The Bull Market In Facebook Stock

The Facebook IPO has caused lawyers to rush to court houses and big Wall Street players to blame each other for short-term trading losses. But investors who scooped up Facebook shares near the beginning of June have enjoyed very big gains.

In fact, there is now a bull market in Facebook stock. Shares of the social networking service have now increased by more than 20% from their lows on June 6, when the stock touched $25.52. The stock rose by more than 5% in midday trading on Monday to $31.55.
The IPO remains a disappointment and the stock still trades for about 17% less than the IPO price of $38. Big players ranging from billionaire Mark Cuban to UBS have suffered losses on Facebook’s stock. But the volatility and wide trading range in Facebook’s first month as a public company, a time that included hardly any actual news about its business, suggests the market is still struggling to put a value on the company. Facial-recognition technology company Face.com did say on Monday that it had agreed to be acquired by Facebook for an undisclosed sum.
Facebook and its investment bankers, led by Morgan Stanley, clearly priced the IPO as richly as they could, raising $16 billion. Both the company and Morgan Stanley have been criticized for deciding to increase the IPO’s price and size shortly before the IPO, a notion that will continue to be fueled by Monday’s Blog Morgan Stanley banker Michael Grimes insisting he be the “single driver” of the IPO. The IPO was also hurt by Nasdaq’s technical blunders and dogged by questions concerning whether some investors were unfairly tipped off by the underwriting banks about a slowdown in Facebook’s financial growth.
The stock is now trading about where the company originally planned to price the IPO, between $28 and $35. The company has described this overall range as not being “meaningfully different,” according to documents released by the Securities & Exchange Commission.
The Facebook IPO, a disappointment for so many, turned into a great opportunity for others. For now, buying Facebook for $26 looks to have been a bargain.