Facebook Shares Plummet on Day 2

Facebook's IPO went from disappointing to bruising on its second day of trading. After closing essentially flat on Friday, the shares plunged on Monday, May 21, 2012 — falling about 11% to close just above $34, wiping out billions in market value and delivering a black eye to everyone involved in the offering.

The verdict from analysts was blunt. "The underwriters completely screwed this up," said Michael Pachter of Wedbush Securities. "This thing should have been half as big as it was, and it would have closed at $45."

The criticism was aimed at the offering's size and pricing: bankers had increased both the price and the number of shares ahead of the debut, setting a valuation above $100 billion for a company whose revenue and earnings growth were already beginning to slow. Nasdaq's technical glitches on day one — which delayed the open and left many traders uncertain about their orders — added to the damage.

Day two confirmed what day one had suggested: the most hyped IPO in technology history had been mispriced, oversized, and mishandled. It would take Facebook more than a year to climb back above its $38 offering price.

This article summarizes contemporaneous reporting, including the Wall Street Journal's May 2012 coverage.