The Breakdown

Explaining Southern California's economy

Not so Happy Facebook Day for Facebook IPO

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38542 full

Well, that was a disaster. Facebook closed its first day of trading at just above its offering price of $38 per share. Mark Zukerberg did say that it wasn't Facebook's mission to be a public company, after all, and it looks like he got his wish to at least have it not be the company that brought the Everyday Joe, retail investor back into the market.

Two new subplots. First, you can't believe how tense it was to watch the market close, as Facebook got precariously close to "breaking the IPO" by dipping below $38. That would have been a debacle for Morgan Stanley, the lead underwriter in the offering. My Twitter feed was on fire for the last half hour of trading with tweets about how Morgan was waging an "epic battle" to hold that $38 line (@TheStalwart and @carney — Joe Weisenthal of Business Insider and John Carney of CNBC, respectively, were all over it). Who knows how much money they spent to buy shares, on trading volume that hit 460 million in a single session, a new record.

Mark Zuckerberg, meanwhile, wound up worth $19 billion. Other investors and Facebook employees became multi-billionaires and multi-millionaires. As a vehicle for realizing the goals of venture capitalists, Facebook did its job and then some. But as an IPO...well, it wasn't like Zuck & Co. even wanted to do one, so perhaps we got the IPO we, and Facebook, deserved. 

However, even though Facebook didn't deliver much of a first-day "pop" — 10 or 15 percent would have been nice — it still held a higher price level than just a week ago. Should the company and its underwriters have stuck with a price around $30? $25? There might have been more money made, but it would have been money made on trading, not money that went to the company or its early investors.

On a bummer note for California, because Facebook DIDN'T close at the speculative top of its trading range — say, $45ish per share — the state won't be getting quite the massive windfall it was expected. It will still get a lot. But with a $16 billion budget deficit, they're probably not exactly dancing jigs in Sacramento tonight.

We'll be chewing this over for a few days. And on Monday, trading begins anew. So what do you think? Will Facebook head lower, or higher?

Follow Matthew DeBord and the DeBord Report on Twitter.

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