Drudge: 'Fakebook' — Facebook's IPO Gives No Return on Day One

Facebook's long-awaited IPO arrived on May 18, 2012 — and by the end of the day, the most memorable verdict came from the Drudge Report: "FAKEBOOK: IPO GIVES NO RETURN."

The numbers told the story. Priced at $38 a share, the offering raised $16 billion, making it the largest technology IPO in history at the time. But the first day of trading on Nasdaq was marred by technical glitches that delayed the open, and the stock that had been expected to soar instead sputtered: it touched the mid-$40s briefly, then slid back to close at $38.23 — a gain of 23 cents. For the retail investors who had clamored for shares, day one delivered essentially nothing.

The flat debut punctured weeks of hype. In the days before the IPO, General Motors had publicly pulled its $10 million in Facebook advertising, saying the ads didn't work — a blow to the social network's monetization story at the worst possible moment. Analysts who had warned that Facebook's $104 billion valuation was stretched suddenly looked prescient.

Zuckerberg, who rang the opening bell remotely from Facebook's Menlo Park headquarters, had little to celebrate. The company's bankers, led by Morgan Stanley, had priced the offering aggressively — arguably too aggressively, raising the price range in the final days as demand surged.

What followed was worse than a flat day one. The stock slid in the weeks after the IPO, falling well below the $38 offer price and staying there for over a year. Lawsuits followed, alleging that underwriters had shared revised, weaker revenue forecasts with select institutional clients but not with the public.

The IPO that was supposed to mint a generation of millionaires instead became a cautionary tale about hype, pricing, and the gap between a beloved product and a sound investment. Drudge's headline, for once, was not an exaggeration.