If you bought Facebook stock from its initial public offering, you’re probably aware that it’s crashing, down nearly 16 percent in just two days of trading. The frustration and disappointment for Facebook is big, and it’s starring down the company. Is it doomed?
On Friday, the shares ended their first day of trading just pennies higher than the $38 IPO price, which is the amount investors paid to get in on Facebook a day earlier than the rest of the country.
But since then, shares of Facebook have been in a tailspin. The company lost 11% of its value on Monday, falling to $34.03. The sell off is continuing, at least in early trading. If there’s any good news for investors here, it’s that Facebook is actually up from its all-time low — earlier today, the stock dipped as low as $30.98 a share.
Already, people are pointing fingers, trying to find out exactly what went wrong. A lot of investment experts are blaming Morgan Stanley and Facebook’s decision to increase the number of shares up for offer — a move that led to investment funds getting more shares than they expected they would.
“The underwriters completely screwed this up,” explained Michael Pachter, an analyst at Wedbush Securities, in an interview with The Wall Street Journal. The offering “should have been half as big as it was, and it would have closed at $45.”
Early trading issues with the NASDAQ stock exchange were also being blamed by some individual investors. George Brady, a 66-year-old recruiter, wound up being sold 1,000 shares of Facebook stock shortly after trading opened. According to Brady, he tried to withdraw his order, but his Charles Schwab account wouldn’t let him.
Many people put a lot of money into this stock hoping to make immediate gains, but are reminded by the crashing reality that there’s no shortcut to being rich, especially in a market like we have today.