The IPO flop has pushed many companies to withdraw plans to offer shares.
Since a month has gone past Facebook’s IPO has fallen flat, the US market for initial public offerings has collapsed.
The fallout from Facebook is making companies, especially those in the technology sector cautious about going public.
A lot had pinned there hopes on Facebooks stock market debut to signify the beginning of a new era in Silicon Valley, that would unleash a wave of investment in technology start ups. Instead from the first day, Facebook’s US $16 billion initial public offering has resulted in nothing among tech entrepreneurs and those who supply the early funding.
After pricing at $38 the night before its debut, Facebooks stock shot to $45, then settling at $38.23 at the end of the first day, since then the stock has been as low as $25.52, then settling at $32.06 down 16 per cent from the IPO price.
Other recent public internet companies that are trading below their IPO are Zynga, Pandora Media the online radio service, and Groupon which offers online deals to subscribers, which went public at $20 and is now trading around $10.
Now companies are feeling a different kind of Facebook effect, with the mood pessimistic right now, everybody is still holding out hope that the market will recover, that Facebooks stock will recover.
The IPO also stirred suspicions that Facebook is overvalued, that it’s not growing fast enough and that the consumer shift from personal computers to mobile devices will hurt its growth.
Facebook has 900 million active users with $3.7 billion in revenue and $1 billion in net income last year.
Facebook is not a crappy company, just a blip in the poorly handled offering.