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Facebook wrapped up its second week of public trading at a $27.84 a share, down 26.8 percent from its initial offering price of $38.
The all-time high for Facebook stock is $45, and its all-tie low is $26.83 — a huge range given that the company only went public two weeks ago.
This IPO has been a huge disappointment so far for early traders — if not for the company itself. We saw red flags on day one of the offering, when the stock price closed down $4 from where it opened. And to be frank, most Silicon Valley insiders, including professional investors, didn’t see this coming.
The poor performance of Facebook stock has had a negative trickle-down effect on other new tech stocks. In fact, the market for public tech stocks has been so turbulent over the past couple weeks that travel search company Kayak delayed its IPO, even though its roadshow had already been planned for this week.
Here’s a five-day look at tech stocks, as well as general market indicators, to get a sense of how the overall industry is performing:
As you can see, the strongly social companies are taking the largest hits; Yelp and Groupon fared even worse than Facebook. But overall, this wasn’t the rosiest week for anyone, tech or otherwise.
“We’re clearly in a state of euphoria about the potential of social media,” said Michael Pachter, managing director of equity research at Wedbush Securities, in a conversation with VentureBeat. “The bubble is not as large now that Facebook’s has deflated.”
Pachter went on to say that Facebook’s share price decline is definitely and only because of the large number of shares issued: 484 million shares, all told. For contrast, he noted, Google’s IPO put only 20 million shares on the market.
“In other words, the Facebook IPO was over 10 times as large as the Google IPO. It is clear that the public wasn’t ready to absorb this much stock, and the lack of reassurance from Facebook management about how seriously they consider the share price performance hasn’t helped.”
Still, many have given a year-end target of $42 for Facebook stock, and we would caution naysayers that the story of Facebook’s IPO is, in many ways, still just beginning.
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