(MENAFN - ProactiveInvestors - Australia) From North America: Since it announced its record-setting IPO and market debut just one week ago, Facebook (NASDAQ:FB) heads into Memorial Day weekend with its shares trading at about 16 percent below their initial offering price.
As at 2:30 pm EDT, the company's shares were trading at 31.71 " a plunge of 6.29 from the initial offering price of 38, despite the fact that the rest of the tech sector was enjoying gains on the day.
On the day the company went public, it saw its shares rise as high as 45, but that was fleeting and the stock closed its first day only a little ahead of its 38 debut.
The next day, the stock began to fall " and it continued its descent over the next week.
Facebook and its lead underwriter Morgan Stanley (NYSE:MS) have faced major criticism for boosting the number of shares sold in the IPO by 25 percent last week to 421.2 million, and for raising the asking price to between 34 and 38 ahead of its opening on the Nasdaq.
The shares hit a low of 30.94 late Tuesday and have fluctuated since then, but continue to trade well below its initial price.
Weak stock performance isn't the worst of the company's woes either.
Facebook was slapped with several lawsuits this week, over the pricing of its offering and whether Morgan Stanley withheld potentially negative information on Facebook's revenue prospects from some IPO investors.
One filed complaint alleged that "the offering materials provided to potential investors were negligently prepared and failed to disclose material information about Facebook's business, operations and prospects, in violation of federal securities laws."
"The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result," said another complaint.
Media outlets have reported that in response to the legal action, a Facebook spokesperson said, "We believe the lawsuit is without merit and will defend ourselves vigorously."
Regulators including the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority and Massachusetts Secretary of the Commonwealth William Galvin, are now looking into how the IPO was handled. The U.S. Senate Banking Committee is also reviewing the matter.
On Wednesday, Morgan Stanley had told brokers that it was reviewing client orders on a trade-by-trade basis and that "in order to ensure best execution, we expect there will be a number of price adjustments."
Morgan Stanley said Friday that it has told its financial advisers it will adjust prices on a "few thousand" Facebook trades and retail limit orders wouldn't be filled at 43 per share or higher, according to media sources.
The Facebook fiasco continued on the now infamous Nasdaq technical glitch that delayed the social networking company's market debut by 30 minutes, causing delays in client orders and giving some investors and traders significant losses as the stock price dropped.
The exchange operator is facing lawsuits from investors and threats of legal action from brokers.
Nasdaq OMX CEO Bob Greifeld recently told reporters that he was "humbly embarrassed" by the delay in the opening of Facebook's initial public offering for trading.
Greifeld has since been in talks with regulators over potentially millions of dollars worth of customer disputes.
The stock exchange group said it would put aside at least 13 million for traders and investors that were affected by the exchange's order-cancellation issues.
According to reports from Reuters, Fidelity Investments was dealing with "thousands" of customers with order problems, and financial services firm Knight Capital was demanding tens of millions of dollars in compensation from Nasdaq for trading-related losses.
Proactive Investors is a market leader in the investment news space, providing ASX "Small and Mid-cap" company news, research reports, StockTube videos and One2One Investor Forums.
