Facebook stock falls on second day of trading
Facebook's stock has fallen well below its $38 IPO price in the social network's second day of trading as a public company.
Investors and technology industry watchers are closely tracking the company's shares. Facebook made its market debut on Friday, with trading on the Nasdaq delayed for a half hour. The stock closed just a few cents above where it priced on Thursday night, when many investors had hoped for a big first-day pop.
The shares opened on Friday at $42.05 and fluctuated throughout the day before closing at $38.23.
Wedbush analyst Michael Pachter, who came out with an "Outperform" rating on Facebook before its IPO, said he thinks the underwriters overestimated demand for the company's stock.
Last week, the underwriters, led by Morgan Stanley, increased the offering price range. On Wednesday, Facebook's early investors and other stockholders increased the number of shares they were selling in the IPO. Both had seemingly been signals that there was strong demand for shares.
"The late addition of 84 million shares to the offering overwhelmed demand, limiting the first day price," Pachter said in a note to investors.
On Monday, Facebook stock fell $4.22, or 11 per cent, to $34.01 in morning trading. Shares had dropped as low as $33.
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