Stirring up passions in the realms of finance and friends, social network site Facebook’s shares have gone on sale and did not provide the massive immediate gains that had been forecast.
Founder and chief executive Mark Zuckerberg – surrounded by newly minted millionaire workers at the company’s Silicon Valley headquarters – remotely rang the opening bell on the Nasdaq exchange to kick off trading.
When it comes to buying, the professionals council caution. Kenneth Polcari, Managing Director of investment firm ICAP, said: “Getting in on the first trade action may not be the best decision. Especially if it is so over-hyped and the first trade is a little bit out of line. So I think people just need to take a deep breath, understand they want to buy it, understand they want to own a piece of it – that’s great. Just don’t go in there making foolish decisions based on emotion.”
The most talked-about share debut in years is the culmination of eight years of breakneck growth by the site that links nearly one in seven people on the planet.
The share sale means it is valued at over 80 billion euros, which is more than Deutsche Bank, BMW and Adidas together.
Financial experts are divided on whether potential profits justify that.
The shares finally started trading much later than expected at 17.30 Central European Time, and immediately jumped from $38 to $45 – an 18 percent increased, but within half an hour the enthusiasm seemed to ebb and the price slipped back to $38 before picking up a bit in later trade.
One analyst, Max Wolff with Greencrest Capital, said: “This is all about the future, so it really is a lottery ticket.”
He added: “The shares could initially rise and then it could go parabolic on a wave of retail investor hope. These shares are going to trade on hope. I do not know how to value hope.”
Inevitably the comparison is being made with a previous occasion when internet related companies were being traded on hope. That was over a decade ago; it turned out to be a bubble and a lot of people lost a lot of money.