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Friday, May 18, 2012

Facebook stock outlook next week

Facebook stock outlook next week : The historic initial public offering of Facebook Inc did not go as planned on Friday, as the social networking company's sky-high valuation combined with trading glitches left the stock languishing near its offering price at the market close.

Facebook shares began trading late Friday morning and opened 11 per cent above the US$38 (S$48) offering price, but after peaking at about US$45 slid rapidly at the end of the day to close at US$38.23. The IPO was the third-largest in U.S. history and valued eight-year-old Facebook at $104 billion.

The surprisingly weak debut of a stock that analysts had predicted would climb between 10 and 50 per cent is not likely to dent the business prospects of Facebook, which boasts 900 million users and is upending business practices and social relationships around the world.

The hotly awaited market debut of Facebook on Friday was marred by technology glitches on the Nasdaq in sending messages back to the brokerages that handled orders of Facebook Inc for individual, or "retail," investors. Those problems rekindled fears about the market's electronic trading system and caused some investors to stay away from equities.

Facebook, the No. 1 online social network, disappointed investors with a tepid market debut on Friday. Shares rose a scant 0.6 percent - nowhere near expectations for double-digit gains on the first trading day - and the day was marred by technical problems due to huge order volume. The stock closed at $38.23 after falling as low as $38, its initial offer price.

The disappointing debut curbed investors' appetite for other social media stocks. Hardest hit was Zynga Inc, which closed down 13.4 percent to $7.16 after falling as low as $6.40. The stock was temporarily halted twice due to sudden declines.

LinkedIn shares fell 5.7 percent to $99.02, and Groupon fell 6.7 percent to $11.58. Zynga and Groupon, both of which went public late last year, are also trading below their IPO prices.

Concerns about Facebook's earnings potential were highlighted by General Motors' announcement this week that it would no longer buy paid advertising on Facebook.

Despite the disappointing market debut and the weak performance of social media stocks, market participants are still optimistic about Facebook going forward. In any brand new area, social media in this case, most are going to be losers and only some are going to be winners. Yes, the IPO was disappointing, but Facebook is clearly the winner here and others aren't,

will facebook shares can hold the $38 IPO price next week may 21 2012 ?

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1 comment:

  1. ParvenuMay 19, 2012 at 1:50 PM

    Gen x and gen y are the prize. They have current and future income/ buying dominance. They Facebook. ~1000M ACTIVE users going to Facebook every day. That's my audience and I will go where they are with my advertising dollars. Face book - over 100$ a share inside first year.

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