Photo: Getty Images
When Facebook went public May 18 its offering tipped the scales at $16 billion, the second-largest U.S. IPOon record. A bit more than a week later, the social network is leading a slightly more ignominious list.
In terms of market capitalization, Facebook has been the biggest loser since its debut among the companies in the Russell 1000 index, according to Bespoke Investment Group.
From May 18 through Tuesday, Facebook has lost $21.8 billion in market value (market cap is share price multiplied by number of shares outstanding). That figure dwarfs the next biggest declines over that span: $3.6 billion forDell, $2.9 billion for Pfizer and $2.5 billion for Google, the company whose 2004 IPO was used by many as a benchmark for the Facebook launch. (Rounding out the not-top 10: Johnson & Johnson, Procter & Gamble, EMC, VMWare, NetApp and Lowe’s.)
To be fair to Facebook, it is worth noting that newly-listed issues have a tendency to suffer more volatility in general. Throw in the frenzy around the offering – from Mark Zuckerberg’s appearances, or lack thereof, during the company’s roadshow to the controversy over Nasdaq’s opening of the stockand whether underwriters including Morgan Stanley favored certain clientsover others when selling the shares – and it adds up to a challenging start for company’s public life. (See “Facebook Lawsuits Start Flying.”)
Credit: Bespoke Investment Group
Facebook will ultimately settle down, but with a large number of shares still subject to a lockup period that won’t expire for months and the little communication from the company expected before earnings come out in July a bumpy ride can be expected for a few more months.
But the debate around the social network seems to be just how to value it, not whether there is any value in the business period. The latter is the debate around one-time tech darling Research In Motion. Facebook shareholders may be lamenting a 24.1% drop from the $38 IPO price, but the BlackBerry-maker stumbled 8% in just after-hours trading Tuesday thanks to a warning of a first-quarter loss and news that it has hired JPMorgan and RBC for a strategic review. (See “RIM Sees Q1 Loss.”)
Facebook may have lost the most market cap since it went public, but as the RIM news shows, there are bigger things to worry about. Shares of the social network lost 9.6% to closet at $28.84 Tuesday.
No comments:
Post a Comment