Facebook Stock Ready to Roll – But Where Will it Go?
The Facebook IPO price was set and the stock is ready to start trading – but will it live up to its hype or sharply sell-off?
The social media giant priced at $38 a share, the company announced after market close yesterday (Thursday).
That makes Facebook the largest tech IPO in history, valued at $16 billion.
It's the third largest U.S. IPO ever, behind first place Visa at $19.7 billion and then General Motors, which raised $18.1 billion.
While the stock has created unrivaled investor frenzy, there is a wide range of predictions for how Facebook will do in its first trading day – and who the real winners will be.
"The ones who make out on IPOs are the early investors, venture capitalists, founders, and underwriters," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "The public almost always goes along for the ride…whether or not they get taken for a ride remains to be seen." The Facebook stock price will be determined when it starts trading today at 11 a.m.
Where the cutoff is for considering the IPO a success varies – with many thinking anything below 50% would be a disappointment.
"I think anything over 50 percent will be considered a successful offering – anything under that would be underwhelming, Jim Krapfel, an analyst at Morningstar, told Reuters. "A lot of retail investors are not concerned about valuation. That's what is going to drive the first day pop."
Could Goldman Sachs (NYSE: GS) Earnings Slip Send Investors Bailing on Stock?
Goldman Sachs Group Inc. (NYSE: GS) earnings reported today (Tuesday) beat expectations, but still showed a 23% profit drop from a year ago – will investors dump it for banks with better earnings?
Goldman Sachs Stock Price History
Goldman said revenue from trading bonds, currencies and commodities was not as robust as counterparts JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC). The decline pushed first-quarter net income to $2.11 billion, from $2.74 billion the year before.
The bank still beat analysts' forecast of $3.55 earnings per share (according to 24 analysts polled by Bloomberg News), coming in at $3.92 – although expectations were set fairly low.
The earnings news pushed shares down more than 2% in premarket trading.
"Although earnings actually beat consensus, I think that the results look somewhat disappointing in comparison with the strong numbers we've seen out of JPMorgan and Citigroup," Richard Staite, an analyst at Atlantic Equities LLC in London, said in an interview with Bloomberg. "The market had perhaps hoped for a real blow-out quarter from Goldman Sachs."
This isn't the first weak earnings announcement from the big bank. It recorded a quarterly loss last fall, only its second since going public in 1999. In 2010 and 2011, its net income fell year-over-year in six of the eight quarters.
While mixed earnings aren't shocking from an industry still adjusting to a post-financial crisis landscape, Goldman's lackluster numbers could drive investors toward better-performing and less controversial firms.
Goldman Sachs (NYSE: GS) Mixed Earnings
Goldman Sachs, the fifth-largest U.S. bank by assets, lost 20% in fixed-income trading last quarter.
That's more than JPMorgan, the biggest U.S. bank by assets, which saw an 11% slip in fixed-income trading, and No. 3 Citigroup (NYSE: C), which lost 4%.
Goldman's revenue fell 16% to $9.95 billion, beating analysts' expectations of $9.41 billion.
While most results fell short of 2011's first quarter, they did show gains from the previous quarter. Total trading revenue soared 87% from the fourth quarter on due to gains in stock and corporate debt markets.
Goldman CEO Lloyd Blankfein hopes market gains and business expansion will drive profits the rest of the year.
"Our mix of businesses gives the firm significant room for revenue growth as economic and market conditions continue to improve," Blankfein said Tuesday in a statement.
Goldman also announced a 31% dividend increase to 46 cents a share, for a 1.6% yield.
Tech News: Facebook (NASDAQ: FB) Scores Big with Both AOL Patent Sale and Instagram Deal
Facebook announced Monday it would pay $1 billion in cash and stock for photo-sharing app maker Instagram.
The Instagram deal is Facebook's biggest ever in both price and reach. Instagram has more than 30 million active users – which it accumulated in just 18 months – the most of any startup that Facebook has bought.
"We don't plan on doing many more of these, if any at all," Facebook CEO Mark Zuckerberg wrote in a blog post Monday, speaking to the size and scope of the deal. "But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."
Instagram, the most popular way for iPhone users to take and share photos, was named iPhone app of the year in 2011. Its features allow picture takers to alter the size, color and style of photographs.
The Android Instagram app debuted last week to a frenzied audience, with millions downloading the app immediately.
Sorry, NYSE: Facebook (NASDAQ: FB) Will Trade on Nasdaq
Investors finally have the answer to where Facebook Inc. will choose to list shares when the social media powerhouse starts trading this year.
Say hello to NASDAQ: FB.
Facebook had no comment as to why it chose Nasdaq. The news was reported in The New York Times citing a source speaking on anonymity.
Facebook plans to raise up to $5 billion in its initial public offering (IPO), which it filed for Feb. 1. It's expected to start trading in May.
Stock Market News Today: Why Annie's (NYSE: BNNY), Amylin (Nasdaq: AMLN) Soared Today
Among the biggest moves in stock market news today include an 87% gain for organic food maker Annie's Inc. (NYSE: BNNY) in its first trading day, and a 55% jump for Amylin Pharmaceuticals (Nasdaq: AMLN).
Annie's Inc. (NYSE: BNNY) surges in first-day trading: It was expected to be among the best performers of the nine other companies going public this week – and it delivered.
The organic food producer ended its first trading day up 87%. The company offered 5 million shares at $19 a share.
"It's definitely the hottest deal of the week," Scott Sweet, senior managing partner at IPO Boutique, told Reuters. "They have only a few products but they've executed very well and have high brand awareness."
Known for its organic and gluten-free foods, Annie's hopes to capitalize on Americans' increasing trend toward healthy eating.
The growing popularity of more nutrition-conscious grocery shopping is illustrated in Whole Foods Market Inc. (Nasdaq: WFM) 844% share price rise in just over three years. Same-store sales at Whole Foods have steadily risen 8% over the past two years.
Annie's sales for the 2011 fiscal year that ended March 31 were $118 million, 23% higher than 2010. Profit increased 233% to $20.2 million from the year before.
The Stock Market Today: Zynga (ZNGA), Kraft (KFT), Hewlett-Packard (HPQ), Hartford (HIG)
Here's a roundup of these market moves:
Zynga Inc. (Nasdaq: ZNGA) said Wednesday it plans to buy OMGPOP, maker of the explosively popular "Draw Something" game.
Financial terms were not disclosed, but Zynga is rumored to have paid about $200 million for the start-up.
OMGPOP's Draw Something game tops both the iTunes "top paid" and "top free" lists, and is the top-grossing iTunes app. AllThingsD reports the company has recently been netting around $250,000 a day from the game, even after Apple (Nasdaq: AAPL) takes its 30% cut.
ZNGA rose 2.46% Wednesday to close at $13.72.
Monday's Stock Market News: UPS Inc. (NYSE: UPS), US Steel Corp (NYSE: X), Glencore
Monday's stock market news from United Parcel Service Inc. (NYSE: UPS), U.S. Steel Corp. (NYSE: X), and Glencore International Plchelped drive gains in U.S. markets. The Dow moved up a slim 0.05% to close at 13,239.13; the S&P 500 climbed 0.4% to close at 1,409.75; and the Nasdaq rose 0.75% to 3,078.32.
United Parcel Service Inc. (NYSE: UPS) biggest deal in company history: UPS announced Monday a $6.77 billion deal to buy Netherlands-based delivery service TNT Express NV to bolster global sales growth.
TNT is Europe's second-biggest express mail company. Its acquisition will double the UPS presence in Europe and give it about the same market share as the region's industry leader DHL. The deal also will boost UPS's international sales to 36% of its total from 26% currently – a significant leap towards the company's goal of 50%.
The Greg Smith Goldman Sachs (NYSE: GS) Letter Led to $2.2 Billion Loss – More to Come?
The scathing op-ed piece by former Goldman Sachs Group Inc. (NYSE: GS) employee Greg Smith did more than draw attention to a "toxic and destructive" firm culture – it drove down Goldman's market value by $2.2 billion yesterday (Wednesday).
Goldman shares fell 3.4% Wednesday, the third-biggest decline in the Standard & Poor's 500 Financials Index.
Smith pointed to Chief Executive Officer Lloyd Blankfein and company president Gary D. Cohn as responsible for letting the firm falter.
"I truly believe that this decline in the firm's moral fiber represents the single most serious threat to its long-run survival," wrote Smith.
Smith painted a picture of executives with zero respect for their clients, saying it makes him "ill how callously people talk about ripping their clients off," and that in the past year he's heard five different managing directors refer to their clients as "muppets."
Even though Smith's Goldman letter weighed on the bank's share price Wednesday, shares had almost made up the losses by midday trading today (Thursday).
So just how much will the Goldman letter actually weigh on GS stock and popularity?