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Massive bank buyout saved Facebook embarrassment of stock dipping below starting price |
Social networking giant Facebook narrowly avoided the embarrassment of its stock dipping below the 38 dollar a
share starting price because the banks advising it stepped in to buy. The sale
got off to a messy and inauspicious start. The start of trading in New York was
marred by a 30-minute delay that left the stock exchange Nasdaq embarrassed amid
confusion among investors over whether trades had been processed. After finally
coming on stream the shares briefly surged by almost 20 percent, only to fall
back to their 38 dollar initial offer price as a widely expected glut of demand
was offset by the weight of those selling, The Telegraph reports. According to
the report, analysts speculated that Facebook's army of bankers had stepped in
to stop the shares falling below 38 dollars a share, a move that would have landed
the social network with a public relations disaster on its first day as a public
company. Retail investors were among the biggest buyers after Facebook limited
their share of the flotation to just 15percent of the 421million shares sold.
"Emotion rather than the company's fundamentals are going to be driving the shares
over the next few days," the paper quoted said Arvind Bhatia, an analyst at Sterne
Agee, as saying. According to the report, analysts said that the shares might
have failed to spark in the same way as previous high-profile tech IPOs because
underwriters were too aggressive in pricing the deal.
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