Facebook lost a little more face Monday, as its stock fell below its IPO price and forced traders to start focusing on problems not possibilities.
Shares of the world's No. 1 social-networking site dropped below the $38-a-share offering price, a financial fat lip more typical of marginal companies or ones with unsteady financial performance.
At its depth, Facebook's shares fell to $33 a share, marking a 13% decline for even privileged investors who bought at the IPO price. Shares finished the day down $4.20, or 11%, to $34.03.
Seeing its IPO "break," as it's called on Wall Street, is embarrassing since the broad stock market jumped, with the Dow Jones industrial average adding 135 points to 12,504. Even more Facebook shares might be sold into the market in as soon as three months when select employees and other investors may sell their stock.
Facebook's disappointing debut is especially troubling as it:
•Showcases technology issues at the Nasdaq. Traders griped Friday they were not getting confirmations from the Nasdaq exchange indicating the status of orders, Ahmed says. Trading was reported as going smoothly on Monday.
•Underscores a sharp reversal for the IPO market. Just as the IPO market seemed on the upswing, Facebook punctuated a big reversal. Of 124 companies that went public the past 12 months, 50 are trading below their IPO prices, says a USA TODAY analysis of data from IPOScoop.com.
•Serves up another confidence killer for investors. Investors who bought Facebook stock got a big lesson on volatility. Facebook's botched debut comes as IPOs and the broad market have been weak. The FTSE Renaissance U.S. IPO index is up just 1.5% this year, and the Dow has fallen nearly 6% this month.
Facebook's stock woes don't directly hurt the company. Facebook must prove it can achieve the huge profitability bullish investors predicted.