Facebook (FB), now Meta Platforms, Inc. (META), went public with its initial public offering (IPO) on May 18, 2012. The popular social networking company had one of the largest and most anticipated IPOs in history. On that day, FB shares closed at $38.23, slightly above the $38.00 IPO price.
- Meta (formerly Facebook) has become the dominant social media platform on the planet, with over 2.9 billion monthly active users.
- The company was founded in 2004 and went public via IPO on May 18, 2012, with a share price of $38.
- The price dropped to under $18 a share early on before rising to where it is today, with a market cap of around half a trillion dollars.
Facebook's IPO Failed to Meet Expectations
Facebook made its long-awaited filing for an initial public offering with the Securities and Exchange Commission (SEC) on Feb. 1, 2012. Prior to its initial public offering, Facebook stated it had a net income of $1 billion in 2011, which was an increase of 65% from 2010. The company also stated it had 845 million monthly active users and 483 million daily active users as of Dec. 31, 2011.
On May 18, 2012, Facebook held its initial public offering and, at that time, it was the largest technology IPO in U.S. history. Facebook offered 421,233,615 shares at a price of $38 per share and raised $16 billion through that offering, a record at the time.
With all of the hype surrounding the social media giant's IPO, expectations were sky-high. Almost immediately, though, it became apparent that 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.
A lot 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.
Facebook, Inc. officially changed its company name to Meta Platforms, Inc. on Oct. 21, 2021. Its stock ticker subsequently changed from FB to META.
NASDAQ Glitch Cost 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.
In the years following its IPO, Facebook focused heavily on its mobile platform, which helped boost the company's revenue. Since then, via acquisitions of popular social networking platforms like WhatsApp and Instagram, Meta Platforms now joins other tech giants with a $500 billion or more market capitalization.
If You Would Have Invested in Facebook After Its IPO
Assuming you would have been able to purchase one thousand dollars worth of shares at $38, you would currently have 26.3 shares ($1,000 divided by $38). On June 15, 2022, shares of Facebook Incorporated closed at around $164. Your shares would then be worth $4,313, for a 431% gain, or around a 15% compound annual growth rate (CAGR).
Facebook's shares, however, did not staircase higher for a period initially following the IPO. Rather, the stock slumped over $20 from the IPO price to just $17.55 per share on Sept. 4, 2012. At this low, your return on investment would have been -53.82%, Some analysts and traders believed the company was overvalued and the IPO was priced too high, which led to the crash.
Meta (formerly Facebook) has become the dominant social media platform on the planet, with over 2.93 billion monthly active users worldwide as of 2022.
What Was Facebook's All-Time High?
As of June 2022, Facebook's stock closed at an all-time high on Sept. 10, 2021, reaching a price of $378.69.
Has Facebook Stock Split?
No, Facebook (Meta) has not yet had a stock split.
What Was the Largest IPO of All Time (So Far)?
As of mid-2022, the largest IPO is the oil giant Saudi Aramco, which raised an astounding $25.6 billion when it went public on Dec. 5, 2019.
The Bottom Line
Though the tech giant's IPO got off to a rocky start, the company turned the tide and has seen significant growth in the years since. With strategic acquisitions, such as Instagram and WhatsApp, Meta will continue to be a dominant player in the tech and social media industries, with a stock price that is expected to continue growing.