Day one was a disappointment as there was no “pop”. Day two was even worse, showing the shares slide 11% to close at $34.03. Is this a bad sign for the long term?
No. Not necessarily. The new billionaires in Palo Alto will not become millionaires any time soon and the shares aren’t going to drop much further than they already have. They likely won’t go much higher than their IPO value, either, until some big news about how the infusion of money is being invested hits the wire. Until then, expect a few gains, a few losses, and an overall stabilization of the stock for the next few weeks.
This was all created by a simple mistake. They priced it too high. The market is reacting to uncertainty and they killed their chances of being a big hitter by coming out of the gate higher than expected. It’s quite possible that if they launched at $34 where they were supposed to open, that they might be over $40 today. Instead, they overestimated the demand and underestimated the uncertainty with their revenue model.
At the end of the day (the first day, at least), there were a lot of rich people coming out for their first high-dollar weekend. Here’s how they stacked up:
Created by: MBAOnline.com