10 years ago, on May 18, 2012, Facebook went public in what is still the largest tech IPO in history. After pricing its shares at the upper end of the scale due to strong demand, Facebook raised $16 billion in an initial public offering that valued the social media company at $104 billion.
Facebook’s time as a public company started off turbulent, if not disappointing. After lacking the first-day pop that some investors had certainly hoped for, things got worse before they got (much) better. After closing just above its IPO price of $38 on its first trading day, many of those IPO investors looking for a quick buck jumped ship, causing the share price to plummet. Over the next few months, Facebook’s valuation dropped by nearly 50 percent and it took until August 2013 for the company’s share price to return to its IPO level.
From then on, things mostly went uphill for the social media giant, as investors realized that the company’s ad-centered business model was no fad and that its pre-IPO acquisition of Instagram was perhaps the bargain of the century. Despite some major setbacks – Facebook twice set the record for the biggest single-day market cap loss in history – and a terrible start to 2022, the company’s share price is up 433 percent from the IPO price, meaning that long-term investors who bought into Facebook’s IPO have more than quintupled their initial investment with an average annual return of 18.9 percent.