After a brutal day of trading, Facebook closed at $34.03, down nearly 11 percent and well below the company’s initial offering price of $38.
Shares opened below the break-even mark and never recovered Monday.
Without the support of its underwriters — who kept the stock above $38 on its debut day — Facebook hovered at around $34 much of the day as questions swirled about the way the IPO was handled on its opening day.
On Monday, Nasdaq said its systems were overloaded Friday and that reports for shares traded and cancellations entered between 11:11 a.m. and 11:30 a.m. were not distributed by the system.
Nasdaq also announced Monday that it was changing the way it handled initial public offerings. From now on, the company said in a note to equity traders, Nasdaq will “no longer accept cross-eligible order modifications after the auction’s final calculation has begun.” That means traders will have a hard deadline to tweak their orders before trades are printed to the tape, which will allow the exchange a breather before the official pricing. The rule, Nasdaq said, should prevent a race to begin trading.
In an interview with CNBC, Thomas Joyce of Knight Capital Group said his firm’s problems with trading lasted for 2 1/2 hours.
“We were trading blind for 2 1/2 hours — retail, institutional, everything,” he told the network.
Joyce said that his firm got “punched in the nose” and said that the company is looking into filing a claim against the exchange.
In acknowledging the technical glitches, Nasdaq Chief Executive Bob Greifeld said that the stock exchange was “humbly embarrassed,” the Associated Press reported. But Greifeld told reporters in a conference call Sunday that he did not believe the exchange’s issues hurt the stock’s performance.
Analyst Andrew Tonner of the Motley Fool said in an interview with The Washington Post that he believes that Nasdaq and the bankers who handled Facebook’s IPO had to share the blame for the stock’s poor performance.
“Judging by the flat performance, maybe investors aren’t excited,” he said. “But it’s a gray area: With all the news about the exchange having a hard time delivering on buy orders, it could be that the demand couldn’t reach that supply.”
He said that he doesn’t think the problems have killed Facebook’s momentum completely. But the firm will have to face pressure of being a public company, he said, even if it wasn’t in the plans for Chief Executive Mark Zuckerberg. Zuckerberg has been clear that going public was never his intention for Facebook and has seemed to indicate that he’s not going to change much about the way he runs the company.
Said Tonner, “Zuckerberg and the management team don’t tend to manage quarter-to-quarter, and he’s said that he’s not going to play the Wall Street game.”
That said, with major stockholders — including several on the company’s executive team — whose wealth is tied to the stock’s performance, Zuckerberg may have to struggle some to float above investor concerns.
“There’s a chance it will become harder for him,” Tonner said. “With his management team and high-level employees [depending on the stock], it probably does get tougher. That’s one of the problems with being a publicly traded company.”