Update: Facebook IPO stumbles out of the gate

Update: Facebook IPO stumbles out of the gate

The frenzy that had surrounded Facebook's initial public offering quickly cooled after trading started today and the company's stock ended the day flat.

The Nasdaq market closed with Facebook trading at $38.23, only slightly above its opening share price of $38. The stock had opened the day at around $42 a share, but quickly began to waver, dropping and rebounding through most of the afternoon.

However, just 10 minutes before close of the market at 4 p.m. ET, the stock began to sink, even dipping below $38 per share. It recovered at the last minute to close just above.

While Facebook was able to maintain its opening price, it did not meet many of the lofty expectations that envisioned the stock rocketing to $50, $60 or even $90 a share on its opening day. For that, Wall Street and investors were left wanting.

I think its very disappointing, said Zeus Kerravala, an analyst with ZK Research. People thought this was going to be the most successful IPO of all time. Its not a bad IPO. It opened at $38, which is good and it stayed there. Trouble is, people were expecting more.

"Some of the problem may have been all the hype," he said. "Investors tend to stay away from hype.

According to the Wall Street Journal, Facebook did manage to make history, setting a record for trading volume for any IPO. More than 460 million shares of the social network were traded.

The first hours of the social networking company's IPO got off to a shaky start today with the share price wavering around the $40 mark, never gaining the astronomical momentum that had been anticipated by many. Shortly after 2 p.m. ET, the stock price was hovering just under $41, less than $3 above its initial share price.

"It's certainly not flying to unprecedented levels," said Kerravala. "This underscores the thesis that many investors are taking a wait-and-see approach."

He added that while many people may be surprised Facebook's stock price hasn't taken off yet, they really shouldn't be.

"I think it's surprising a lot of people, but I think it should have been expected," said Kerravala. "There are a lot of questions about Facebook.... How are they going to monetize mobile? Can [CEO Mark] Zuckerberg run a public company?"

Twenty-eight year-old Zuckerberg started the day by ringing the Nasdaq opening bell from company headquarters in Menlo Park, Calif.

After that, though, there were a few hitches.

Trading was supposed to start at 11 a.m. ET, but the Nasdaq delayed it by about half an hour in order to handle the flood of buy and sell orders that were coming through for Facebook's stock.

Once trading actually began, the stock started out strong, trading at $42 per share, $4 above the official offering price of $38 the company set Thursday.

However, instead of rising from there, Facebook's share price began to fizzle, and dropped to below $39 just 20 minutes after trading began. Once the price hit $38, about 10 to 15 minutes later, the company's underwriters stepped in to bolster it and hold the price floor at $38, reported the Wall Street Journal.

TV commentators and online headlines began using words like "underperform" and "disappointing."

Ezra Gottheil, an analyst with Technology Business Research, said people may be jumping the gun. He contends that Facebook's stock price is hovering around where it started this morning because it was priced appropriately.

"I can say that if your IPO doesn't go up or down very much, then you priced it right," he added. "At this point, it's all about perception and expectation. The stock price is just a noise meter."

Regardless of the ups and downs the stock is going through today, there's been a huge amount of interest and excitement around the event.

As trading began, people were standing around Times Square in New York City, staring up at giant screens showing Facebook's stock numbers. At the same time, Twitter momentarily staggered under the crush of tweets about the IPO.

As noteworthy as this day has been for many in the financial and tech industry, it's been a tough day for other social networking companies.

The Wall Street Journal reported soon after trading of Facebook's stock began that LinkedIn's stock price was down 2.6% and Groupon was down 6%. Pandora also was down, dropping 5%.

Zynga, though, might have fared the worst. The online gaming company's share price toppled a full 13%, landing at $7.17, according to MarketWatch . Trading on that stock was halted, later reinstated, then halted for a second time.