Facebook IPO goes live and other top news stories of the day.
Facebook IPO goes live
Facebook’s stock has begun trading on the Nasdaq stock market. The social network raised $16 billion in its initial public offering that valued the company at $104 billion as reported by the Associated Press. Mark Zuckerberg rang the opening bell today. The stock priced at $38 per share on Thursday, the top of its expectations. Facebook is one of the few profitable internet companies to go public in recent years. In 2011 it earned $1 billion, up from $606 million a year earlier. CNBC is reporting that retail demand for the stock today is the highest that bankers have ever seen. About 15 to 25 percent of the shares will be released to retail investors. Trading will begin at 11 am Eastern time today. The Dow is currently up 42 points at 12, 484.
JP Morgan Chase’s Dimon to testify before Senate
JP Morgan Chase’s CEO, Jamie Dimon, will testify before a key Senate panel next month about his company’s $2 billion trading loss. At the time the loss occurred, according to the Wall Street Journal, JP Morgan did not have a treasurer in place for the five month period in which the trades occurred that led to the loss. Experts indicate that this may have made it easier for some of the bad positions to go unchecked. The trading positions have produced losses that could total as much as $5 billion in losses. The bank has ousted the Chief Investment Officer. Apparently risk control caps that had required traders to exit positions when their losses exceeded $20 million had been dropped. Dimon was unaware of these changes. The Financial Times reports that JP Morgan also has built up positions of more than $100 billion of risky bonds, the types of mortgage backed securities that caused the 2008 collapse. The problem in holding these positions is the ability for JP Morgan to unwind these positions due to a limited number of buyers.
Europe preparing for Greek exit
European officials are working on contingency plans in case Greece drops out of the euro zone, according to Reuters. Policymakers insist they want Greece to remain in the European Union but feel they must prepare for a worst case scenario. Policymakers are hesitant to confirm they are actually preparing plans. Currently the biggest fear is that a Greek meltdown would spread to other countries, especially Spain. Spanish loan losses rose in March to their highest level in 18 years have raised fears about the strength of Spain’s banking system. Asian shares were down today due to the European issues and European markets are set to report the biggest decline since November today.
Home prices in China fall
Home prices in China continue to fall more than two years after the government began measures to secure the value of property, according to theFinancial Times. Prices had skyrocketed in 2009 due to large scale stimulus measures. But real estate investment represents more than 10 percent of economic growth in China. If investment falls to zero, China will lose 2.6 percent from its GDP growth. A survey released today indicates that prices declined in 46 cities.
Walmart beats Q1 estimates
Walmart reported a 10.1 percent increase in first quarter profits, beating Wall Street estimates, according to USA Today. The company’s re-emphasis on lower prices drove shoppers into its stores. The US stores account for 62 percent of Walmart’s business and apparently had veered away from its traditional low cost strategy. The said it expects earnings per share to be $1.13 to $1.18. Analysts had expected $1.16.