Reviewed by Margaret James
Facebook (FB), now Meta Platforms Inc. (META), went public with its initial public offering (IPO) on May 18, 2012. The popular social networking company had one of the largest and most anticipated IPOs in history. FB shares closed at $38.23 on that day, slightly above the $38.00 IPO price.
Key Takeaways
- Meta (formerly Facebook) has become the dominant social media platform on the planet, with over 3.07 billion monthly active users.
- The company was founded in 2004 and went public via IPO on May 18, 2012 with a share price of $38.
- The price dropped to under $18 a share early on before rising to where it is in 2025, with a market cap of around $1.5 trillion dollars and share price well over $600.
Facebook’s IPO Failed to Meet Expectations
Facebook made its long-awaited filing for an initial public offering (IPO) with the Securities and Exchange Commission (SEC) on February 1, 2012. Facebook stated before making its IPO that it had a net income of $1 billion in 2011, which was an increase of 65% from 2010. The company claimed 845 million monthly active users and 483 million daily active users as of Dec. 31,
Facebook held its IPO on May 18, 2012, and it was one of the largest technology IPOs in U.S. history at that time. Facebook offered 421,233,615 shares for $38 per share. It raised $16 billion through its IPO, a record at the time.
Expectations were sky high due to the hype surrounding the social media giant’s IPO, but it became apparent almost immediately that the results were going to be lower than expected. The stock fell right at opening, and share prices plummeted more than 40% over the next several months. Losses totaled $50 billion by August 2012.
A lot of the lack of confidence in the stock came from within, because 57% of the shares sold in the IPO were from Facebook insiders. Another factor in the stock’s falling price was the decision by General Motors to pull $10 million in advertising from Facebook due to ineffectiveness.
Note
On Oct. 28, 2021, Facebook announced that it had officially changed its company name to Meta. Its stock ticker changed from FB to META on June 9, 2022.
Nasdaq Glitch Cost Investors
Facebook’s IPO price was raised to between $35 and $38 just before going public. Heavy demand was cited as a reason. Unfortunately, a glitch in Nasdaq’s electronic trading system delayed some investors from selling the stock on its first day of trading as the price fell. Investors stuck with huge losses sued, and Nasdaq eventually paid a $10 million fine over the botched IPO debacle.
Facebook focused heavily on its mobile platform in the years following its IPO, including acquiring such popular networking platforms as Instagram (in 2012) and WhatsApp (in 2014), which helped boost the company’s revenue. As of October 2024 Meta had a market capitalization of $1.493 trillion.
Leading Up to the IPO
Facebook was initially launched in 2004 as a platform for Harvard students, and by the end of that year it had reached one million registered users. The company’s skyrocketing debut was marred in 2004 when Divya Narendra, Cameron Winklevoss, and Tyler Winklevoss sued Mark Zuckerberg, alleging that Zuckerberg stole the Facebook idea from them while they were all students at Harvard. The suit was settled for $65 million in 2008. The three subsequently appealed that settlement but to no avail, ultimately deciding in 2011 not to take it to the U.S. Supreme Court.
Zuckerberg was initially opposed to taking Facebook public, but the platform had become too big to be maintainable as it was and had too many shareholders.
Note
Meta (formerly Facebook) has become the dominant social media platform on the planet, with more than three billion monthly active users worldwide as of the close of 2023.
Facebook’s Funding History
Funding is an ongoing process. A company must go through several stages of funding before it can open an IPO.
Facebook’s first significant funding was $500,000 from Peter Thiel just after it was incorporated. This was followed by $12.7 million from Accel Partners in 2005. The next round of funding was $27.5 million from a group of venture capital investors that included Greylock Partners and Meritech Capital. In 2007 Facebook raised approximately $240 million from Microsoft. Fundraising continued until it reached so many shareholders that it couldn’t remain a public company.
Facebook’s Top Shareholders
Mark Zuckerberg owned 958,000 Class A shares and 346,048,858 million Class B shares in 2023, according to Meta’s annual report filed with the U.S. Securities and Exchange Commission. Sheryl K. Sandberg held 1,373,362 Class A shares at the time of the report, followed by Christopher K. Cox with 379,336 Class A shares. Rounding out the top five shareholders were Javier Olivan with 100,187 Class A shares and Susan Li with 84,133 shares.
Sandberg , who was Facebook’s chief operating officer before Olivan took the role, resigned from the company as an employee on Sept. 30, 2022. Cox is the company’s chief products officer. Li took over from David M. Wehner as chief financial officer in November 2022.
If You Had Invested in Facebook After Its IPO
You would have 26.3 shares if you had been able to purchase $1,000 worth of shares at $38 ($1,000 divided by $38). Shares of Facebook Incorporated closed at around $584 on Oct. 10, 2024. Your shares would therefore be worth about $15,359 for a nearly 1,536% gain.
However, Facebook’s shares didn’t rise in price following the IPO. Instead, the stock slumped about $20 from the IPO price to just $17.55 per share on Sept. 4, 2012. Your return on investment would have been -53.82% at this low. Some analysts and traders believed the company was overvalued and the IPO was priced too high, which led to the crash.
What Was Facebook’s All-time High?
As of Oct. 11, 2024, Facebook’s stock closed at an all-time high on Oct. 4, 2024, reaching a price of $595.94.
Has Facebook Stock Split?
No, Facebook (Meta) has not yet had a stock split. However, as its stock price continues to rise, speculation is that a split is coming, if not in 2024 then probably in 2025.
What Was the Largest IPO of All Time?
As of the end of 2023, the largest IPO is the oil giant Saudi Aramco, which raised an astounding $25.6 billion when it went public in December 2019.
The Bottom Line
Facebook’s IPO got off to a rocky start, but the company now known as Meta turned the tide and has seen significant growth in the years since, hitting a record high stock price off nearly $596 in October 2024. Meta expects to remain a dominant player in the tech and social media industries by focusing Facebook on a young adult clientele and making greater use of artificial intelligence (AI).