THE initial public offering of Facebook shares was undoubtedly the most hyped float of the year. It turned out also to be the most disappointing.
It was launched with plenty of fanfare, but lead underwriter Morgan Stanley had to step in and support the stock to keep it above its $US38 offer price over the weekend, after an initial 11 per cent rise.
The shares finished trading at $38.23, having touched $US42 and analysts described the performance as disappointing.
Investors had hoped for a first-day boom although perhaps not to the same degree as during the tech era, when companies such as VA Linux listed and rose 700 per cent, and theGlobe.com rose more than 600 per cent within hours of opening.
But hopes were for Facebook shares to close much higher than they did.
Morgan Stanley, one of 11 Wall Street banks involved in the listing, was forced to dip into the emergency reserve of 63 million Facebook shares to support the stock, The Wall Street Journal reported.
By the end of trading, Facebook's market capitalisation was more than $US104 billion and its chief executive, Mark Zuckerberg, was worth more then $US19 billion.
The float had created more than 1000 new millionaires. But it is not a cheap stock to buy. It is trading at more than 100 times forecast earnings. Google trades at about 20 times forecast earnings and Australian banks trade at about 10 times.