Trading of Facebook stock began this past Friday allowing anxious investors to finally own a piece of the Facebook empire. The stock opened on the Nasdaq at $38/share and did break at least one record according to the Wall Street Journal, volume. In fact, "Facebook had traded 460 million shares by 3:07 EDT. The most ever for a US stock on the day of it's IPO."(http://stream.wsj.com/story/facebook-ipo/SS-2-9640/) But the record breaking has not continued.
As the market closed on the first few days of trading, the price of Facebook stock has started to fall. On Monday (May 21, 2012) the stock closed at $34.08 down 9.4% from the IPO price of $38. On Tuesday (May 22, 2012) Facebook stock was valued at only $31 when trading ended for the day. As the stock price continues to fall both current and potential investors are asking if Facebook is indeed a good investment.
Experts are wondering the same. In fact, IPO expert and professor of finance at the University of Florida Jay Ritter cautions that the IPO market is very unpredictable. Ritter argues that perhaps the price to sales ratio of the stock is too high, but he still invested. Other experts agree with Ritter and believe that the initial price of the stock was too high and did not account for other risks associated with an IPO such as:
*Many marketers have not figured out how to use Facebook
*There is a lack of strategy that has been established for using social media
*Content investment is difficult
*Consumers are not caring about brands in a social context through Facebook.
For more expert opinions on the IPO take a look at the video below or click on the following link: http://www.youtube.com/watch?v=MIm9EsPFX6c
Less than a week into trading there are still many questions about whether or not Facebook will be a stock market success or utter failure but it sure does have some work to do.