Facebook stock briefly traded above its $38 initial offering price on Wednesday, before dipping back to close at $36.80, inspiring thousands of news reports, blog posts, and tweets. But what did it mean? No less than five media outlets insisted on the "psychological significance" of the share price hitting $38.31, offering a modest 0.82 percent return to anyone who purchased Facebook stock at its IPO price over a year ago. That rate of return would normally warrant zero news articles. So how to conjure up the importance of a momentous occasion such as this? Well, just out and out admit that the entire thing is in your head:
- "Considering $38 is not only a psychologically significant level, but also the break-even point for early investors who invested in the IPO, there’s plenty of attention surrounding it." — Moneybeat
- "More than anything else, it is Facebook’s psychological win." — AllThingsD
- "There may be a psychological barrier there with the IPO price." — Bloomberg
- "Stock analysts are being cautious in making recommendations on Facebook, with the $38 mark being called a psychological barrier." — NPR
- "It is a psychological barrier more than anything, as the company's fall from grace after the IPO has remained a sore spot for investors and employees." — USA Today
Looking for more compelling interpretations of the figure brings little clarity. "It symbolizes investors recognizing that the company's promise at the time of its IPO could finally materialize," writes USA Today, which suggests that it might mean something. "To eventually cross $38 is indeed a win for Facebook in regaining lost investor confidence, a threshold that the social giant needs to surpass to convince potential buyers that its shares will perform well in the long term," added AllThingsD's Mike Isaac, who again says its meaning is that is might mean something.
The actual meaning is that investors, like the one who spoke with The Wall Street Journal, did not lose as much money on Facebook as they feared. "There's some relief," Chris Baggini, a senior portfolio manager at Turner Investments, who has held 2 million Facebook shares since the company went public said. Then again, if he missed that short window in which the stock was at $38, he's still losing money. But at least, for a brief moment, he felt some mental relief.
This article is from the archive of our partner The Wire.
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