27th August 2013 Facebook Climbs Back to IPO Level.

Shares in social network Facebook (FB) have risen above their IPO price for the first time since they were floated over a year ago, bringing the company's market capitalisation briefly to over $100 billion.


The company, not in need of any financing, only decided to float shares in May 2012 as regulations forcing it to make public its earnings once it had over 500 investors was on the verge of kicking in. Investors clambered to get on board, driving the IPO price up to $38 and sending shares to an all-time high of $45 by the close of the first day. By September they had fallen to a low of $17 and have spent much of their time since in the $20 region.


Shares closed on Monday at $41.34, giving the company a valuation of $100.6 billion for the first time since its IPO day. Shares have risen on the back of optimism over its mobile strategy as the company gets to grips with the once thorny issue of mobile advertising. The ace up its sleeve is that it hasn't yet tried to monetize Instagram, which Facebook purchased just before going public in April 2012. While some investors have been calling for it to do so, Facebook wants to allow the Instagram user base to grow further before introducing any form of advertising. As of June Instagram has 130 million monthly users.


After a series of technical failures halted trading on its first day, landing the NASDAQ with a record $10 million fine and with lack luster buying forcing underwriters to step in and prop up the share price, Facebook was being touted by many as one of the biggest IPO failures of all time. Now with the share price back at the $40 mark Morgan Stanley (MS) believes that the company will generate revenue of $1 billion next year from as yet undeveloped video advertising.



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