we don't want is we want.
Markets to be realistic and will we don't want excuse me is for something to be a bubble and if this stock went much higher than where it opened up and quite frankly I think it's gonna -- a lot lower from here in the short run.
I think there's been some support we do not want to see unrealistic prices we wanna see prices that are absolutely realistic in the market.
And we don't want to see people getting in there and then thinking that it's like gambling.
And -- -- very very happy this thing did not pop it's 40% overvalued he'll make it real simple right now the stock this 40% overvalued based on expected earnings.
And I don't -- all of that sale of a real good number I think we're gonna see -- thing trade down probably down to the low thirties over the next couple weeks.
All right but it's 40% overvalued you can make the argument right this should be worth no more of -- -- loads -- money.
-- be able to make that argument especially in light of what's going on -- the world economy right now now that could change very dramatically if certain things take place about 21 days after a stock goes public.
-- they can start making a research reports come out in new announcements come out so there's quite period still -- but based on what we know right this moment this stock has about 40% overvalued.
And -- I'm happy that we didn't see a big pop in this right now.
You know there was such high expectations.
Built in today's offering in May be just -- it -- social enormity of it the fact it has -- million users.
The fact it was so incredibly -- It's very hard to live up to expectations like that at -- and I do wonder.
The company brought this on itself or whether those who were bringing it to this day.
Brought it upon themselves that when you have so many shares out there and ahead of the fact been ratcheted up the price of those -- it's almost impossible.
To see them like I can certainly do the double address.
Well it really did it all comes down to valuation remember 80% of the volume.
Now in this stock if not more than that today we're all institutions and institutions don't look at the popularity of a company they look at the valuation of a company that's -- you look at historically the best IPOs on day one.
Are mostly companies you've never heard of before because the value -- That was placed on them was dramatically.
-- -- was low and the demand for was very high.
Again the popularity does not equal price performance.
And now the media did get a hold of it -- almost talking about you couldn't go anywhere without talking about it but that doesn't mean that it's gonna make it for a good stock or a good feel good day one which we saw today.
All right real quickly if you're right on on the course from here until it stabilizes is down.
That would be in keeping with the theme -- IPOs on any sort that they start strongly.
And can write you know maintain that and and they sort of struggle.
I admit I sort of get a beachhead and then they're off.
If they're good they're off to the races Amazon comes to mind -- comes to mind even Microsoft -- -- and the author on author and another thought about ten days from now people are gonna build a borrow shares and start shorting this stock if they chose to -- a lot of downside left potentially in this and plus ninety days later the lock up comes off.
So I think we're just gonna keep seeing a lot of selling pressure on this and individual investors don't make stocks rise.
Institutions move the market and institutions are the ones that really don't like this company so.
Be careful buyer beware the person aboard a 45 -- he's going to be real sorry a couple of weeks from now.
All right thank you very much at the.