Don't look now, but Facebook shares have been on the rise for the last three trading days. Last Wednesday, the social network's stock stood at $27.24. It closed today at $31.41, a 15 percent rise in less than a week. So far, Facebook has recovered more than $10 billion of the $35 billion in market capitalization it blew off following its disastrous IPO. Facebook's painful low of $25.52 -- just 12 days ago! -- is now starting to fade a bit.
There are many possible reasons for Facebook's recent rise. The company has been on a bit of a spending spree, including its acquisition of Face.com today. It launched a platform for real-time ad bidding last week, one of several recent moves intended to convince investors that it's serious about bolstering its ad revenues.
But there's rarely a single explanation for any given stock's rise or fall. This is especially true of IPO stocks, which frequently remain volatile months after their debut.
Zynga, for instance, debuted at $10 per share before dropping to $8.00 per share and rising back up to $9.22. That's an 18 percent swing in 30 days:
Zynga's first month of trading
Yelp's first month as a public company was even more volatile. Its stock opened at $15, bounced up immediately to $24.60, then dropped to $19.80 before recovering to $28.09. It nearly doubled its valuation in its first month -- twice!
Yelp's stock in its first month as a publicly traded company.
And let's not forget about LinkedIn, which debuted at $45, rose to $94.25, then plummeted to $63.31 in its first month, a 32% drop from its high:
LinkedIn's stock in its first month as a publicly traded company.
History shows that this kind of trading volatility is going to be the norm for Facebook, at least for a while. The company's next earnings report, its first as a public company, will give us a better idea to the overall strength of its business -- and the likely direction of its stock.
0 comments:
Post a Comment