Facebook Shares Drop Below IPO Price in German Trading

By Amy Thomson - May 21, 2012 4:34 PM GMT+0700

Facebook Inc. (FB2A) fell below its initial public offering price in German stock trading briefly before rebounding above the $38 level.

The shares fell to as low as 29.74 euros, and $37.97 based on spot exchange rates, in early trading in Frankfurt. The stock traded at the equivalent of $38.43 as of 11:30 a.m. local time. It closed 0.6 percent higher at $38.23 on its first day of trading in New York on May 18.

The company, based in Menlo Park, California, raised $16 billion in its IPO last week, valuing the social-networking site at $104 billion. The offer makes the 8-year-old company the seventh largest U.S. technology firm by market value, outstripping more established giants such as Cisco Systems Inc. (CSCO) and Qualcomm Inc. (QCOM) Still, the share performance has yet to match some of its peers that sold shares in the past year.

LinkedIn Corp. (LNKD), a social network for professionals, surged 109 percent last May after its IPO. Groupon Inc. (GRPN), the biggest daily-deal coupon site, began trading on Nov. 4 at $20 and rose 31 percent that day. Zynga Inc. (ZNGA), which makes games for Facebook including “FarmVille” and “CityVille” fell in its first day of trading, closing 5 percent below its IPO price on Dec. 16.

Morgan Stanley (MS), the bank that handled the IPO, stepped in to prop up the stock from dipping below the offer price on May 18, said people with knowledge of the matter, who asked not to be identified because the purchases were private.

Sales at Facebook came in at $3.71 billion last year. That puts it below the top 50 U.S. technology companies by revenue. Google Inc. (GOOG), valued at almost twice as much as Facebook, reported $37.9 billion in revenue last year. Google jumped 18 percent on its first day of trading in 2004.

Facebook was the 11th U.S. consumer Internet company to go public in the past year, a stretch that began with LinkedIn a year ago. With a valuation of $104.8 billion at May 18 close, Facebook is worth more than three times the other 10 combined. LinkedIn is second, valued at $10.3 billion.

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net