Facebook’s reception on Wall Street goes from lukewarm to frigid

Facebook, a few mornings after its IPO:

• First, shares in the world’s largest social network are tanking Monday morning after an opening-day pop failed to materialize last week. They’re down nearly 12 percent to about $33.75 as of this post. The Menlo Park company’s shares began trading at $38 Friday in one of tech’s most anticipated IPOs.

Although a few expressed disappointment, many analysts and investors said Friday that Facebook’s first-day closing price of $38.23 meant that the shares had been priced correctly, and that time would prove its value. But there were reports that Facebook shares would have closed lower had underwriters not stepped in to prop them up, and analyst Brian Wieser of Pivotal Research Group told Reuters: “Investors are increasingly aware of the risk embedded in the stock price.” Those risks, he said, include rising costs and uncertainty about ad revenue.

Bloomberg quoted anti-hoodie analyst Michael Pachter of Wedbush Securities: “There are only so many people that are going to buy into a hyper-growth story.” Pachter is the analyst who criticized Facebook CEO Mark Zuckerberg — who by the way got hitched the day after his company went public — for wearing his signature hooded sweatshirt during the company’s pre-IPO road show. (See Did Zuckerberg wear his hoodie in the wrong ‘hood?)

Ronald Coleman of Columbus Advisors Group reportedly said “the problem was they waited too long to go public.” The 8-year-old company’s shares had been trading on private exchanges for a while. Facebook was valued at $82.5 billion on SharesPost in January. (See Facebook IPO questions: impact on social, economy.)

• Nasdaq is dealing with the fallout after Facebook’s IPO was marred by a more than 30-minute delay and uncertainty over execution of trades. Its CEO, Robert Greifeld, reportedly said Sunday “this was not our finest hour.” Nasdaq announced this morning that it was making changes to prevent a repeat of Friday’s embarrassing episode, which it said was due to poor design of trading software. More than half a billion Facebook shares changed hands on the first day, setting an IPO record for trading volume.

• A couple of other social-related stocks, Zynga and LinkedIn, are down about 2 percent each as of this post after steeper declines in earlier trading. Zynga, the San Francisco social-games maker, is trading at its lowest level since it went public in December. Other tech stocks and the rest of the stock markets are mostly higher.

 

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  • All IPOs should bomb this badly. I hope my IPO ends up making my investors billions of dollars. Record trading on its opening day is testament to a poor showing?

 
 
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