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Facebook’s IPO (Nasdaq: FB) Not As Exciting As It Could Have Been

The Nasdaq Stock Market board in Times Square advertises Facebook before its debut Friday in New York. / Spencer Platt/Getty Images

Facebook (FB) priced its IPO at $38 per share on Thursday, at the high end of expectations. The IPO values Facebook higher than and other well-known companies such as Kraft, Disney and McDonald’s. After all the hype, Facebook’s first day as a public company ended where it began. Its stock closed at $38.23, up 23 cents, after pricing Thursday night at $38 per share, when many analysts had expected at least a jump of 5 to 10%.

Facebook offered nearly 20% of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2% of its stock when it went public in 2004 – and rose 18% on day one.

“Facebook closed up only a few cents but likely would have fared even worse if not for underwriters’ buying every time the stock touched $38,” Jim Krapfel, IPO analyst with investment firm Morningstar, said. “Facebook debuted at an inopportune time, as overall stock market weakness clearly pressured the shares. Had the company gone public a couple of weeks earlier, first day performance would likely have been much better.”

On Friday morning, Mark Zuckerberg, CEO and founder of Facebook, and COO Sheryl Sandberg gathered with a throng of cheering employees at the company headquarters in Menlo Park, Calif., to ring the Nasdaq’s opening bell at 9:30 a.m. eastern time ahead of the social media network’s long-awaited IPO.

Mark Zuckerberg, CEO and founder of Facebook

On Thursday, Facebook and the investment bankers settled on a price of $38 per share. The company and its early investors raised $16 billion in the offering, which valued Facebook at $104 billion. That makes Facebook the most valuable U.S. company to ever go public.

But, it might not have been possible for the social network to live up to the hype that led up to its IPO.

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