Facebook, Inc. (NASDAQ: FB) went public with its initial public offering (IPO) on May 18, 2012. With a peak market capitalization of over $104 billion, the social networking company had one of the largest and most anticipated IPOs in history.
Facebook's IPO Failed to Meet Expectations
With all of the hype surrounding the social media giant's IPO, expectations were sky-high. Almost immediately, it became apparent the results were going to be lower than expected. The stock fell right at opening, and share prices plummeted more than 40% over the next several months, with losses totaling $50 billion by August 2012.
Much of the lack of confidence in the stock came from within, as 57% of the shares sold in the IPO were from Facebook insiders. Another factor in the stock's falling price was the decision by General Motors to pull $10 million in advertising from Facebook due to ineffectiveness.
NASDAQ Glitch Costs Investors
Facebook's initial IPO price was raised just before going public to between $35 and $38, citing heavy demand. However, a glitch in NASDAQ’s electronic trading system delayed some investors from selling the stock on its first day of trading when the stock price fell. Investors stuck with huge losses sued, and NASDAQ eventually paid a $10 million fine over the botched IPO debacle.
Facebook’s Eventual Rise
In 2015, Facebook's heavy focus on its mobile platform helped the company's stock rise 30%. The social networking company joins Apple, Alphabet and Microsoft as the only other tech giants with a $300 billion market capitalization.