Underwriters supported $38/price so FB would not go down today
When the stock finally got started at 11:30 a.m. it opened at $42.05, 10.7% above the offering price. Those gains were short-lived though, in a choppy session of huge volume with well over 400 million shares changing hands.
The common belief was that the deal’s underwriters were a big part of keeping the price from breaking the $38 level Friday, particularly during the final hour of trading when more than 30 minutes of high-volume went by without the stock moving more than a few pennies above $38, but never slipping below. Morgan Stanley, JPMorgan Chase and Goldman Sachs Group led the Facebook offering, which involved more than 30 underwriters.
While the offering delivered big returns for the early investors who sold shares Thursday, those hoping to get in early Friday and flip the shares for a score were sorely disappointed, a fact that should have come as little surprise given the experience of similarly-inclined traders in other recent Internet offerings like LinkedIn, Zynga and Groupon. (See “Wannabe Facebook Flippers Should Watch Out.”)
By day’s end, Facebook shares were at $38.23, just 0.6% above the offering price.