The IPO Guy and Facebook

On May 17, 2012, Facebook sold its shares in the IPO market for $38 each and the shares began trading on the NASDAQ the next day at a price of $42.05, a relatively modest price increase of about 11 percent. Unfortunately for shareholders, the stock price dropped to $38.23 by the end of the day. All in all, the Facebook IPO was relatively mild by IPO standards. Because of the pricing of the stock prior to the IPO, we would have expected a bigger first-day "pop" in the stock price. For an explanation of the partial adjustment effect and more on Facebook, you can watch this interview with world-renowned IPO expert Professor Jay R. Ritter. http://www.bloomberg.com/video/92947929/