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Comment by its_so_on | Hacker News Reader

(EDIT: Earlier this title read "barely above it's IPO price". It definitely used this word, "barely". My comment is now moot. I'm leaving it due to the replies.)

what is with this title? It sounds like it's saying sullenly, "a year later, Facebook is barely above its IPO price".

OF COURSE IT'S TRADING AROUND ITS IPO PRICE, GIVEN THAT IT'S JUST IPO'D. I mean, of ALL the times a company could be trading at its IPO price, don't you think the IPO date is the least notable? Yeesh.

Incidentally, the submitter and I also have a VERY different definition of 'barely.' $0.23 in a day means $230 per 1000 days. At that rate, investing at $38 sounds like a steal to me! A better title might be "Facebook stock up already!"

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On a day where a company has IPOed, for it to be close to the IPO price on the close is a comparative failure. When you float a company your underwriters will generally float at a price which is slightly under what's perceived to be the true value - this is mostly to ensure that the shares get sold (i.e. the VC firms and investors when the company was private get to make their profit from selling their shares), and because it generally ensures that the price will go up on the IPO which makes the company look better.

Saying that +$0.23 in a day means $230 per 1000 days makes no sense at all. What happens on one day, especially when it's the IPO day, has no bearing at all on what will happen in the next trading day - or at least the open to close difference doesn't tell you anything, the volatility along with some other numbers (at my last firm we called them skew, mom and dad but they're all numbers which indicate the directionality of the vol surface) might give you some indications.

My gut feeling, and this is based on the time I've spent in the financial world and especially with options traders, is that today was good for pre-IPO investors who wanted to sell out of their positions, but that any retail investors who bought in on the IPO are going to regret it in the medium term - not least of which because the balance sheet just doesn't support the market cap.

It's a failure if you're in the business of buying IPO stock.

For Facebook itself, it's a glorious success: they have successfully raised alllll the moneys. Most IPOs try to "pop" a little as an incentive to get the big underwriters to take multimillion/billion dollar positions (which they would be totally unable to liquidate at the 'popped' price, because they'd run out of buyers willing to pay decent money). But Facebook had people tripping all over themselves to get the stock. Why give away shares for anything less than they had to? Preserving existing shareholders' values is the name of the game, not giving away valuable shares to a bunch of outsiders.

An incredibly successful IPO.... for Facebook's existing shareholders. Possibly the best IPO ever.

(Disclosure: I bought 50 shares as part of the IPO, because I had that kind of money sitting around and was getting bored with medium-term corporate bond funds.)

Oh for sure, good for Facebook as well. Post-IPO Facebook doesn't really care so much what their valuation is - they've got the cash, they've got a profitable business.

Considering many recent tech IPOs have ended up much higher on their opening day, AND Facebook was highly anticipated, it is surprising that Facebook barely gained anything on its opening day. In fact, if not for the underwriters, it might not have gained anything at all.

Stocks can often pop on the first day after IPO, if there's a lot of demand building. There was a time when companies doing IPOs would consider a 100% increase ("shooting the moon") a realistic possibility. LinkedIn went up 117% a year ago[1]. I don't mean to indicate that these events are positive or a good expectation, just that it does frequently happen.

[1] http://money.cnn.com/2011/05/19/technology/linkedin_IPO/inde...

I guess my thought is that that expectation is dumb. My thought is it's better this way. The difference between the 'high close' and 'low open' should instead have gone to these companies: they should have IPO'd at the high price, so they have more money in the bank. Selling at half of what you'll be worth later in the day is dumb, and means you don't really know what you're worth.

The more interesting thing is: "It didn't plummet like some people were expecting!!!"

It quite possibly would have if the underwriters hadn't been propping it up. Next week, when they stop buying up shares to keep it at $38, will be the real test.

Wait until employees start dumping their stock.

The flip side of that sentiment is "wait until a bunch of sector-specific ETFs and other mutual funds start buying their stock". You know, QQQ Trust, S&P500 index funds, et cetera.

What great world we would live in if all stocks increased that linearly.

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