Facebook share dip wipes $10bn off its market cap
Facebook shares sank in the first day of trading yesterday - leaving some investors down almost 25% from where they were on Friday and driving others to switch back to more established stocks.
Facebook's debut, without the full support of the company's underwriters, was beset by problems, so much so that Nasdaq said it changed its initial public offering procedures. That may comfort companies considering a listing, but does it little for Facebook, whose lead underwriter, Morgan Stanley, had to step in to defend the $38 offering price on the open market.
Without a fresh round of defence, Facebook shares fell $3.79 to $34.34 in afternoon trading. That represented a decline of 10% from Friday's close and 24% from Friday's intra-day high of $45 a share.
"At the moment it's not living up to the hype," said a futures analyst.
The drop in Facebook's share price wiped some $10 billion off of the company's market capitalisation - it became a sufficiently interesting pop culture story that even gossip website TMZ did a brief item yesterday morning.
In the broader market, US stocks rose to snap a six-day losing streak on the S&P 500, rebounding from equities' biggest weekly drop in almost six months.
The Dow Jones industrial average was up 135.25 points, or 1.09%, at 12504.63. The Standard & Poor's 500 Index was up 20.78 points, or 1.60%, at 1316.00. The Nasdaq Composite Index was up 68.42 points, or 2.46%, at 2847.21.