Mike Isaac

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On Day Two, Facebook Shares Open More Than 10 Percent Off

After opening at a share price of $36.53, shares of Facebook stock dipped by more than 10 percent below the company’s initial public offering price of $38, trading as low as $33 at one point on Monday morning.

Zynga and LinkedIn were also down on the news, opening off around 2 percent and 5 percent, respectively.

After what many called out as a lackluster performance on its opening day, all eyes are on the company’s ticker this week to see how the shares perform going forward. Scores of financial analysts and armchair investors and much of the technology press expected an initial first-day “pop,” a jump of 10 percent to 20 percent or more for fast-moving retail flippers to make a quick buck.

But as Friday’s trading day came and went, and the stock closed only slightly higher than it debuted, many expected that Facebook shares would open off come Monday morning, especially since underwriters were no longer able to prop up the stock by dipping into the greenshoe like they did on Friday.

A great many argued that Facebook shares were priced perfectly, leaving no money on the table for retail investors to come in and sweep up in the first-day pop that so many had expected. Exercising the allotment option was the underwriters’ job, Fortune’s Dan Primack argued vehemently; first and foremost, Facebook was priced to get the most money it could for going public.

Here’s the thing: Like Benchmark Capital’s Bill Gurley reminds, Amazon’s debut saw the stock break issue and stay below its IPO price for months.

It then went on — over the long haul — to rise 1000x.

FB Chart

FB data by YCharts


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik