UPDATE: Facebook Volume On Track To Set New IPO Record
May 18 2012 - 3:03PM
Dow Jones News
Frenzied trading in shares of Facebook Inc. (FB) had slowed to a
mere rush by midday Friday, as the social-media giant remained on
track to have the most heavily traded IPO ever.
More than 375 million Facebook shares changed hands in the first
three hours of trading, and more than 100 million of those were
traded in just the first three minutes of the stock's offering.
Market watchers will be keeping an eye on the final volume
figure for Facebook, which had its initial public offering Friday,
after markets close at 4 p.m. The current holder of the record for
most shares changing hands in a single day is Citigroup Inc. (C),
which saw 3.8 billion shares trade on Dec. 17, 2009. That was in
the depths of the financial crisis, when panic selling was rampant
and Citi was in sharp decline.
The record for most shares traded on the day of an IPO is held
by General Motors Co. (GM), at 458 million.
Facebook is poised to beat those levels easily, which would be a
shot in the arm to trading desks that have been seeing anemic
volumes all year.
Facebook accounted for 6.8% of the total U.S. stock market
volume at 1 p.m. EST, and 21.6% of trading in the Nasdaq composite.
The major U.S. markets had seen 4.8 billion shares of stock
trade.
The Facebook trades were clustered around a few different price
levels. Close to 25% of the shares traded around $42, around 16%
traded around $40, and nearly 11% traded around $38. Just under 4%
of the stock's trading has occurred at the $38 offering price.
Other social-media companies saw a volume halo effect from the
offering, although they didn't see any benefits to their share
prices. The Global X Social Media Index exchange-traded fund
doesn't own Facebook yet, but nevertheless saw more than five times
its average trading volume. LinkedIn Corp. (LNKD) and Zynga Inc.
(ZNGA) saw higher-than-average volumes as well. All three stocks
were down more than 3% by midday Friday.
This injection of volume came to many traders as a welcome
boost, if just for the short term, for what has been anemic trading
in the U.S. stock market.
The first quarter of 2012 saw the lowest average volume since
2007; it fell 14.5% from the same quarter the prior year. Last
month was better, but not by much. April trading volume fell 7.6%
year-over-year, according to Credit Suisse Trading Strategy.
The lower overall volume has come amid fewer initial public
offerings. IPO levels are roughly one-sixth of where they were in
the 1990s, according to Credit Suisse. According to data from Ipreo
Capital Markets, they are still in decline. Deals fell
year-over-year for the January-through-April period. Last month saw
$3.9 billion raised in nine deals, down from the $5.6 billion
raised by 20 deals in April 2011. But Facebook's offering should
juice the May figure. Thanks to this deal, the month will show the
first monthly increase in IPO proceeds this year. In the first
weeks of May, 12 IPOs have raised $18.6 billion. Last year, for the
entire month of May, 21 IPOs raised $6.9 billion.
Chris Hempstead, a director with WallachBeth Capital, said he
doesn't think the Facebook IPO will provide a lasting boost to
stock volume, however.
"I do not expect Facebook to create or take away, in any
material way, from the trading of other securities," he said. "The
company has been around for some time, and its arrival as a
publicly traded company simply adds one more stock for fund
managers to choose from."
-By Alexandra Scaggs, Dow Jones Newswires; 212-416-4125;
alexandra.scaggs@dowjones.com
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