Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Nasdaq  >  AMAZON.COM       

SummaryNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 

Facebook shares sink 11 percent as reality overtakes hype

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/22/2012 | 07:33am CEST

Facebook shares sank 11 percent in the first day of trading without the full support of the company's underwriters, leaving some investors down almost 25 percent from where they were Friday and driving others to switch back to more established stocks.

Facebook's debut was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing, but does it little for Facebook, whose lead underwriter, Morgan Stanley, had to step in and defend the $38 offering price on the open market.

Even so, one source said Morgan Stanley's own brokers were at one point "ranting and raving" about glitches that left unclear what trades had actually been executed.

Without a fresh round of defense, Facebook shares ended down $4.20, at $34.03, on the Nasdaq. That was a decline of almost 25 percent from Friday's intra-day high of $45 a share.

"At the moment it's not living up to the hype," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago, adding that some people may have decided to hang back and buy the stock on the decline.

"Look at the valuation on it. It might have said 'buy' to a few people, but boy it was awfully rich," he said.

The drop in Facebook's share price wiped more than $11 billion off of the company's market capitalization -- it became a sufficiently interesting pop culture story that even gossip website TMZ did a brief item Monday morning.

Volume was again massive on Monday, with nearly 168 million shares trading hands, making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.

The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales of the stock, according to a notice from Nasdaq.

EMOTIONAL TRADING

"One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors' decisions to get out of the stock," said JJ Kinahan, TD Ameritrade's chief derivatives strategist.

Shares of other one-time Internet darlings fell in lock step with Facebook before rebounding on their own merits, with Yelp and Groupon rising. Zynga and LinkedIn fell, though.

The news was not all bad, though, as the Nasdaq rose 2.46 percent. High-profile tech stocks rose sharply, with Apple up 5.8 percent and Amazon 2 percent higher.

FuturePath's Lesh said some investors took money out of Apple to buy Facebook, and now could be going right back in to Apple given the lackluster performance of Facebook thus far.

By mid-afternoon on Monday, though, there were indications that investors might be coming back in to Facebook. The stock was well off the lows of the morning, and some market players saw an entry point forming.

"We see 38 percent of the ideas on Facebook are short and 62 percent have a more long bias," said Tim Murphy, general manager for the Americas at TIM Group, which transmits and tracks equity trade ideas from 750 brokerage firms for institutional investors globally. "Brokers are saying to their clients there is a good opportunity here."

NASDAQ CHANGES

Still there was a long list of questions -- ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever -- and few easy answers.

"It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it; that's the bottom line here," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

Nasdaq said Monday morning the changes it was making would prevent a repeat of what happened Friday, when glitches prevented some traders from knowing for hours whether their trades had been completed.

The exchange also said it would implement procedures to accommodate orders that were not properly executed last week, which could ultimately lead to compensation for some investors.

"It doesn't instill confidence for clients. Talk about trying to convince them it isn't a casino," one Midwestern financial adviser told Reuters on Monday.

Separately, a source said Morgan Stanley's brokerage arm still had a "large number" of share orders from Friday that were not confirmed, which it was working to resolve.

A Facebook spokeswoman declined to comment on the share price issue.

Some financial advisers, who might have been furious last week at getting left out, were counting themselves lucky by Monday that they did not get their clients involved.

"By pure luck I failed to talk it up with a lot of clients because I didn't think I would be able to get much," said one Raymond James adviser, who sought, and received, only 500 shares for one client.

"I basically told people they weren't going to get any, and luckily, it proved to be a bust," the adviser said.

(Additional reporting by Jennifer Saba, David Gaffen, Edward Krudy, Ashley Lau and Rodrigo Campos in New York, Doris Frankel in Chicago and Jennifer Merritt in Orlando, Florida; Writing by Ben Berkowitz in Boston; Editing by Edward Tobin, Maureen Bavdek and Steve Orlofsky)

By Chuck Mikolajczak and John McCrank

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on AMAZON.COM
03:43a AMAZON COM : ‘We Will Revolutionise Online Sale of Jewellery’
09/23DJUPS Uses Drone to Deliver Package to Boston-Area Island
09/23DJMetro AG Breakup Plan Faces Opposition
09/23 AMAZON.COM, INC. (NASDAQ : AMZN) Hits All-Time High; Could Reach $1000
09/22 AMAZON COM : BIZ BUZZ Bookstores and book sales on the rise Belmont Books part o..
09/22 AMAZON COM : Who is ahead in the e-Commerce game?
09/22 ORACLE : CTO Larry Ellison Taunts Amazon
09/22 Macy's teams up with grooming services provider in beauty push
09/22 AMAZON COM : Handmade at Amazon Expands into Europe
09/21 MILESTONE : Nexstar Venture Distribution Content On Amazon Prime (ALLISS)
More news
Sector news : Department Stores - NEC
09/23DJFINISH LINE : Comparable Store Sales Rise
09/22 Macy's teams up with grooming services provider in beauty push
09/21DJAHEAD OF THE TAPE : Bed Bath Shouldn't Go Beyond -- WSJ
09/20DJBED BATH & BEYOND : Can Do More With Less -- Ahead of the Tape
09/19 Kohl's to keep seasonal hiring little changed at about 69,000
More sector news : Department Stores - NEC
Advertisement
Financials ($)
Sales 2016 136 972 M
EBIT 2016 4 725 M
Net income 2016 2 819 M
Finance 2016 8 396 M
Yield 2016 -
P/E ratio 2016 138,90
P/E ratio 2017 77,49
EV / Sales 2016 2,73x
EV / Sales 2017 2,20x
Capitalization 381 985 M
More Financials
Income Statement Evolution
More Financials
Consensus 
Mean consensus OUTPERFORM
Number of Analysts 45
Average target price 880 $
Spread / Average Target 9,2%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Jeffrey P. Bezos Chairman, President & Chief Executive Officer
Brian T. Olsavsky Chief Financial Officer & Senior Vice President
John Seely Brown Independent Director
Patricia Q. Stonesifer Independent Director
Bing Gordon Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
AMAZON.COM381 985
AMAZON.COM, INC.19.21%381 985
WESFARMERS LTD5.84%37 784
KERING15.38%25 836
EL PUERTO DE LIVERPOOL..-2.94%13 726
AEON CO LTD-17.69%13 188
More Results