One year ago the world looked like 1999 again when Facebook opened for trading on the NASDAQ stock exchange May 18, 2012. Everybody and their aunt was convinced that Facebook was the new Google and that investing in the shares was a one way bet, just like in the hey-day of the tech boom at the end of the 1990s.
What happens usually to over-hyped stocks though is that they go up for a bit and then down. Facebook’s $104 billion valuation and sky-high multiples surely was too much for investors to stomach and unlike the 1990s it only traded above its IPO price for the briefest of time on the day of the offering. The reason for this, however, wasn’t a frenzied public but rather the lead underwriter Morgan Stanley who kept buying the shares to support the price and prevent a marketing failure.
After that the only way the stock knew was down, hitting rock-bottom at $17.73 on September 4. After heavy insider selling abated, the stock could reverse its decline, also due to decent earnings and some headway on the mobile advertisement front. It now trades at $26.13, down 31 percent from the IPO price.
But in equity investing, everything is relative and Facebook’s returns are even worse when compared to the market or its competition. Since the IPO, the S&P 500 benchmark of large U.S. companies is up 29 percent, resulting in a 60 percent underperformance of Facebook, a staggering number.
Marissa Mayer at Yahoo! is doing even better. Yahoo!’s stock is up 72 percent since the Facebook IPO, with Facebook underperforming its less loved cousin by 103 percent.
Statista contributed to this report. Infographic by Statista.