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““This was not our finest hour, we’re not happy with our performance.” – Robert Greifeld, Nasdaq CEO May 2012

Morning stock market summary

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In addition to Walmart (WMT) earnings, which were released earlier this morning, we have a busy day of economic data.  Jobless claims and the Philly Fed were just released, and at 10 AM we’ll get the release of Existing Home Sales and Leading Indicators.  Existing Home Sales are expected to decline from 4.4 million down to 4.3 million, and Leading Indicators are also expected to decline 0.6 points continuing what has been a miserable stretch for that series.

Jobless claims were modestly lower than expected on both an initial and continuing basis, and the Philly Fed report was less bad than forecast, coming in at -10.4 versus forecasts for a reading of -20.0 and last month’s very weak reading of -31.3. In reaction to the reports, futures have sold off modestly, and are currently pointing to a flat open.

Eleven years ago today, officials from the Nasdaq, as well as reporters from every business network and many other mainstream news outlets, flew to Menlo Park for the “remote” IPO of Facebook. The company raised $16 billion in what was the largest technology offering of all time.  In the 11 years since its launch, Facebook (FB) – now Meta Platforms (META) – has rallied 538% for an annualized gain of 18.3%.  Over that same period, the S&P 500 gained ‘just’ 290% which works out to an annualized gain of 13.2%.  Based simply on the performance of the stock relative to the S&P 500, the Facebook IPO was a huge thumbs up.

It hasn’t been a smooth ride for the company, though – both in and out of the market. Right from the start of the company’s life as a public company, Facebook has had more than its fair share of drama.  On the day of the IPO, trading was delayed by over a half hour due to a technical glitch, and while the stock initially rallied, it quickly sold off and struggled to hold its IPO price by the close of trading. Without underwriter support, the stock wouldn’t have held its IPO price on its first day of trading which is considered a cardinal sin for underwriters.  From there, it only got worse as the stock traded steadily lower.  In the first three months of trading after the IPO date, FB traded lower on over 60% of trading days for a total decline of over 60% from the intraday IPO day high. Facebook was quickly looking like the Titanic of IPOs.

Obviously, we all know with hindsight that Facebook recovered from that rocky start, and while that 61% peak-to-trough decline was extreme, it wasn’t even the largest drawdown in the stock’s history.  As shown below, the most recent decline of over 75% from the 2021 high blows that initial decline out of the water.  Even now with the stock up over 175% from its low last November, META is still down 37% from its all-time high, which would still rank as one of the larger drawdowns in the stock’s history.

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