Facebook IPO Fizzles; Dow Extends Losing Streak
(NEW YORK) -- The much anticipated Facebook IPO couldn't help stocks Friday. It was a bad end to a dead-end week on Wall Street.
The Dow closed down 59 points at 12,383 -- its 12th day of losses in 13 trading sessions. The Nasdaq lost 27 points to close at 2,787, while the S&P gave up eight points Friday and closed at 1,297.
The IPO everyone had waited for -- Facebook closed at $38.23, gaining just 23 cents.
After some technical hiccups, trading in Facebook's blockbuster IPO officially opened to an eager public Friday at about $42.05 a share and drifted lower by mid-day. Shares were trading below $39 around 3:05 p.m. eastern time, just over the offer price of $38.
Earlier on Friday, the shares nearly dropped to its offer price, lower than what many analysts expected.
Jim Krapfel, IPO analyst with investment firm Morningstar, said he was surprised to see Facebook only up a few percentage points given the pent-up retail demand for its shares.
"Clearly concerns regarding the company's valuation, increased insider selling, and GM news are weighing on the stock. Weakness in the stock market over the last several days is also likely playing a significant role," he said.
General Motors said this week it was pulling about $10 million of advertising from Facebook.
Out of four recent technology IPOs -- those of LinkedIn, Zynga, Pandora and Groupon -- only LinkedIn has recently traded above its IPO price. LinkedIn's IPO price last May was $45 a share. Shares of LinkedIn were trading down around 5.8 percent on Friday late afternoon at $98.83.
A trend of other high growth tech offerings show that "the more the stock goes up in the first day, the more it declines in the ensuing weeks and months," he said.
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