very little time. >> 20 seconds. stock price of facebook 12 months from now. >> i bet it's above the ipo price. i am worried about where it trades relative to the end of the today, which we will see. >> thank you, mandy. make sure you join us on monday. have a great weekend. "sqauwk on the stree "sqauwk on the street" begins right now! the excitement has been building for weeks.

good morning, and welcome to a special edition of "sqauwk on the street." outside facebook headquarters in melo park, california. david faber live from the nasdaq where facebook is listing its historic ipo. good morning, guys. futures are on the rise. of course it's going to happen at 11:00 a.m. eastern time. in the meantime, european markets trying to shrug off some of these concerns about the crisis in europe. but, our road map for the morning, all roads lead to menlo park and facebook. the social network going public today with the biggest internet ipo of all time valuing the company more than a hundred billion dlarsz.

we'll cover what it means for investors, including reaction from shareholders and heavy hitters in the tech world. what a morning we have shaping up. >> it is quite a morning. and it is certainly one big morning here at the nasdaq. and i believe right outside the nasdaq is coming out and entering the nasdaq market. you see that shot right there as he comes into the building for this much anticipated ipo. this is happening live here. >> yes, basically up all night. they've had 31 of them staying up all night. essentially, doing anything other than what your normal job is. not a waste of time by any stretch of the imagination. in fact, past hack-a-thons have produced facebook chat, the like button. and, guys wharks's going to

happen over the next half hour, you're going to have the scene there in times square. back here, employees are already gathering in hackers square. bob will make some remarks. zuckerburg will make some remarks. >> as we continue to rise ahead of the bell-ringing, carl, let's run through some of the number that is you need to know ahead of this facebook ipo. $38 a share is where the share is priced. that's at the high end of the rating. it will be the third biggest u.s. ipo. and as from mr. zuckerburg's stake, that could be worth $19.1 billion. not bad for a 28-year-old. >> look, carl, i think that this is one of those deals. i actually haven't seen this in my life. this orders that i am told people are putting in are by children. they are literally children entering orders.

this is a brand that resonates with people who are very young. why that worries me, there are going to be two kinds of buyers with the open. they tend, literally, to not care what price they pay. >> and that is an issue that. 's why you have to be careful if you're calling your broker out this morning. you don't want to put a market order in. it could open well above 38 buck as sharement it is going to be filled where ever those shares are trading at that point in time. could it be 50? could it be 60? who knows. >> it may be a bit later as you were explaining to a number of us, jim. there was the institutional orders and then the transoms that come to us from the retail

shops like an e-trade. unlikely this thing is going to trade right near where it was priced. one would expect it would be a fairly significant bump. we would be remiss if we didn't see there's some level of fatigue setting in. and part of our mission today is going to be trying to put this whole thing into a larger context, right? >> before we really go into the notion of fatigue, i think it's kind of like the superbowl. do people who cover the story feel fatigued. the reporters are all fatigued. i think people at home are saying, you know, the game is about to begin. we talked about the notion of the retail investor. here's what you've got to know behind the scenes.

everyone feels that morgan stanley is in control. they gave it to the best accounts, supposedly gave it to flippers. the problem with that is that they don't know how to do it. believe me, every one is out of their league when it comes to over the transom, individual buying, no one will ever admit that. i've been in pricing meetings. believe me, they don't know what they're doing. >> this aerial shot, guys, really gives you a sense of what the mood is like over here. we're not talking just a couple hundred employees gathering around a long table. i mean, three quarters of the 35 hundred global employees work here at facebook, the campus, and they've all gathered, a lot of them here overnight. some of them discussed the speech zuckerburg gave just recently.

as much as the company tries to say it's all about business today, it's not. this aerial view does not happen every day. there are cameras set up outside, there are crowds, there's a rope. this ipo has hit the mainstream with kids wanting to put in orders. you can see that excitement here in times square. >> we'll see where it opens. over a hundred billion dollar market value. those shares being sold by the company, let's not forget many more being sold by insiders. but yesterday, did a story on hewellet packard. many of them seem today be in that shot right there. and it just goes to show. facebook could be worth well in excess of three times what hewellet could be.

once, of course, the leader. >> it's so difficult to try to figure out what the actual valuation should be. we've got a couple of benchmarks. apple was selling at earning, earnings, 10-11 times the year we expect facebook to have. >> to have real earning, right. >> that's important. this is a real company. they could have two dollars a share in earn lgs in 2015. that would produce if it were apple or google. you would get a very low price to earnings multiple. talking about 10, 11 times earnings on those out years versus facebook, which obviously is going to be very highly valued if it opens at 50, 60 or $70. i think that people, again, don't know how to handle an influx of orders from the unsophisticated market buyers.

>> and, of course, for all of you out there who do have facebook fatigue, this does have a broader impact on the market. if there is a time in the market for the weak when there are offerings that exceed $10 billion, that includes ipos and secondary share offerings, for the past five years, they were down 1.9% for that week. for this week alone, it's $20 billion including the facebook ipo. and also, in terms of frenzy, average first day pop, 42%. that's where i'm getting -- you know tharks's where i'm coming up with this 50, 60, $38. now, lelt's just take a look at it. what do you get a couple of months later? how about every single one is a loss. could this one be different. >> well, no coincidence a couple months later, that's when the lock up comes.

180 days or so after when the lock up expired. 10 days after the lock-up expired, the shares were down 59 bucks. >> although, finally people did get back a little bit more with linked in. so linked in has earnings. linked in is a social media company that had some discipline. but here's the problem. link linkedin, there's 38%. the highest that we had, which happens to be the same amount of insider share percentage as pandora. so they opened pandora's box and they've been trying to get it closed at a certain level. that's more than twice what pandora is valued. and they've been a total bust. >> carl, interesting, of course,

when it comes to facebook and when it's finally out there trading, it's not going to be a quarter-to-quarter story. one can imagine sitting here many times after the bell or in the morning, whichever it will be, wondering what the quarter is going to look like. mark zuckerburg has made it very clear he's not running this thing from quarter to quarter. >> this was never intend today be a company. it's intend today be a social mission. the last few minutes of the squawk box say this might be a frustrating ride if you're used to that kind of communication. you're not going to get it. there's been a lot of discussion on if you don't have the distraction of going public. you know, jim, there's a theory

that says they're going to come out with a platform that is so rich that the apps will make words with friends look like pa looks like to us now. >> i keep thinking about the gm deciding not to be able to use facebook as a way to jam its own issues. by the way, chinese auto sales being very bad. i hate to deviate for one second to gm. sorry. but go back to that. but i do want to point out, i think this is really important. this mobile need for people to click on ads, has so far evaded everyone in this space. so zynga being the one, you know, they've got tons of ads. obviously, they're having trouble clicking on ads. the stock has been another bust. i'm throwing cold water here not

because i think facebook is a cold company. clearly great momentum. i'm just concerned that the public will get burned again. >> does anyone see positive impact from this facebook frenzy? >> he is a person who likes growth so much, some people will say he's intoxicated by growth. i think the mutual funds are intoxicated by growth. he's got 38% operating cash flow growth. he's got it. and he could sell, you know, you're talking about a company that could sell at 70 times earnings. that could be the upper limit benchmark, which would, again, allow people to value this company at substantially more. >> hey, guys, let me take you

back to this chopper shot. we mielgt actually have some photos as it happened last night. not only do they get into teams and work on various projects, again, they have nothing to do with your day job. there was a little roller hockey played. they made a big run for chinese food. i think there was talk about a bunch of employees bringing back some burgers. we haven't been able to confirm whether or not zuckerburg himself did play roller hockey. there's been a production of idea that hopefully turn into revenue generators down the road. i've heard anywhere from 500 to a thousand employees stayed overnight. they've upped the shuttle runs between the city and the campus today. it's been a remarkable 24 hours for this company. and it's going to get a lot more interesting in the next hour and a half.

>> i think some people are split. they don't like how much these people are worth. other people are now proud. trying to figure out how they got bigger than google, much bigger than google. trying to identify if these are real grown ups. a lot of people think that zuck, at 28, is a killer. they may be playing ping-pong, but for all i know, he's playing beer ponge. but the guy is a killer. i think this social trend is. you know, by the way, when someone wants to do something social, google, they took a lot of money on social stuff. >> g >> go ahead, quarrel, i'm sorry. >> we talk about the challenges, i should say. but there's a story in this part

of the country that is so under-reported, that you talk about these young millionaires and occasionally billionaires, they've got the ma serks rati dealerships and the small end wine shops. it's about wealth being generated. that's what we're witnessing this morning. that's not a uniquely american story, but it's worth reporting on, it's worth celebrating, it's worth building on. i think you just need to pause for a moment and assume why it's good. i agree. >> the exciting part about this is the american bride story. this is, remember, california, 1/5 of america obviously in a severe recession? it's the kind of thing that literally does move -- oh, man, i can't believe i'm going say this. move the national yield. >> this entrepreneurialism is so important.

and, of course, you know, they are creating a lot of jobs. whether it's linkedin, groupon or zynga, this is where job growth is occurring in the u.s. economy. so much is needed at a very high end and many times, they can't find qualified people. >> facebook, italian facebook, yeah. >> well, guys, monday, as you know, as you remember, it was mark zuckerburg's 28th birthday. he will have a lot more to celebrate at the bottom of this hour. a lot more special coverage of facebook's ipo and their first trading day when squawk on the street returns.

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and certain lly there's another big story. jamie dimon has agreed to testify on the bank's recent $2 billion trading loss.

the panel is scheduled for next tuesday and another one on june 6th. this chronicles the drama behind the scenes saying dimon personally approved the concept, but didn't monitor the trades. when dimon saw the numbers, he could not breathe. i don't think i would be able to breathe, either, if i was ceo of jp morgan. >> now, behind the scenes, i always like to look at the bylib byline. why is that important? she wrote the book. i believe what jamie dimon discovered was a rogue operation within his own company. >> what i think is most interesting about the article and something i wondered about from day one, knowing jamie as i had, having watched him literally look through the operating budgets, the numbers, the trades of so many divisions. how could he have missed it? they assumed that they were

operating within previously established limits, missed when they actually expanded those limits in terms of how big those trades could be and how large they could get and gave a lot of deference to ina drew. that gives you some sense as to how, for a while, he might have said i don't need to worry about that, only to find that, of course, in fact he did. >> when he testifies, will that mark the bottom? we've seen so many times disastrous stock stories where it seems like they're shoes and shoes and shoes and shoes to drop. >> it's the main recognition of how bad things are. i've got to tell you, this investment office, this is a gigantic hedge fund that had run amuck with no restrictions what so ever. is that not the definition you expected jay see dimon not to

have? >> there's articles that say this loss could reach $5 billion. it's not a $2 billion loss anymore. it's far exceeding that. >> let's go to the nyse and check on brian sullivan who's monitoring some other stories out there. >> hey, good morning. keeping some chairs warm for you guys. listen, 47 versus 45. guidance may be a little bit light, about 20 cent below the consensus forecast. there's a few firms out defending gps. montgomery likes the inventory management. oppenheimer like it is management. it seems it's getting its gap in order and margins are finally starting to go up. we're going to watch the stock indicated maybely slightly higher right now. so there's other stories out there today, the gap is one, getting defended and it's based in san francisco.

karl, i was on their web site and they all have hoodies. that could be our top story on monday. >> yeah, well, judging by the number of hoodies we've made at cnbc, we could be a rival. coming back, mark zuckerburg rings the opening bell. for more special coverage of facebook's ipo and their trading debut, keep it right here on "sqauwk on the street"

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introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. welcome back to menlo park, california live this morning. we are at facebook headquarters. that is a chopper shot of hackers' square, which is the cultural center of facebook headquarters. the words "hack" are literally written in cement.

you can see them from the air. we're expecting mark zuckerburg to ring the opening bell shortly. he's expected to speak, as well, before the bell rings at 930 a.m. eastern time. ryan sullivan, meantime, back at in nyse. >> yes, we've got coast to coast coverage here. we've got a recent ipo being celebrated. fete is the ticker. they're ringing the bell this morning. there's a lot of people here from houston. you know, carl, i know it's cool to be on the interweb or whatever that thing is. but i like what forum does. they make underwater vehicles, you know, robots to go down and check out drilling rigs. i think underwater robots kind of trump sitting at home on your computer any day of the week. but, hey, that's just me, carl. >> thanks a lot, brian sullivan. jim, melissa, david, are you

guys still back at the nasdaq? >> oh, we're here. waiting for the big, big, bell, carl. >> there was a live shot of zuckerburg. bob to his left. and we should say what coup this is for the nas. >> this is really big because we often debate these two institutions dually. i remember when microsoft decided to be nasdaq. and that was the moment of embracing the nasdaq to the point where we thought it was the over-the-counter market. this is a huge win. i've got to tell you something, i think it's going to be mark. >> and we should know, we're going to be speaking with bob mchugie who is the man who helped bring in the facebook. and that interview is coming up. it is a coup, as well. carl, remember the day they were hoisting that facebook flag up and those road shows were starting quite a different road

story for jp morgan then. >> we are witnessing a lot of american wealth getting generated as we speak after years of people taking risks, dealing with uncertainty, unknowns, rivals. this is the pay off. the opening bell, mark zuckerburg and facebook.

jim, we said it yesterday and we'll say it again this morning. this is a moment in american business. and we do not know how it's going to turn out. we do not know how we're going to talk about this day in five or ten years. but given what we have right now, you have to say it opens a new chapter, an exciting chapter, for business in this country, wouldn't you agree? are people jealous in this country? or are they proud? >> obviously, they must be proud. >> i think it goes both ways. what mark zuckerburg has accomplished is the substance of everyone's american dream.

to have a great idea, build a business and become a multibillionai multibillionaire? isn't that what everybody dreams about? >> i can't imagine that people wouldn't look at that and be proud. that's creativity. that's ingenuity and that is, still, one of the greatest capital markets in the world, as well, the ability not just to raise money, by the way, today, but to raise it all along the way to help fund it and bring it to fruition. that's still what we've got going for us here that really, you can't replicate anywhere else. >> let's say it opens at 11. at 11:30, do we not put facebook through the prism of spanish banks? at what point do we regard facebook as another stock? >> probably 11:31. >> it's important people at home were thinking it's a wood stock event. >> by the way, one of the largest cap company wills represent a significant portfolio commitment for many investment managers, but could

end up being a source of funds when we find those risk off days. and at this size, the speculation will start right now or maybe when the the stock starts trading, as to when the stock will be added to the nasdaq, when it will be added to the various indices. >> it's very important because people have to understand that there's this concept called waitings, where large institutions, whether they like it or not, will have to buy. that is the institutional component of craziness that we have to deal with. obviously, the individual component is the longer this thing doesn't open, the more we talk about it, the more we're going to get people saying i want a piece of facebook instead of just going on facebook. and that's where the problems begin. people at home. you use those market orders. you, in the history of all of these kinds of companies, you use market orders, you lose money.

maybe people want to hear it's a touch stone or an american culture, but they don't care. >> and, remember, if you think you lost your chance to get in on this ipo, there could be many tun opportunities in the future. 91 days is when the first lock-up expires and the free float will increase by 55% in nine days. >> to a billion shares, i believe. by the way, at 180 days, melissa, we're talking a full float of 2.2 billion shares. >> the number of shares will double in 180 days. >> doesn't it just sound like it can overwhelm the market? hey, there's two markets here. there's facebook, which is fabulous and there's everything else, which is one of the worst markets we've seen in years. i think it's important to point out. we have one of the worst stock markets that we've seen in years.

rivalled to 20112010. here's what i'm using. versus the yield of treasuries versus the price to earnings multiples. and then there's everybody else. let's talk apple for one second and deviate here. you've got apple that had been basically in free fall for multiple days. >> and do you think it's because the oxygen got sucked out of the room? were there shares sold in anticipation of getting an allocation for facebook? i'm going to say yes to that. you should be able to get that cash on hand as that bit of ap. le. and, by the way, the fundamental quarters are weak. if you believe that a new iphone is coming to the market any time soon, nobody is going to be buying the old one. >> i know they were hoping this

is when they could sell some androids. it is selling, on a $50 basis, it's a heck of a lot cheaper than facebook. >> no doubt. and that's, by the way, including cash. if you x out the cash on hand, it falls even more by apple. the equivalent of facebook's market value at its ipo price over the last few weeks, over a hundred billion dollar's lost given that more than 17% decline in the stock price. >> context, context, context. your kid, your 16-year-old might say i want some facebook. your 60-year-old portfolio manager is thinking how do i avoid the debokle of a run. >> is carl still out there? >> oh, yeah, by the way, tieless

which i know is a rule when you go out on the west coast. you can't wear the tie. >> if i had a tie on, they would say what's that thing around your neck. there's not even a debate. some of the statistics, guys, are pretty amazing. raisi raising 16 billi$16 billion thi morning. that's more than the individual market caps of two-thirds of the s&p companies. if zuckerburg sold today, he could buy heinz all to himself. he could buy yahoo all to himself. it is ahead of amazon, it is ahead of cisco. the metrics are mind blowing. also, a few of these tweets coming out, really, really fascinating. randy zuckerburg writes so proud of my brother on eve of tech's

biggest ipo. hey, mark, now can you pay me that $10 i lent you for our lemonade stand. a large part of this discussion is going to happen not on television air waves, but on the web itself. >> again, i want to come back. i hear that he has great stories. it's exactly what carl said. think about how many companies it has been big ere than. carl, are they conscious of the fact that this -- does anyone think that this company could be overvalueled within the two mile blast zone that you're in right now? >> well, i think the insider selling, as we've been talking about for the past couple of weeks here, jim, that is a clue. that is a clue about sentiment in some fashion. we had kevin landis on the show yesterday. his take is, look, who's going to sell if not the insiders already. so i'm curious to know where do you think the debate stands now about insider selling?

i think it's something to consider to the potential ref knew decline that we've issued to any average user. you've got to put this in the basket. >> you've seen a return on that risk capital. and you do want to realize something. >> yeah, you know, and i keep coming back. general motors, they're a large advertiser. you take your life in your hand if you cross facebook right now. the other thing is, as genius as he is, maybe misunderstanding the difficult in the ad market on that cell phone. and everyone is trying to figure out the media. trying so hard to tell people, you know, the ad market is going to work. this is an add-supported model. this is not a search-supported model. this is not apple which is an actual multiple stream model.

it is an ad-supported model. the pres of the comparest of th not experiencing a big surge. they might say it's a social zealot media. my problem with that is you need to have the nonsocial zealots, mcdonalds, say when i put a tie that on, i'm going to try to be able to capture an 18-year-old, what detergent they should use. >> on the topic of other stocks -- >> one last point, jim. you really hit it right there. can being public legitimize facebook in the eyes of advertisers who clearly aren't with the company. they're not seeing eye-to-eye on that roi, right? on advertising on that platform. and i wonder, that will be a big debate. if you have a symbol, if you

trade on the nasdaq, do advertisers think of you differently? we will find out. >> although, if i'm proctor&gamble and i can identify somebody who is moving from home to college because i know, fed facebook, that they're doing that, isn't that somebody that i'm going to want to advertise to? and aren't there any number of brands that would want to take advantage of that? >> yes, general motors is trying to capture a youthful buyer. maybe they can. i would certainly advertise on facebook with the idea that maybe they're financially savvy enough to own stock, maybe they should get in. zynga. zynga is a company that has made its bones with facebook. it's words with friends, it's scramble with friends, it's instagram a fad that they just bought. i think to mention the word fad is not heresy. >> all right. as we await facebook to open for

trading, you see that unchanged sign here at the nasdaq. let's talk to bob at the new york stock exchanges. bob? >> hey, you're doing a great job over there. everything looks fabulous. but things are still happening here. h houd how would you like to be a fly on the wall during this one? he's going to try to nudge her towards the middle a little bit more. she's already isolated from the u.k., from france, from spain, from italy, all the leadership there. the big talk is within a couple of weeks, you're going to hear very specific projects from europe. increased investment from the european banks, there's talk about project bonds. you can't get euro bonds. it's too early for that. but you can have things like investment bonds, project bonds where you have specific money earmarked for very specific infrastructure projects and backed by everybody there. that might be possible. you're going to hear specific ideas in the next couple weeks. men time, the market is in

serious trouble here. jim eluded to this. the last hour of trading yesterday was simply horrendous. not only did the buyers walk away, but as the market started drooping, nobody was there to buy. we saw pick up, involatility, the high frequency came because of the spike in volatile till. ty. the s&p is down 33.6% this week. it's the worst showing since november. i know it's hard to believe, but the european markets this week are down four, five, six percent in spain, in italy, virtually everywhere you look. we'reperform ging, we're just less bad than anybody else. we have a course here at the new york stock exchange. there will be trading in facebook on arca once trading in

nasdaq opens right after 11:00's tern time. by the way, arca is going to have a dedicated trade-matching engine just for facebook. and as you all know, the nasdaq has been testing their systems all week. the bottom lienl, guys, everyone wants to make sure there are no trading glitches. no wearing trades in facebook today. and melissa, the guy that looked happier than mark zuckerburg this morning is bob greyfield there. >> as we've taken up temporary residence here, we sent bertha koontz to watch for the facebook opening. bertha? >> i've got to tell you. this is dshl i was talking with one trader this morning who says on their desk, they have millions of retail orders. i know you guys have been talking about whether people should be buying it here today

in the aftermarket. but he says he thinks this is going to be the retail event. it is a bit like 1999 in terms of the enshuz yachl. some of the folks who are watching here this morning, not sure if they're going to be here when it opens at 11, but mike schloss is the guy who got it. you actually got some shares through e-trade? >> yes, on the train ride in, i looked at my account and saw a hundred shares sitting there. so i'm excited. >> a lot of people talking about the evaluation here. we don't know what their forward earnings look like. you've got a lot of insiders selling today. are you concerned about that? >> if you talked to anyone here on the street, you could find nine out of ten people are on facebook or know people on facebook. and the concern really being where they can monotize the mobile market are really the only negatives i've been hearing. it's a long-term situation for them to make money. if there's a way for them to make money, they're going to

find it. >> you're not concerned about all the insiders selling here? >> these guys are going to be cashing out and they're going to make money. how much of it is deserved, i don't know. but they made a nice business plan, so good for mem.congratul your shares. you have crowds out here of people watching what's going on on the tower. just to give you a measure, the biggest ipo volume for the day, rich peterson over at capital i.q. was g.m. when they listed, back in 2010, they did over 450 million in terms of volume, the biggest one so far recently here has been zinga here at the nasdaq with over a hundred million. guys, folks are expecting this to be 500 million shares here for facebook.

>> thank you very much. and now let's welcome bob mchugie. >> certainly a big day. and the market is good. more of these bigger days than coming along. so welcome to our house. love having you up here. thanks for joining us. >> it's great to be here. how much can you parlay this into new business down the road, to say we're the home of facebook, the third largest ipo? >> i think we need to step back from just facebook and talk about decade-defining companies. the last decade would have been google. we've had so many great companies come to nasdaq through the years. so facebook is, obviously, an important company to nasdaq and it's wonder frl to have them as part of our family. it's not our only listing and we'll work closely with them and are excited to have them as a partner. >> let's say you're reading spot of five.

they're become emblemmatic. now, do you go in to see them and say listen, we've got facebook, so we're obviously -- >> the biggest companies. >> well, that's one thing. jim, i think we look at new listings in five different areas where i think we're really strong. our brand is really strong. certainly the corporate solutions and all the services they need, we think our market structure and our platform is the strongest in the u.s. we've got great visibility assets. a million people walk through our tower each and every day. and companies derive value from our lower fee structure. so we think putting all of those into a presentation to a company is what allows us to win new listings. >> how hard did you have to -- >> except for the fee structure. >> except for the fee structure, how much do you think that played into this? and did you have to give up even more on that fee structure as we saw the underwriters give up about two-thirds of the

traditional fees in the ipo. >> we're not allowed to negotiation fees. we can't deviate from that. i think that we go in and i'm sure we might say the same things, but i guess the proof is in the pooding as to which one demonstrated the long term value of the customers. and i think the companies that have come to nasdaq for the last 25 years are those that have driven our market forward and those that are driving our economy for the next 25 years. >> amongst those who make decisions, i assume you hear the same? >> well, when financial crisis everyone has fees. they're going to look closely at the fees that somebody is paying. but i certainly think being here in times square for a consumer-facing company, we had bloom and brands facing us, the old outback state house. no language.

talked to both exchanges and chose us two days ago. i certainly think the ability for us to be broadcasting on our tower here in times square, you know, all of the great brands that they have was a significant difference. >> the stock is up a couple percent. this is not a big fee, gentle n gentlemen, for you. i just want to mention if you have it in perspective. you don't make a lot of money when you get these companies lested. >> sure, it is a halo e fekt. the fact of the matter is we are the home for technology companies. we have been for our 41-year history. and we certainly welcome nasdaq -- welcome facebook to nasdaq as part of that family. and, you know, defining companies for the future. >> and how often are we going to be seeing this clip? a triumphant nasdaq ceo high fiving, essentially, mark zuckerburg. >> maybe we can get rid of joe's

animal orchestra and just show that every day instead? >> we'll show it every day if it eegs on ton. . >> was it part of the deal that he got to stand right up there next to zuckerburg? >> that was one of the new negotiations with bob. >> can you tell us a little bit about the pipeline? we heard so often that facebook obama sosh obama absorbed all o faces. >> there's about 240 companies in the pipeline right now. a good portion of those are technology, melissa. you're right. facebook was this week and there was no one else going out on the road this week. there's actually one other company that tried to pull their offering just because of the fact of what everybody was focused on on facebook this week. i do think with the pipeline, everyone is kind of angling for

the next few weeks and making sure they can lock in their opening or closing bell. >> so the pipeline is not telling you, it's not an indicator to you, that this could be a repeat of last year when it comes to market action? >> well, the market action last year is really about what happened in greece and europe. it had nothing to do with the quality of the companies because so many of the companies that were coming to market last year are now coming to market now. they were teed up to come in the third and fourth quarters. they deferred their offering and now they're coming to market now. and the pipeline we see, we'll keep the bankers busy, we think, through the entire summer. not just taking august off to go to the hamp tons. >> all right, bob, it was great to speak with you. >> thanks, i'm glad to have you here. we hope you come back a lot and hope you show that clip -- as they say in brooklyn, politics early and often. >> all right, bob, thank you so much. and andrew brought facebook here to the nasdaq. carl, over to you.

>> i love the shot of him rocking the madonna head shet. i didn't think i'd ever see that in my life. guys you should understand here in menlo park, employees have been here all night long. we're sort of reaching a point where the climax has passed because of the bell. we're seeing a lot of cars leaving the parking lot after that big scene there. you can actually make out the letters, h-a-c-k which are written in cement in the cultural center of the campus here. i assume a lot of these employees obviously exhausted from not just last night but from the week are going to go home, turn on "sqauwk on the street" and see where the stock opens at 11:00 a.m. eastern time. but it has been a very busy night here. one of the big things -- every time they do a hack-a-thon, they make t-shirts. t-shirts are a big thing.

it generally means you're somewhat of a veteran. julia is going to join us a little bit later with one of the t-shirts they passed out overnight. interesting cultural scene here. you know, guys, after so much attention from all around the world all week long, they're really trying to center themselves with these traditions and that's what we saw last night. guys? >> yeah, absolutely. i mean, a moment of time that we'll always remember. and the thing hasn't even started trading yet. >> i liked monster off of this. this is a younger generation. drink monster. look, i love these stories. this company is very, very profitable. i know if i don't bring these stories up, i'm going to feel real bad.

>> where was the price? >> $19 goldman sachs lost the deal immediately. at that point, it was a very powerful entity. took control of the deal. sold the stock short to people who brought it in market orders and made the only real winner in the deal. things are a little more regulated these days. but that can happen. >> yeah, it can. of course, there's a lot more shares of this being issue. i can remember globe.com. >> by the way, as we're here outside the main entrance, i'm noticing a lot of cars that are leaving as people go home. a lot of hondas, a lot of fords, a couple chevrolets. i think that's going to change in the next 90 days or so, 91 days.

>> yeah, i would bet it will. carl, in the never ending find of facebook, there's a dow jones headline that somehow facebook is going to help with california's $16 billion budget deficit. so they've got that going for them, too. people start spending their money that carl was just talking about and paying taxes on that windfall -- >> the one person who should be ringing a bell today is governor brown. his financial situation just got a lot easier because of these guys. >> great point that there will be a lot of taxes paid. a great point that wealth creation is something that has not been the emphasis on this country in the last few years. this is, again, a needle holder. there are so many shareholders and so many companies selling. so many big funds that got in this and turned out to be right. that's rather remarkable. these rounds and rounds and rounds and they ended up being right. >> all along the way and valuations that kept increase

ds. >> and everyone laughed. remember, after groupon, people thought that it was going to be a mistake. after zynga, people thought it was a mistake. but this is right now, money good. >> tonight, jim, i'm presuming you'll discuss facebook and how it actually opens. >> but i also have to talk about larger forces that are at work that jp morgan, where did they go wrong? it was a directional bet to some degree on europe. they don't want to admit that, but they got europe rong. wro a lot of people have gotten europe wrong. i'm afraid that on monday morning we'll come in and by the way, i mentioned that. it's the same thing. it's a really good bank. people don't think it is. >> and i would assume you'll be talking on meet the press about some of those concerns and that facebook ipo.

>> well, i think that the contrast between unemployment in this country and -- well, there you go. unemployment in this country versus facebook is a big issue. let's not overlook the gulf. okay? don't overlook the gulf. >> all right, jim, we will see you tonight and we'll see you also on meet the press on sunday. all right, we're going to take a quick break here. again, a special edition of "sqauwk on the street." and also from the facebook campus in menlo park. stay tuned.

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welcome back to "sqauwk on the street." we are one hour into the show and anxiously awaiting first day of trade. we're now joined by simon hobbs for the next couple of hours. carl, of course, is over in menlo park. carl, what a scene out there. >> yeah, you said it yourself. how many times are we going to be looking at that shot of mark zuckerburg standing at the podium ringing the bell a little more than a half an hour ago. we'll see if it turns out to be an iconic moment in an american business. but, for now, it's one of the biggest stories we've seen again this year, certainly among

american corporations and the story still being written even as we speak. >> of course, it is. and simon, i'm curious what your take is? >> well, on the one hand, there's a discussion about facebook as an investment and we have to have that conversation with the retail investors about whether or not they're going to make money out of this and are they going to get burned. but this is a huge moment in cultural terms. i would say you had elvis in the '50s, you had the beatles in the '60s. for this year, you have zuckerburg. when you say half of internet users around the world, 900 million people are using a platform that he has built over the last eight years. that is huge in how the human race communicates. whatever we say about the investment, i don't think you can take that away from them. this is facebook's day and it's a very important day.

it's a very important business and it goes to american exceptionalism. >> i like the way you think, simon. i totally get what you're saying. i would have called it microsoft, apple, google, and this is the company that will define this next decade. >> right, you are sort of culture and business, i would think, more of a cultural -- a business icon. it is a cultural phenomenon. if you look at this generation, who do they have? they have a film about the man. he's hugely wealthy at 28. for the generation that is there using facebook, late 20s, early 30s, zuckerburg is the man. >> he is the man and not only is he a multibillionaire of $19 billion, he's also purred plenty of wealth and for a lot of

investors, carl. >> carl sounds like he is talking to an investor himself right now. >> he's trying to get ken zuckerburg on to the program. >> you never know. >> you know what was quite interesting, we saw the cfo arrive earlier. it was obviously the way he understands his weaknesses around the organization. we know that cheryl has a very prominent role. but they seem to be pumping up the ceo. the king of the road show who drove this through and i was listening. elements are knocked down. you can't go in certain areas. that's the deal they did with facebook. but i could hear them chaering upstairs. one described the cfo to me as a rock star in the making. and i suspect that we will be hearing an awful lot more of him when zuckerburg is not as readily available. >> facebook and zuckerburg in

particular has done a good job with experience. and, of course, that is embodied in cheryl sandburg who is in her early 40s and is very well regarded. and in that way, it differs from a number of other start up companies, if you will. it also differs from the fact that it's going to have at least $104 billion market value if not more so far larger than any of these smaller internet companies and social media company that is have come public in the last year. he's set to know his strengths and know his weaknesses. it's a huge learning process for him. hopefully, we can talk about what he's learned for that. >> right. well, let's check in with bertha koonz out there. >> actually, i'm right here at the wall.

this morning, the nasdaq is going to have a lot of it people on a conference call as this opens to make sure that this goes smoothly. there's been anticipation that we are going to see monster volume for the start of the trade. that call expected to start in a few minutes and to run right through the opening of the ipo this morning. it's expected at around 11:00 a.m. or so. it's interesting because it's not electronic, it's not like we'll have the specialists sitting there calling out the indications. we'll be watching this on the screen as it starts. in terms of the ecosystem, their biggest friend, the nasdaq today, is certainly reaping the benefits. the stock is up 1.7 pnt today even as the market is up fractionally. but some of the other plays, carl, zynga is actually down today. a couple of shares that had firsthand technology and some of the others, hbsg, their shares

are down today, as well. let's see if we get a pop once the shares open. have you found any new billionaires who are ready to talk? >> it's still unrealized wealth, but i'm sure they're waiti ininr later on this morning. michael owns 350,000 shares of class b common of facebook. they got in last summer. he joins me in menlo park this morning. thank you for joining us. >> quite a week. and we're trying to struggle with valuing the company. trying to fight the litany of coverage and information. there's probably some fatigue setting in, but you're not a seller. >> facebook is a one-type of business. it's going to be an internet age. this business didn't exist 10 years ago.

it has one aikt of teighth of ts population. >> now that this process is almost done, we're an hour from being another stock, what are you looking for in a post-ipo life. do you want to see them change the way they interact with marketers? >> i think the key thing for me is that they don't take their eye off the ball. i really believe despite the size and the impressive financial characteristics, i really believe it's in the early beginnings. and i think the key is, number one, engagement. engagement and how they're going to monotize that user base. >> have you seen -- what's the most concrete signal you've seen that the education of marketers

is under way, right? that it might not be about the absolute reach, but it's about the sophistication. >> well, sophistication by a advertisers and consumer brands is increasing every moment. a new phenomenon trend that i see is called return on social, r.o.s. and that measurement is going to be something that's increasingly important as we look forward. companies that are a little bit different like clout which has joined tremendous success. >> it's not the only start up, so to speak, you own some twitter. actually, one of the larger positions in your portfolio. yeah, 50% is in triter. so twitter is a company that we have a high degree of conviction on and excitement about. and this is a facebook day.

>> that said, one more twitter question. what happens? how does that story end the way that this story ended for facebook? >> i like twitter. i think twitter is about two years behind in terms of where facebook was. twitter started two years after. twitter is an incredible social media platform. >> does it go public or get bought? >> i think it would be public. >> guys, you have a question back home? >> obviously, facebook is supposed to go for this new revolution. we got all of that. but for investors watching now, how dangerous is the stock. is it a long term hold? and when you see the way they bought instagram and paid so much for it so quickly. are you going from one social media to another? or is it a long-term holding?

>> clearly, the facebook is the social leader. it's offense and defense. they're driving their key farktistic. clearly, i think facebook is one of the technology growth category. >> they have critical mass in your view. they can keep going. they will stay ahead of the game? >> think about it. a hundred billion plus company. it's almost nothing, but from a strategic standpoint, it's huge. you can see a lot end up in facebook, and i think that's exciting. >> michael, before we let you go, do you want to call a close on fb tonight? >> i think for a fundamental standpoint, i think you can see a stock that trades well. but what you can't predict is just the phenomenon around facebook. it's supply and demand and something like we've never seen

before. >> melissa, back to you. >> okay, back to headquarters for me details on the retail allocation. >> thanks so much. i've done much reporting on the aftermath of the share price tgs. one key question is what would the retail slice of this be? first of all, i understand retail demand is the highest that bankers and investors have ever seen or heard of for a company about to have a new issue. this probably isn't a huge su prize, but it is a fact. gm was the largest retail allocation ipo until now. that was the fall of 2010. and the retail slice of that deal was close to 20% i'm told by people that were involved at the time. facebook, the slice that would go to investors, is still being completed. as of late last night, it's anywhere from about 15% to the

low 20s%. that 25% might just be a little hard to pull off. they're trying to build sort of a long term book. but at the same time x you're hearing closer to 25%. the other thing i want to point out is that $38 price was obviously much an its pated yesterday. we were all waiting for that final number. i'm told that the bankers and the company were thinking about that number all day long. they were thinking about $38. they thai did pull some investors to see how they felt about 39. and there was some conviction among people involve wd the deal that the stock could do absolutely well north of $40. i know a lot of people thought so. however, david ebersman who you guys have been talking about this morning, the experienced guy in his own right, he really drove the bus on this. and he felt that $38 was the

prudent mark. >> you know, real quickly. the dynamic that you're describing with 25% of that going to retail and jim cramer describing how they're going to get to a price, are you getting any understand as to how they are managing that very significant and dynamic demand? >> i think it's been very difficult. this was sort of an all-nighter on the deal. and, you know, this question was very much in flux, as well as with the institutional vendors. the message i was hearing was everybody is going to be disappointed. the allocations that even very experienced, you know, favored investors are going to be small. i will bring updates to you guys as i get them.

>> we're going to be attracting a lot of new viewers today. and i think it's very important to distinguish between the retail investor that is got in and have got in at $38 a share and those attempting to buy facebook and may buy at the top of what's happening! absolutely, simon. people need to be very leery at getting this stock at an overhigh valuation. those $38 shares are so crucial and that's where there's so much demand. >> i should say i talked to one very high net investor yesterday. and the advise i got from my bank was ask for a 20,000 share allocation and you might get 200. those are the kind of investments we're talking about here. >> meantime, we do want to bring

in the analysts who first brought in facebook stock two weeks ago. michael, great to have you with us. >> hi, me lis sa. and as we continue to decide whether or not facebook is worth the valuation north of $100 billion, reading through your notes here, you highlight the growth of facebook mobile and that was the reason why it was amended recently. you say that the growth rate will exceed that of all monthly average users. at the same time, that threatens, though, the revenue growth of this company if they're not going to monotize. what sort of trajectory should we expect? >> you know, i think that you probably described this wrong. i don't think people are going to be only mobile users or only desktop users. certainly if they're in vietnam and they don't have internet access and they do have a smart phone, that will happen.

we're going to supplement our facebook use with our mobile device. instead of spending 375 minutes all on the desktop, it will be 75 minutes a month on mobile and 300 on desktop. i guess the problem is if you get everything you need done on the mobile device, they can't really miss that opportunity to advertise with you. and i think that's why you're seeing the emphasis on delivering adds to the device. the real trick there is location base. they can think groupon and send a coupon to the mobile device for something you like when you happen to be near there. and i think that's very powerful. i think you're going to hear about that from them. >> the other problem, though, michael, which you eluded to, is that these are duplicate users. and the end of the day, is the better metric monthly average users overall, mostly desktop because it sounds like what you're saying, there will be a

lot of duplication in those users? you're not going to get the dramatic growth of monthly users. minutes aren't going to go up that dramatically, either. what can go up is revenue per user. it means higher frequency of ad delivery or better targeting. i think that's where they're going. far better targeting, far higher ad rates. gm is sending a signal when they pull their advertising that we don't think we're getting value for the money. it's not a big number at all. they're really trying to tell facebook you've got to show us that we're reaching the right customers. i think facebook is going to respond. you're going to get targeted ads for gm. it's going to happen. and i think the mobile device makes it powerful. >> give us the one number and

what you have now. you know, it's calculated so many different ways. >> i think the easy metric was it was about $4 in change last year. $3.7 billion delayed by 8.50. >> i think when you get to five and six and seven billion per year, you're out of options. >> where do you think the first trade would be? >> if one percent decide to buy a hundred shares each, that's two time it is number of shares that are being offered. i think it will take up to the 50s and settle in the 40s. >> are you going to be the first to downgrade the stock? >> i prefer to let the fren si settle. once the fren si is over, i'll think about this over the weekend and probably not doing anything rash until monday or tuesday.

>> we'll look forward to it, michael. thanks so much. michael of web bush. carl, over to you. >> you know, there's a growing eco system that are using facebook's 900 million users as a platform to launch their own businesses. branch out is one of those companies. it aims to be the linkedin for the facebook generation. >> linkedin for the 99% is how some people describe it. i got my invitation just this week. what's the point and how much alliance would you say you have on facebook right now? >> branch out is the largest professional network on facebook. we allow users to utilize their existing network on facebook to be able to identify professional students and we're very closely

tied to facebook and their ecosystem of 900 million monthly users. >> you had 400,000 population in december. >> we are now adding three new users every second. >> and at that pace, you will pass linkedin as the world's largest network. how do you handle such growth? >> well, it's been great. i think linkedin is a good service. but we are growing at an incredible pace right now. i really give a lot of credit to the ecosystem and develop a platform to be able to allow us to grow this quickly. to be able to tap in to 900 million users and the 500 million that come back every day gives us huge advantages. >> your point, more broadly, is

that in a post ipo life for facebook, the platform for app developers becomes a lot richer. and you expect them to start unvailing some of that process in the near future. what does that mean? how sophisticated could some of these apps become? >> i think any time that you have social baked in on day one. if you have benefits from socials, the last three year haves been dominated by social gaming companies. but i think they're going to start to see the emergence of utilities. again, verticals whether it's recruiting or dating or ticketing or travel, those are all thing that is you do with friends. in your friends, your support network, they're all on facebook and i think that's going to be the future of the ecosystem on facebook. >> when it comes to ad partners, do you think gm is an out liar?

and just anecdotely, what was the reaction to that news when it came out? was it seen as some sort of curious exception to the rule? >> i think the ad dollars from gm were in the single digit millions. i don't think that gm is a big deal for facebook. and i think that gm may be back some day anyway. >> finally, rick, you meet with zuckerburg's lieutenants pretty regularly. if you could sum up what they have taught you about doing business in this era, what would it be? >> yeah, you're right. we are down in facebook's office on a weekly basis. something that i am continually impressed with is their openness to be able to work with some of their top app developers like branch out and zynga, spotify, pinterest and others.

they're very open to how to use an ecosystem. they share ideas with the future of facebook with us. products that that may or may not release. and they're great about really understanding our user's needs and sharing information. that's been a great partnership that we're really glad to have on facebook. >> rick, aappreciate your time today. rick is the founder of branch out. we're just about 40 minutes away from beginning. julia joins me here over on menlo park. you've had a long couple of days. the interesting part for you is the story itself. you've had a million feet of office space. >> yes, now there are 2500 facebook employees based here out of facebook's 3500 total. and facebook pulls out all the stops to make sure these empl employees are happy and staying

close to their laptops. we took a look inside to see how exactly they do that. let's take a look. >> food plays a starring role at all times. offering three meals a day plus limitless snacks. 15 snack kitchens, one on nearly every floor, there are out door food stations and a courtyard designed to look like a street. employees can take a conference call on a treadmill. . >> they make it everyone easier for employees to never leave e, facebook offers free dry cleaning. even bars with beer on tap for happy hours.

>> interesting. when it was google's era, there was a lot of talk about fusball and bringing your pet to work. >> this is a whole other level. you could really live your whole life here. there's a gym. they have toothbrushes in the bathroom so in case you're stuck late. they really make it so you have everything you need. and they will take employees to and from san francisco on busses that pretty much leave all times of day and night. >> and our estimates as to how many were here? >> over a thousand have r.s.v.p.ed. i think some of them probably went home around 1:00 or 2:00 to get a couple hours of shut eye. but there were a lot of people here even in the dead of night. >> it's an interesting demonstration of how it gets done. >> and a commitment to liking and spending time doing something creative. >> it's not a 9:00 to 5:00 job.

you're going to stick around here all morning long. in the meantime, though, i want to get back to brian sullivan who has some headlines this time jp morgan. >> basically, jp morgan is giving up its gains for the entire year. it is perfectly flat. it just went negative for the year. so jp which had a pretty good run for the beginning of the year is now down. the stock is at 33.25. you saw the headlines, the loss keeps growing. it may get going. now the question is the quality of the trade, a lot of talk about the high quality corporate bonds, a lot of that is not as high credit or as high quality as we thought. so jp morgan chase down around 2%, 64 cents. it is flat and has dipped negative for the year. melissa, jp's market cap is $126 billion. if some of the indications on

facebook that we have seen out of european indications come to fruition here, it is entirely possible, face book, when the first trade happens, could have a market cap bigger than jp morgan chase. >> dha is something to think about. thank you, brian sullivan. and certainly we are seeing the impact on the slf which is the etf that tracks the financial center. so we're watching jp morgan as jamie dimon gets geared up. david, as you had mentioned, the losses could actually be widening as we speak. >> yeah, they could. they have widened certainly from over a week ago. it was 2 billion on the conference call. it could be another billion, but it could be more than that. this is an enormous trade. one that they're having difficult repairing and taking off to a certain extent. so that does seem to be mitting. the wall street journal eluded to $5 billion today. so that is certainly something the market is reacting to.

>> and we're also seeing the impact on morgan stanley from ubs to a buy rating say enough is enough. and they point out the value that the stock is trading at right now. 49%, which is barely above the 49% that the stock had traded at october, 2011. so no lift here on morgan stanley shares. it's close to the truss that we saw back in the fall. >> let's not forget it was $21 after they reported good quarterly own r earnings and worried about how many notches that downgrade will be when it comes in june. but there's great frustration there. it seems to get hit no matter what. >> you know, even the analysts say at this point, even a three-notch downgrade, it is being prized into the stock. morgan stanley, the lead

underwriter for facebook. >>. >> i believe it went to three. don't hold me to that, but i believe so. and what the collateral claims would be given that there are certain contracts that are written in terms of your counter parties. but some of them are at 5 billion. maybe a bit more than that. none the less, the market cap has been losted already. a few expected will be a three no, ma'am down. >> hey, we're an hour in, guys. it's an hour since they rang the opening bell. they're still trying to match the trades. i heard from a facebook insider that there is an internal pool within the business. >> really? >> about where it would open. i don't know how widespread that is. but that's what one of them told me. there is some discussion and possibly a pool going on. >> i wonder where the bets are concentrated on that. i'd love to get a glimpse at it.

>> meantime, let's check on n kayla tashi. >> even though he didn't know how to put that he wasn't a harvard graduate for some times, now he says he studied at harvard. but if you take a look at his face book page, an hour ago, they actually rigged the bell so that at the very second they touched that button, he put a status on his page that he just lifted a company, fb, on the nasdaq. the other thing is the nasdaq conference call is going on right now. and i'm told that this is basically blocking and tackling as orders start coming in. there's big worries about record volume. of course the company is prepared for this.

>> of course we remember several months ago when they had to pull its ipo because of high volume and because of technical glitches. they want no issues here. and that's the reason for that call. and it is just getting underway. and i'm sure bertha will tell us a little bit more about that. it will be interesting because we're just getting down this morning that i reported on "sqauwk on the street" where facebook traded in the private market. guys, its first trade ever was at 3.50 in april, 2008. interestingly, the stock traded down in april, 2009 to its lows along with the overall market drop for an valuation of two and a half million. so it's on its climb upward, of

course the last trade valued at $107 billion. so we'll see. we'll see what happens. >> kayla, thank you very much for the moment. it's a boom time for those that get in early, the venture capitalists. let's bring in manuel cofounder and chairman and ceo which holds, i believe, so, over 300 thousand shares in facebook, is that right? >> that's correct. we own about 3307 shares. >> it's a lot of people that would like to know that. what's your bet now? >> well, i think that the previous announcer talking about the secondary markets is probably a good indication. i think the secondary markets are pricing around 40, $41 a share. i would be surprised if the stock stabilizes and opens up 42, $45 a share. >> wow, i think a lot of people thought it would be higher than that. what sort of profit are you making here? >> well, we bought in at $31.8 a

share. back in effectively february. we secured the shares back in december. but because of what's called the rofr, the right of first refusal, we had to wait until february. so we've only held the shares for a very short period of time. >> and what is the intelligent thing to do? what's the smart thing to do for you from here? do you buy more or sell when you're able? >> i think that facebook has a long way to go. regarding the desktop users versus mobile user, i think that facebook is in the process of monotizing those mobile users, something that hasn't quite happened yet. so it's a very revolutionary thing to do. i think there's a really good future there. >> what does that monotization process look like and how long will it take before we see results. what terms of metrics are you using? >> i think if you look at the

announcer. gm revenues are frankly meaningless. if anything, it shows gm that gm might be out of touch with that new revolution of millionaires that it just created. so by pulling your ads out, you're actually isolating yourself from a whole new population of coolness. so the mobile users frown upon gm saying jim is not cool. >> i get that. but i'm asking you in terms of monoteization of the users facebook has and the new mobile users that it will have, when does that happen? >> well, i think it's going to be some time. i think that facebook has to really reinvent to serve ads on mobile platform. that's something that google did effectively years ago. and i think facebook is in a catch-up mode to get that platform in place and really monotize that. >> so what happens if you're wrong? what happens if they can't make that transition?

so you sat there with the stock with the cool kids, as you put it. but that almost sounds like a paradigm. there's a possibility, surely, that you may be wrong. and they don't win over the general motors and the people that actually have the cash to make the stock sing, at least at these sort of valuations. >> well, i have to say that f e facebook is a lot like zynga to me. they took all of this money off the table and have an incredible amount of currency to do what they do very well. it's just if i cfigure it out ak very hard. i don't think mark is going to let that revenue stream go away on hichl. and i think he will work very diligently to walk away with that technology. >> there's somewhat of a leap of faith that you're taking that they will be able to do what they need to do in order to monotize to the degree that they need to monotize. whether that be an acquisition

or just come up with ways organically. but at some point, as an invest investor, you have to make a decision as to when to pull the plug. when would that be? >> well, you know, we obviously have a standard 6 month holding period here on the stock. so we can't do anything for six months. anybody who bought secondary shares is required to hold the stock for 6 months. facebook holds the -- no secondary investor has shares. >> so you hold them for six months and how about, you know, two years from now, whenever. at what point do you start reading them and get bored that they city need iy still need to their mobile holders. >> we've seen tremendous liquidity so far this year. we've had multiple of the social networking companies going public. but on facebook, in specific, i

think the six month period of time is like dog years. six months in internet time is like a decade. >> i've got to ask you, what's hot now? what are you investing in now? what's the next thing that people watching now should be buying into? >> we're seeing the first elements of that happening with the whole slump ipo. it's right after 34. linkedin, prior to that, ran up to 120. i don't think it's going to double in value. that would be crazy. but i do think we have other properties in our portfolio. like i said, we had four ipos go public. we had those and then q 2 alone, just now, we had public a few weeks ago. we had 110 different companies still there. it's a storage company that's

quite interesting, as well. >> thank you for sparing the time. thank you, sir. >> all right. let's check in with bertha here. bertha, you've got some information on quoting? >> yeah, not yet. you'll start seeing those quotes in just about five minutes, it looks like. they have started taking orders. and i can tell you folks this morning were seeing -- they have a monster waiting list of retail. one trader telling me this is the biggest ever retail event. and he thinks that this is going to go at least twice the float today in terms of the volume that they are anticipating on facebook. what's very interesting is that when youf look at what has been the sort of ancillary facebook play, zynga today, that they are down today, which is not something you would anticipate. certainly we know zynga has had its issues and it's down 40% in the last three months or so.

you would have thought that they might have gotten a little bit of a lip. we'll see if facebook got moved, how high it moves and whether that is a bit of an an lair lift to zynga. it's certainly a great day on all of the exchanges trading higher today. and while facebook has friended nasdaq, a huge publicity play cementing nasdaq's credibility as the place for the big cap companies to list. everyone is going to get a piece of this. and why they estimate they could see as much as 30% of the average daily flow, which could be about $1.9 million in y revenues per year. facebook is going to be a friend to the street today in terms of bringing in a lot of folks. >> bertha, let me ask you, do

you accurately describe the huge investor? was there emotion that came from the people that you spoke to about how wise it was for those return investors to pick the stock up? >> you know, it was interesting. it wasn't the excitement. like, yeah, this is great, even though it's great for them. they're very leery and they are just worried that these people are going to feel burned if they buy here, you know, 10, 15, 20 min utes into the trade, they'r buying at the top of the day. but you know, it's not the first day. i know we talk about the first day we're going to close. it's not about the first day. >> sure. sure. got it. bertha, thank you very much. >> the quoting will begin at about 10:45. we're about four minutes from then. at that point, to my right, you'll start seeing the prices. we'll get an indication of where this can go out in just about

four minutes time. meantime, we want to bring in a very successful venture capitalist. it's great to see you. >> thank you, thank you for having me on. >> there are a lot of questions about how facebook will actually be able to monotize its mobile users. if you had to give facebook advice at this point, what would you like to see facebook do in the next, say, six months in order to accomplish that? >> i think that has a lolt lot to do with just continuing to work on the ad products as you develop something that's more indemic to the property. some of these things last week were there with people putting the post in the feed. that seems more endemic to me. that's something that could easily transfer to mobile. i think they'll figure it out. as everyone said, this company

has a ton of potential energy. they have 900 million users, they're all registered and they have high switching cost. i think they actually get a lot of time to figure it out. >> you know, bill, i want to get back to the fundamentals in a moment. but i would love your take as a long-time venture capitalist. how important is this day in terms of your business for silicon valley and just overall? >> yeah, i was listening to the show earlier. and i think some of the commentary was exactly right. it's kind of a once in a ten-year event. silicon valley is lucky enough to launch intel and goog le and these things do tend to happen more than once. but it's kind of in a ten-year window. and it's quite a short period of time. a lot faster than say a microsoft. >> we all want to make

comparisons to the '90s. jim cramer was talking about his own company. are any of those come parsons fair? or is it really a completely different era when it comes to performance in the capital markets of the company that is we're talking about? >> i think if you forget about facebook, forget about today and just look at the ipos of the past, you know, two or three years, we had a very wide open ipo market. but the valuations are not anywhere like they were in the late 90s. you have companies that are trading 20, 30 times pe. these companies just recently went public. two exceptions might be linkedin and facebook. but they have these very strong global effects that give them a competitive control. >> all right, bill, thanks so much for your time. appreciate it. >> let me just mention one thing. what does which i think the course is that zuckerburg will

be judged relentlessly in realtime by the market. they've orchestrated to date extremely tightly. but going forward rkt, that's g to be anni issue to them. >> we should know the quoting will begin at any moment. so quoting set to begin as we are about 15 minutes away from what it's anticipated to be. we understand that quoting has begun. we'll bring you some more details. meantime, i want to go back to carl in menlo park. >> yeah, you can cut the tension with a knife. in the meantime, a group of former facebook insiders are already busy building the next generation of silicon valley firms. david moren joined facebook in 2006 and became one of the highest profile employees. he left facebook in 2010 to

start p.a.t.h. personal journaling and social network. >> good morning to you. >> you joined the company when they had 10 million users. far from the 900 million today. i mean, just can you put today in perspective as someone who worked there in the early days? >> i think this is a moe men oe mentous day for a variety of reasons. the long term foe cuss is coming to fruition today. i think it's a big moment. it's an important day for everyone that's been involved. >> yeah. i mean, obviously, in the business press, we all wonder how you keep your focus with so much attention and with the sort of structural changes that come with being a public company. do you honestly believe they can resist that? and if so, how do you do it? how do you have that kind of

discipline? >> well, i think one of the things that facebook benefits from is the network itself has been, you know, sort of a fundamental changer of how communications and information flow in the world. so mark and the executive team have, you know, spent a lot of time, you know, interacting with the public and with, you know, dealing with communications and information globally. you know, for really the last five years, you know, even longer than that. and so, you know, i think that they're -- of any company going through this process today, as well prepared as anyone. >> let's talk about path for a moment. you raised some funding in april. valued the -- valued path at about a quarter of a billion. you've been mentioned as a possible acquisition target for apple. you turned down $125 million from google in 2011. and now we're looking at valuations for companies like

pinterest that are truly mind blowing. do you think we have crossed some lines somewhere where these numbers are getting a little bit overheated? >> no, i think the opportunity of the internet is bigger than it's ever been. you see this in the way that people are talking about facebook and mobile today. the mobile opportunity is four times larger than the desktop internet ever was. you can actually make an argument that due to the rapid grow growth, this is the largest technology opportunity of all time. >> right. but the assumptions that come with it, dave, i mean, a lot of the valuations that we're looking at are based on cash flow aassumptions that aren't oe year out. their're five, six, seven years out. are you happy with that? >> i think with the shift of

mobile, you'll see the development of some new business models. you already see this where apple is already paying out billions of dollars in app purchases and consumers paying directly for goods and premium services. they are additive on top of advertising. so i think you'll actually see the rapid evolution of some newer looks that internet business models on top of the advertising world. and i think that votes to be very promising. >> david, you've had the rare distinction to work with both steve jobs and mark zuckerb rurks, g. what's it like having one of the longest winning streaks in history? >> well, you know, i think that what both steve and mark have in common is sort of a releaptlere focus on prubloduct and the lon term. i think both facebook and apple

have proven if you stay on something long enough and really stay committed to building valuable for the world, you can really, truly have a deep purpose. i think they're both inspirations pr that reason. >> inspirations for that reason. >> on a day when we're watching facebook, we're paying attention to alumni like you. thanks so much for your time. and hope to talk to you soon. >> thank you. all right, carl. as we await the first pricing to cross to pop up let's bring in one of facebook's underwriters, john moriarty. where do you anticipate this top? >> i can't speculate on the opening trade this morning. suffice a number of bets as you all have been talking about. >> i'm sorry to interrupt. we're seeing the cross.

45, looks like what is it, it is indicated to price at -- sounds about right. >> those are the first indications market makers have. waiting for the opening cross. trying to get the totality of the institutional and retail demand. this opening trade will be significant in term of the cost basis. so they get the ipo distribution, opening trade and the event for them is day one. >> wonder about retail and institutional. bank of america you got bio. merrill lynch there. how did you guys go about deciding in terms of the allocation, i'm sure there's plenty of merrill brokers who want to get as much as they can. >> every ipo process we ask was your objective. facebook like everybody else was focused on balance distribution. the challenge with this is that you know that there's going to be net retail buying after the initial pricing and you want to

balance the institutional price feedback with that overwhelming demand and you need to give the issuer enough granularity. >> does that come through dependly? >> you get price feedback from institutions and you need to price a deal that will work -- >> why $39 would not do? they floated that yesterday. why was the feedback no? >> specifically on why 39, i really can't comment on that. you're constantly trying to assess a basis that an institutional investor will be comfortable with. >> to paraphrase, in other words 39 took too much off the table. >> it's not so much will you pay

39, but rather what is your long term price target for the company? what is that based on? you share that information with the company and you go back and you say this is what they are assuming you're going to do in 2012, 2013 and beyond in order to justify that valuation. >> will it be there in 2013 and beyond? we're going see volume today that would indicate at least every single share may have changed hands. that not the case. some change hands three or four times and others won't. what about flipping? what about getting this thing delivered at 38. i get out at 45 or more. >> it's a challenge of any ipo of this size. you're trying to get a sense for not just the institutions but what funds it's going into. that's the process for the last several days for getting a sense where that demand is. there's a lot of funds that have to own this so despite that temptation to flip this has to be a core holding given the scale. >> kayla, i want to bring you in

on this. >> i had a question about the retail scenario. i felt there were two story lines. one is you want the retail slice to be as low as possible to limit volatility and on the flip side you want to it be as high as possible. maybe low 20s or 25 as a percentage. what does that mean for the thesis of what the retailer investor overall said they would do with the shares? >> in terms of a percentage, i don't think it means a whole lot with respect to aftermarket trading. this is one deal we know there will be net buying from retail and that's certainly the expectation. the demand was overwhelming and you're trying to balance that with the institutional price feedback just like any other deal with a thought towards the scale it, kayla. that's really, i don't think you should read a whole lot into percentage or thoughts around

percentage. >> can i ask about the process by which you decided there should be 25% more shares allocated to the whole thing. we hear in several funding foreign lands like saudi arabia were sitting up through the night to hear what the cfo had to say about putting more on table. >> with any ipo, what you're doing you start out with price and initial size that is at least big enough to represent a decent float. clearly investors in the aftermarket will fob cussed on overhang and you're trying to reduce that. if somebody thinks that they would likely be a seller in six months and comfortable selling at this price level today and can you get that float out there, you know, that's typically the goal. so you're trying to size it appropriately so as to reduce that longer term overhang. >> you were surprised so many insiders chose to take the opportunity as you upsized it. the venture guys are selling a lot of stock. >> but as always you have to

think what's their basis and furthermore what do they continue to own? they still have a lot of skin in the game. that's the balancing act. as the market has evolved public investors have become far more sophisticated with respect to the fact that those investors have a different agenda than they do. >> i wanted to ask, i know this may be getting ahead of ourselves, but to what extent did the idea that there will be more stock issued before the end the year play into the pricing discussions as far as 38 saying we want to go on maybe the more conservative side so that we have upsides so we can issue more stock. >> kayla, that's obviously somewhat challenging to say. there's a structure in lockup expiration here that is not your traditional six month clip. and so it wasn't as much of an issue. you're always trying to present insiders with options, and i think that's really what this is. >> longer term you hear, how important is this to the rest of the pipeline in terms of getting

other tech ipos out even before some of the lockups start to expire. >> it's a question we get a lot. people ask what does facebook mean for the overall ipo tech market. the tech market has been open for a lot of years. i think it does reignite some retail investor interest in ipos which is great. ipo market for tech companies is very open. you've seen what's going on in private markets. that gets us more investors. the jobs act will play into this. in >> it obscures what's going on. there could be a rush now to hit the facebook halo. >> the valuations have been fairly robust. the jobs act will enable people

to move forward confidently. >> thank you for coming by. exciting morning for bank of america along with scores of other underwriters. we're moments away from facebook's first trade. you see the ipo cross. 43.19. this upgrades every 14 seconds. we're keeping it up on the screen. we're anticipating that very first trade to take place. carl, i don't know what the mood is like out there in menlo park as we're awaiting our first trade. carl? >> reporter: melissa a couple of interesting statistics. for every $10 that facebook rises above 38 that's an additional $4 billion in the collective pocket of shareholders. the "journal" has a fascinating tidbit limited orders.

finally, brian sullivan has been tweeting about bono who will make more from his investment in facebook than he will have made from his entire career in music, which remind me of another story kayla told me once kenny g got rich not based on being kenny g but his angel investment in starbucks. so a lot of people will get rich in ways that we did not expect just a few years ago. >> this is one of the first times -- >> we'll keep an eye on the ipo cross. i guess you guys must have your hands fullback at the nasdaq. we should mention that a lot of at least atmosphere here back in menlo park has faded because people were here all night at

the hackathon. cramer has talked about the performance of ipos on the first day. typically not a good indicator of long term performance. look at pandora, did an amazing first day. turned out to be long term one of the relative losers of the ipos in the past inquiry sore. don't take any lessons about what facebook does today the real question is 91 days from now when lockups expire. towards the end the year you look at more tax selling. but certainly going to be more of a parlor game more than anything among traders, investors and just market watchers. this is a game to see where it end the day. i think we're just a few seconds away from wchg this open. we should mention as well here

in menlo park a real ill straugs how far nasdaq went to get this business. the cfo of facebook is meeting investors and bankers as pell when jim cramer i think is on the phone. jim, we've talked a lot about first day performance but i got to assume you're at least curious how the afternoon sets up for facebook. >> well, i'm looking at a couple of stocks, carl. they are distinctly good. apple a lot of people had felt what's the matter with apple. maybe that's a harbinger. people sold apple to buy more facebook after it becomes public. secondly i like the action in linkedin which is gives the company a good face and that

stock has been doing well. third here's an off the wall one, but the spanish market did not burn us last night and fourth gold super. there's a lot of feeling in gold that the europeans will do something good. i mention those that will come in to play on monday after facebook. >> these limit orders, jim, where people want a taste of it no matter what the price, i assume that you think that's inherently dangerous. >> you know what, carl, you have to go on history. that's all we have. the average stock has had a 42% increase on the first day. but we also have seen the best time to buy is not the opening, we have seen pops in the opening and then see further rise and then sellers came in. so what i would warn people, let's do this, because i can't commit to not using market orders or a limit order of 1,000. by half of what you're going

buy. i'll do anything, carl. i'll do anything to help people. >> yeah. nasdaq, as you can see from the bottom of your screen, the ipo may begin trading at 11:05:00 a.m., jim, rather than 11:00 straight up. having gone through this on the street.com, having watched microsoft go public, logisticaly is this more difficult given the size of the company and the attention paid to it or is this is how it's supposed to work. >> this is a very difficult deal because there has not been a company that has captured the younger person's fancy in years and years and years. can you go back to google but obviously they did that deal very differently. the most sophisticated investors in the world are selling. and they are selling a huge part of what they own. the least sophisticated investor i can recall since the year 2000 is buying.

that is the dichotomy i fear. >> jim, i'm not going let you go quite yet. we got a couple minutes left. guys, back at the nasdaq, you have the clock, i do not. oil toss it back to you and let you walk us up to the very first trade. >> we're just about a minute plus away from the first trade. what's so staggering is that this looks like it's is going to go at 42 at least right now. 42. i want to bring in gary kaminsky for more on this. gary, you're actually hearing it would have gone higher this the is a surprise it's at 42 right now. >> as soon as this indication ipo cross was visible to all, looked to first to a $45 selling. the actual ability for those to come in to see. we have the early indication 45, now looks at 42. we're showing 70 million shares paired off. you'll see that volume jump dramatically on the open print once it happens because there

are orders that will trigger once we open. >> which we're about 15 seconds away. >> that has to be a surprise. most people wouldn't have expected if we opened only four points above 38 we're talking a little over 11%, 12% bump on the open. that would be surprisingly small in terms of the premium. not that it's a bad thing and may show a very stable market. >> david, remember there will be many that says look at the early indicator range. not where they priced it at 38. where was the original pricing range. look at the valuation then and look at the premium versus that. you know how the bankers work. that's the story they want to tell later on today. >> what's the spin if it's priced at 38 and goes 42. said spin they didn't leave any money on the table and priced appropriately or are we going hear from critics maybe it wasn't as good and there were some skeptics on the street. >> i think the headlines tomorrow if we price at 38, open

at 42 it was priced well, did a very good job balancing supply and demand and talk about retail. retail was well rewarded in this distribution unlike any other transaction that i think i've witnessed. retail participated in a major way here. >> 42 is where it was trading before they had to shut everything down. >> 44. 44.10. >> the market had trades, issue trades not actual trades taking place. nasdaq sanctioned trades. they were trading at a much higher level early this morning 8:00, 8:00. >> four-point pop on this it will be very interesting. underwriters will have done a good job of bringing this close to a valuation that institutions were happy with but is not over the top. >> what's the takeaway for investors who missed -- 44.10 was the last trade on shares

posted in march. if this comes out at 42 the market cap on the stock, the market valuation has done down compared to the implied market value. >> exactly. those aren't big liquid trades. the general banking community will send a message, we did a very good job here, we priced this thing at the right level and we gave those that wanted to participate in the private market couldn't they can invest at the same level. >> that's the concept. does that mean the other trades like linkedin were priced long? >> that was a 6% float. they issued so few shares there, you know, as well. jim, let's bring you in on the conversation also. i mean this thing look likes it's going to open up four points. that's significant. you're talking about a lot of shares out there. nonetheless some people heeded some of your warnings. >> you know, this is a really good sign. the brokers, the under writers had the option of opening this close to this.

they can change the pricing at the end. they didn't. they kept some discipline. it looks like the individuals themselves may have some discipline. don't forget it is a gigantic deal and there's still a lot of guys out there who say you know what? i'll ring the register no matter what. it's a different kind of process. >> yeah. gary, you know, as you pointed out retail is getting a decent slug. we had bank of america. merrill lynch will get. morgan stanley is the biggest brokerage in the world. >> smith barney brokers were very, very pleased. legacy smith barney brokers merger with morgan stanley. they were very well rewarded in this transaction. i think a lot of it had to do with the fact morgan stanley wanted to send one message, we're one big happy family. if you had an account with

morgan stanley and your broker didn't get you shares, you should question about that. >> take a look here at times square. the crowd has grown as we're anticipating this first trade as we're watching the ipo cross at the nasdaq. 42 is the indication here. lots of people out there are wondering what this thing is going open at. this will be a historic moment. >> there's retail interest, perhaps as to where we were not so long ago. >> simon, for those that had retail accounts and participated, they have, they can say i did go into the facebook ipo and got shares. it's been a long time. the small percentage of the float that was issued in these ipos retail participated in this transaction across the board. >> enough so that they stemmed some of the aftermarket demand. i don't know. but, again, 42 up four nice but not what some had anticipated. >> carl? >> carl? >> i just want to say, i want to

make sure we don't whip ourselves into a frenzy over this initial trade. i mean, it's been written this morning, jim, that this is the equivalent, the business tv news equivalent of a car chase, right? it's really, really interesting. you don't know how it's going to end. long term, how important is it going to be because it's not about valuation today. it's about extreme near term momentum. and about extreme near term supply and demand, right? >> right. let me just tell you. let me give you a contrary view. some people are actually kind of disappointed that it doesn't open higher. we've seen somewhere people said oh, that was okay, there isn't more to it? let me go ring the register. because of the car crash thing a lot of people have been telling me jim you're skeptical. we all learned. again, the car chase analogy is one that is a lot of people who

own the stock are worried it will play out and don't want to hit this. >> this is one of the largest capital market transactions of all time, gary, certainly in many years. for those institutional accounts that thought hey this is an opportunity to make a lot of money quickly, it may not be there. >> again, the bankers will tell you that's a good thing, they weren't necessarily playing. jim, i want your thoughts on this. retail brokers, big retail brokers have spoken to their clients and their clients tell them i have zero interest in selling the shares. i want to hold them for a year, two years. i'm not interested if it goes up today or down today. i want to be part of history. interesting phenomenon. most brokers can't believe it. >> this town is like the classic case of people who say you know what? my kids are on facebook all the time. they are on it half hour a day.

i recognize that they told me s facebook is the greatest thing in the world. i want to own it. they are dreaming in the sense that in the end this is a stock. it's not a holy grail. it's not something people should say this is like the green bay packers and owning a piece of them. i don't want a piece of green bay packers. i want to make money. >> we want to go down to bob pisani. >> this is a dynamic process. the underwriters are sitting there with their hands and ears who wants in. we're closing it out. i've seen it many times with ipos on the floor of the new york stock exchange. david is right, i did an informal poll about traileders. most were in the 50s. this is lower. a lot of people said i don't want in at 48, 49, 50, 52, but

i'm interested at 42. they are getting more orders in. and they are having to deal with that. they are having to adjust the price at this point. this is an ongoing process and fascinating to watch. >> certainly is, bob pisani. gary, you got to wonder we were talking about the retail investor wanting to hold on to this thing for the long term. the lockup is a major consideration. as cramer points out it's a stock, it's an investment and fact of the matter is the free flow will increase by 55% in 91 days and then double about 151 days from now. >> that's been shown on the road show and known venture capitalist who had the opportunity to increase the amount of shares they were selling on this transaction, jim has pointed out they took that opportunity. i'm just getting emails. we're doing this real-time, folks. you're talking about allocations to retail that are

unprecedented. if you can see this. a million shares allocated, 7 million as an institutional hold. you're talking about sizable retail allocation. >> what difference does it make that there's so many banks into this. how does that change the dynamic? >> i think that, simon, what it is did is they can say their objective was to make wide distribution minority firms, for example. a number of minority firms some hedge funds never did business with were offering allocated shares this morning. >> what about the price action from here? >> it will not be influenced by the fact it had the wide distribution because ultimately if you get shares and you want to sell those shares, where you got them from -- >> does the bank have an onus to sell the stocks? >> with this type of size of deal and liquidity the answer is no. this thing will trade on its own supply and demand as soon as it opens. i don't think the banks have any

stabilizing form in any shape or form. >> the banks won't try to stabilize this. >> i think you're right. it's too big. >> they did a deal and done. as i'm looking at some of the distributions where people are telling me what they actually got on the deal -- >> they got hit pretty big. you put in for 20 million hoping for 20,000. >> i'm shocked. i'm shocked. i'm looking at these numbers. >> the ipo cross is gone. carl just so you know, we're anticipating that trade could happen at any moment. we're just sort of keeping that up there. right now obviously it has not young changed, 38 won't last for long. >> melissa, i want to note, nasdaq guys, i just want to note since 11:00, since weaver been standing here waiting for facebook to open, nasdaq dropped rather noticeably 28, 25 to 28.15. there's some effect on people anticipating moving money into facebook and selling a few other

shares. we're not at the lows of the day but it did move down the last 15 minutes. >> carl? >> no. i was going to say echo bob's comment on nasdaq. it's interesting how 15 minutes can mean so much to perception. a lot of questions this morning on twitter in the last few minutes what is taking so long, and looking at the possibility that perhaps this is not going to go as well organized as we thought. people are very impatient about this given that the stakes are so high. >> and the crowds out here in times square, carl, they are growing impatient as well. they don't gaze up at the tower at the nasdaq waiting for that first trade as we stan here watching that $38 mark. maybe we should review some of the history. $38 a share. $16 billion raised before the overall allotment. third biggest u.s. ipo.

>> this 28-year-old will be $19.1 billion or more. >> 503 million shares. you do the math. >> as carl mentioned every dollar above $38 will be $4 billion extra in shareholders. that's why we're watching this so carefully. >> every $10. >> was it only a year ago that we were wondering whether facebook would even go public. it was only a year ago before that private transaction where the whole issue with facebook would go public. >> they had access to the capital. they were generating cash. there was an ability for insiders to sell given the growth of that second market. all that being said once they got to at least 500 investors they were going be forced by the sec to make certain disclosures. it didn't make sense for them

not to go public. it was always going to go public some day. the question was it was in no hurry. >> cramer, i know you're still on the phone. >> i'm getting nervous. i fear that people are saying hey it's not opening. i can still get in. once again, another moment to be able to buy it. don't freak out. don't be at the opening. please be tempered. >> be tempered. we learned the lesson, we saw what happened with the linkedin ipo which doubled and then when the lockup expired it trade low. it since has recovered. there may be other entry points. there may be other entry points out there once a lockups go. gary is this different, though, because there's a point to be made this is such a large holding people will have to hold on to be a benchmark and core holding as opposed to a lot of other ipos.

>> there's that fear of not owning something. no one will ever admit it. there's also going to be that element of i better own some of this just in case. >> could it be the next apple? when it stops, carries momentum two, three years down the line on that huge use of base and the revenues. >> let's look at those numbers. simon we were chatting about this earlier. david listen to these numbers. i asked one banker who was involved, how is this stock is cheap at 38. this is the answer i got. if you take all the users on facebook, the 900 million users, take the valuation at the ipo pricing of 38 this is why it's cheap. it values every user at 10 cents, a time peruser. just the actual -- >> right. >> that's going to be one of those metrics. you'll hear a lot about now. taking a dime for every person in the world who is on facebook

as a user. >> carl? >> yep. >> one of the strongest emperrical arguments -- you can slice these numbers a bunch of different ways. on the bull side they have 48% of the worldwide internet population. they have one half of 1% of worldwide ad dollars. so, i mean, look those are is going to get parsed in various ways long term. zero to do with what it will do when it opens in the next few minutes potentially. >> yeah. >> carl, listen, not to mention 3.7 billion and 2011 revenues incredibly high operating margins. operating margins you don't see anywhere else. significant growth rate. people may have been concerned about the seasonality we saw in the business quarter to quarter.

let's not forget there is an overhang here, 91 days a lot more shares out there. lockup is up and 180 days you could have as many as 2 billion shares out there trading every day in terms of available. >> despite the caveats within the nasdaq market site there's a celebration that's waiting to happen when that first trade is made. the champagne is poured. the glasses are out. we're waiting for that first trade to be made important the people here, not us, but the other people here to take a sip and celebrate and jim that puts it in perspective because yes it is a stock, it is an investment but right now facebook embodies a lot more than that. >> yes, that's true. can i just say i'm getting embarrassed here. 11:00, let's get some precision. this is indeed a capital market. you say you'll do it at 11:00, 11:05 and this makes me less certain about what's happening. i like all the ideas people say,

don't have to worry, i like what david said about the gross margins. you the user creates it. i come back to this mobile strategy that's not been articulated. the notion that as great as it is you're going to get all this information, if the ceo of sprint is right, the government will not like the level of violation of privacy. obviously there's a lot of companies that bridge space badly. let's keep these in mind as we go crazy with we buy it with no limit at the opening. i told a broker, okay, any price you want. >> wow. carl, this is gary. i think you're trying to get to me? >> as someone who knows the street, i have to ask you, what do you think is going through his mind at this moment? >> i think he's a little bit concerned they have put out a

time call and they are not ad hearing to the time. i think and i'm just reading emails here real-time they are going say this is a good process that it's been delayed because they are trying to match -- there's a lot of selling that's come in at the last few minutes and trying to make certain they open this at the right price. >> because we sold at 52. >> that's right. once you get closer to the actual print, a number of people that may have been sitting on their hands in terms of okay let me see where this thing is have come in. >> does that imply we could break 38. >> people think we may, melissa. it will be very, very surprising, i would say, david. you would be surprised. >> i would be shocked. third largest ipo of all time. >> can't imagine. >> there are those who feel i can't imagine that happens. >> it's not his call right now.

this is the underwriters call. traders i talked to yesterday their rough guess opening at 50. if it opens around 42 i think there are bargain hunters out there putting in orders. >> we should know, previously we were talking about the head of listings here at nasdaq and responsible for bringing facebook to the nasdaq. he came back in with a champagne glass in hand along with the cfo of the nasdaq. they have since left the room. what that indicates we don't know. that's the scene here at the nasdaq from where we're broadcasting now. so, still waiting here, gary. >> retail, we talked about retail orders being filled. i can't recall, david, do you recall times where people put in for x amount of shares and

actually got -- >> or close to it. not in an ipo of this type or of this size and excitement. >> i think that's a lot of what's happening right here. >> yeah. >> guys, you see the headline now. "wall street journal" reporting traders experiencing problems changing, cancelling their orders ahead of the facebook ipo. again atrit btributing that to "wall street journal." >> hey, guys. >> yes, jim. >> i don't want to get all the shares i asked for. the only time i got all the shares i asked for is when i got my head plastered. if i got 100% that means holy cow there's a lot of supply. >> jim you and i have been through this for many, many years. it is startling that i'm hearing from some small institutions should we call them that they actually got 100% of their

allocations. when you look at the whole distribution. >> those are people who may not have the ability or the discipline to say to people listen i don't want to you flip it. when i was on the goldman side selling stock i told people don't get me in trouble don't flip it. when i was a hedge fund manager, jim i want to be a long term holder. what discipline do these people have. take the money and run. >> we should note -- we're 21 minutes past the time of which we expected facebook shares to start trading as we're getting this headline from "wall street journal" about orders, difficulty with orders being changed or cancelled ahead of this ipo. >> of course, we were supposed to have -- >> jim, i hope -- sorry. >> jim, people were joking around this morning in a sort of dark humor way about bats and bat software and the experience

we went through just a few months ago with their would be ipo. jim, is there a possibility this could be related to some software that is related to bats? >> carl, i hope not. if there was ever not to be the time to the amateur hour is right now. this is the kind of thing i don't want to see. if you weren't prepped for this one, when will you be prepped? we all must hope that it is just an influx of market orders and nothing more than that. >> we should note here that as you can imagine, jim and carl, that the tensions are pretty high here in terms of the delay and as we understand it nasdaq officials are actually on a conference call not a media call an internal conference call presumably to figure out what is delaying -- >> we should emphasize the magnitude of what has to happen here. they run rehearsals. they knew this was a tough technological feat to pull off.

>> what they are saying now is that this is a good -- this is what's being said. it's a good thing we're delaying it because we want the match to be good. we don't want to have people that have put in, jim said don't put in market orders, a lot of people unfortunately did. if you put in a market order you want the market toward be filled as close to the actual opening. >> i'm hearing there are a number of brokerages that deal almost exclusively with retail like fidelity and from what i'm hearing communication delays are nothing like they've ever seen. that may be playing a role here. you know, i'm being told -- >> it means they cat make the allocations, they can't communicate. i have to find out more. >> if you put in a market order in your account and want to buy 10,000 shares on the opening they are worried they can't

execute that. that's what's happening here right now to make sure that all the orders that are market orders despite the fact you've been advised not to do it that way will be executed at the right price. >> guys, let me break in and tell viewers if you're just joining us this morning, tuning in to see where facebook started to price, we were expecting the first trade at 11:00 a.m. initially. nasdaq then said 11:05 then 11:15. now we're closing in at 11:30 eastern time and no trade has begun. the "wall street journal" is reporting the traders are having problems changing or cancelling their orders hide of the facebook ipo. and then, of course, julie boorstin is here with me in menlo park what the mood is like here. >> there's a huge amount of excitement when mark zuckerberg and the cfo rang the opening bell. soon after that the crowds dissipated. a lot of people left.

they drove home because they were up all night and lot of people headed back to their desks. a lot of people are invested what happens. they are watching it from their laptops and the mood is pretty calm. >> we could have it at any moment. we got a flash coming through. it will be at 11:30. within possibly the next three seconds. that's what just hit the wires. >> it's 11:30. 11:30. we should expect the first trade at 11:30 a.m. eastern time. it's past that mark so far. >> an indication that they believe they are still on track. >> here we go. >> facebook opening for trade -- >> 42. >> 43. >> $43 a share. up 13.1%. >> priced at 39. opened at 42.

>> 43 was the opening trade on facebook. 42.05. we see it. now it's there. officially a public company available for anybody to buy shar shares. >> look, it's not bad. obviously i think there's -- the volume is -- i would have expected more volume. there's not a lot of flipping going on. it's positive. nice bump from where it did become public. if it goes below 40 it will bring out sellers not buyers.

>> jim, when you take a look at how things trade in the afternoon, it's 11:30, european close. we close at the lowest levels of the day in germany. will that have an impact on the rest of the day? >> i think if we see apple go negative, if we see gold reverse -- gold has been going up. that trade has been going along for some time. let's lock some things in. nothing good happens over the weekend. >> the 42.01 -- >> simon, i'm looking at things again. i think we could say now the reason we were delayed was selling orders came in.

there was more selling once you got the initial indication of the print, remind me where we were at. >> 45. >> 44 was where we went out. we went out at 44 and started to get -- then went down to 42. >> 45 was the first. >> the initial sort of lock down brought in selling and i don't think -- david i don't think it was retail selling. there was a retail feeling amongst some of the biggest brokers in this country that retail wanted to hold. they said they wanted to hold. they said they wanted to hold and you see, you see where we are -- we're at the low now of the day. >> i'm curious what your thoughts are, gary, in terms of facebook sucking the oxygen out of the room. as we were sitting here, technology overall is weaker. apple has turned around and pairing its gains for the session. we're seeing large cap technology down for the day. >> for facebook it's a terrible week.

the news associated with everything this week, we were, obviously, we focus sod much on facebook. europe had one of the worst weeks that we've seen going back to the fall of last year. the jpmorgan news, i guess jpmorgan is a little bit happy what's going on with facebook because of the news that came out last night, everything else again being equal, very negative. >> there was a time when we thought that facebook would re-enliven the stock market. the headlines tomorrow on this are not going be spectacular. it's not like the other ipos where, you know, the headlines were phenomenal. the pictures were phenomenal. for market sentiment after a tough week this is not great. >> simon, i can't believe this thing will trade back to 38. these people think it will are right, then it's going a very, very different outing. >> suggest 39 yesterday right at the end when they were going raise the price. one wonders what they were told.

>> they priced it very well. the big story is facebook, a social phenomenon we haven't seen, a company that comes along once in every ten years in silicon valley is a public company. the smaller story tomorrow or perhaps right now that on its opening after trading for five minutes only up 6%. >> i do not recall seeing the type of allocations that people put in for that they actually got them. >> i believe we want to go kayla back at headquarters who has been on the phone this morning in light of the trading delay. >> i just want to don't levels that we're seeing trading right now. up about 6%. the sources i spoke to this morning who were on the deal were saying this will be a reasonable dave trading. they are aim forge a range of 5% 120% to the upside because gm was the last deal of comparable size like this with a comparable retail allocations. that traded 500 million shares

on the first day and traded up 5% on that opening day. they are expecting something a little bit bigger than that because of the retail and fame recognition of facebook. they are expecting it to trade within a 5% to 10% range from the expectations i'm hearing from some of the underwriting sources. >> they certainly priced it well then, it would seem, kay larks in a lot of ways. watching the stock trade around the $40 level one has to admit that's a surprise given at least what seemed to be a huge demand out there in the aftermarket potentially. >> it's about to break 40. >> if we had to place prior to opening, if we had to place wagers where this thing was trading at this time, how many minutes in, the only person who won, price is right governs. nobody would have thought $40.

>> 20 minutes ago when i showed enthusiast note that a number of professionals who were selling right at the open expected this thing to test and break the syndicate bid i was surprised, melissa, you know me, when i looked at you -- >> my jaw dropped. >> you know, again, you get to these equilibrium points. if you love this thing at 3, you're a mutual fun manager, you're probably looking at the number right now, you say to yourself i don't want to be the one to go out there and put in a bid for 2 million shares at 40. >> if we come back to this active campaign that the cfo had to increase the amount of shares that were put on the market, that were priced last night at 38, what do we now make of that? is that an indication of negativity because so many sellers sold out or do we actually say the cfo has done a great job in putting those extra shares on the market. >> forget the name is facebook. if you go a venture capitalist,

you can monetize your stake at 20 times your projected revenues, you want to hit that bid, venture capitalist will hit that bid every time. when they have an opportunity to sell more shares, of course they did. >> i want to go back to carl out in menlo park. >> we're here menlo park. the most interesting shot right there is in times square. just from an optics standpoint when was the last time you saw people in this country literally line the streets to see where a stock was going to trade. i think it's just a vivid illustration impact this ipo has. guys, i want to bring in our next guest, portfolio manager of the firsthand technology value fund which currently holds 600,000 shares. facebook and also chief investment officer of firsthand capital management, kevin landis joins us once again. kevin, good morning once again. >> good morning to you. >> as i recall your cost basis

was somewhere in the low 20s. what's your reaction to basically a $40.04? >> well, low 30s, but yeah. i wish low 20s. i'm surprised that it feels a little bit weak but, you know, i guess i would say with stocks you should expect sort of first day crazies, and we got a different flavor of the crazies than i was expecting. >> you've been asked a lot about insider selling, and i saw some quotes this morning in which you said look, who is going sell if not the insiders. >> right. >> how do you explain away the aggressiveness of some of these sellers this morning. >> well, you know, i think probably the most interesting comment this morning was people getting the allocation that they asked for and quietly saying i really didn't mean i wanted all of that and that leads to selling perhaps half your allocation at the opening and

putting that money in your pocket. so, you know, you can analyze trading dynamics all day long. people make a career it. i think the stock will find its footing. there will still be a lot of retail investors who want to own it that don't own it yet. and, you know, i guess all you can say is when you have lots and lots of angst and lots of people involved you can't expect discipline. ultimately you have to put the stock out on the market and markets are not disciplined. they are herds. the herd eventually gets it right but sometimes it lurches it around before it gets. >> with the lockup expiration and so much discussion of how aggressive that is, how unusual it is, when do you think the stock really starts to trade in a clean fashion based more on longer term valuations, even while those also may be cloudy when do we start looking at the

market really taking a look at the value of the business? >> well, i think look at it this way. six months or a year from now this will trade like a big cap tech stock, a blue chip. between now and then we'll have moments like this where people head fake each other and all sorts of silliness like that. it will take a few quarters before the stock really becomes less about emotion and more about the story and how the story is unfolding. >> and finally, kevin, year end. you see it above or below $40.12? >> be surprised if it wasn't higher. but i've been surprised before. still, you know, we're happy -- we're happy to see a successful ipo and we're happy to see the company itself is still on track and i feel pretty comfortable with our investment. >> all right. we got to get through today

before we get to the end of 2012. kevin, thanks for your time. >> thank you. >> kevin landis in san jose. melissa? >> we're watching the facebook related stocks. zynga shares have been halted. this is a circuit breaker that kicked in. it did trade last down 13%. it hit the lowest level, 42 week low, $7.08. we're watching that to see if that will reopen for trade. zynga shares halted for trade. it gets a significant portion of its revenue from facebook. the stock was down more than 13%. we have to take a break. much more facebook coverage in our interview with bob here at the nasdaq. that's straight ahead.

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welcome back. facebook up 5.3% at $40, up two bucks from 38 the initial trade. carly joins us from the nation's capital. good to have you once again. good morning. >> exciting day. >> very exciting. couple curveballs thrown our way. trading got under way. what's your reaction and your experiences with lucent at the time, one of the largest ipos. what is a modest gain on day one mean? is at it single, a double? is it anything short of a home run? >> well, you know, honestly, i

think this is a home run by any measure. i mean they upped the price of this ipo a couple of times. the stock is now trading up five or so percent as you mentioned and that's what you want. all of that delay was because market makers were doing their job and i think most market makers would say if the stock rises 5% to 10% in the first day that's a home run. given all the hype behind this stock it clearly is. to me what's really interesting is at what point will the emotion separate from this company. it may be quite some time. is this a company unlike any other. it's a social phenomenon. there's 900 million people who have a very close personal connection with this company and so while i think, of course, over time people are going to focus on the company's execution and is the company meeting its

metrics, are they dealing with some of those important opportunities like mobile and international, et cetera, but i also think it's possible that there will be whole set of shareholders who truly have a deep emotional connection to this company and i don't think we quite know how to price that in. >> yeah. it's going to be difficult to gauge the impact especially now that we've broken 40 and back to 39, carly. i hope you won't mind me taking a brief pause and ending it back to the nasdaq. the attention will be on a stock price going lower. >> something important is happening here. gary kaminsky is with us. the $40 mark was a real important line in the sand for where the market stacked up. we have lost 40 and plunged to the 39. >> take a look at the intraday. a number of sizable orders. as soon as you pierce that $40. we had a drop in the 40.

down to 39.05. that's symbolic of the fact, don't ask me the reasons why, some people say i'll throw it in, take a look at the chart. so the question now is if you got the allocation, it was kevin landis who was on earlier, he said you got a million shares, you put in for a million shares, watch the opening print and you may have a tendency at this-foot shave half of it and say, okay, let me get back to the level i thought. now all of a sudden you look at this and say wait a second i'm sitting there with half a million shares. that's what i wanted to get. do i want to take a risk of getting a loss. >> that's what's going through your head. >> we're losing $39. >> very interesting. unexpected this thing would be trading so close to syndicate. a lot of people thought high 40s or 50s.

up 3% or 4% on the day is strong under writing. priced where it should be. allowed outsiders to get out. you said to me as a possibility, 35 minutes ago and i said no way. >> david, i looked at the note. we're not going to say where it came from. i looked at the note and i was shocked. i cannot believe -- >> why did you lose -- >> i genentech to say, the thing is this just confirms to me that the big institutions, the big hedge funds who sold on that opening print had a good feel. >> amazing. if you're retail and felt you were missing out on it you clearly were not because you can buy facebook at 12 cents above the offering price. i should point out one of the largest ipos we've seen prior to facebook and one high-profile but a different profile fundamentally with gm. gm priced at $33 a share. people may recall first day trade up 3 poif 6%, closed at

34.19. the same under writers. same under writers as facebook on the gm ipo. so they did a nice job there but okay, we're about to break syndicate -- >> you see what happens. >> not a good sign for the market. >> they had those orders in there. >> once those orders were filled you immediately then started to get what were sort of market orders that came in and did not get the follow through. >> we haven't broke syndicate bid. they might want to hold that wall. >> those huge number of banks. >> $38. >> 38 unchanged. we just printed 38 unchanged. my watch is a little off. 11:50 a.m. basically 20 minutes. 20 minutes after the opening. >> why those involved in the underwriting process not involved in it. is that not their job? >> can't step in on this one.

>> firms have other capital requirements. they can't necessarily just support it. but i guess what this says is that the venture capitalist who had the opportunity to increase the size that they could -- >> let's not forget the overall market. i just got an e-mail from a hedge fund manager i'm friendly. why don't we move on to a happier subject like euro. >> we should note along with facebook here, potentially breaching the $38 level we're taking a look at lot of the other related social media stocks. they are all trading lower on the day. if you look at scol, social media etf, singa zynga is holdi. >> this is now correlating with a sizable broad based move. >> aligned with what david just mentioned. melissa, you guys faked on "fast

money." what if you don't get the follow through effect. you know, now everybody is focused on the fact what does this do, where we were in terms of the overall market. >> if even facebook can't have a pop on the open then should we have faith overall in technology? >> i think the sentiment is that if a transaction that got as much publicity, excitement, enthusiasm cannot price at a level where at least there is a distribution that has a respectable first day performance, what does that say for the public's point? >> you just mispriced it. you should have been at 36. >> it hasn't broken syndicate bid. it's a cent above. >> how do you feel if you're in that syndicate. >> really? >> they priced to it a point where facebook was able to raise the maximum amount of money, where insiders could realize a huge ability to sell. much more than they anticipated.

so i'm sure the under writers would argue. reflection of confidence, enthusiasm, animal spirits this is not that. >> if we thought this was going to be a positive impact in terms of the retail investors enthusiasm for the market, because of that retail allocation, imagine this thing, if it does close blower syndicate what that impact will be because it will be negative just as we thought it would be a positive. >> i can't underestimate when i first saw that note when we started to trade, knowing what i thought i knew about the way this book was built, i'm still in somewhat a state of shock. >> let's bring in kayla who is talking to the underwriters. >> there's a big question on what the underwriters are doing and what they are doing in stabilizing the market. they are buying shares so they wouldn't go below the break even market when they saw the shares being sold at the volume they

were at that time. you saw the price open at 42.05. you saw a big downward slide right then and then neighbor cue of sellers was too long. they are trying to stabilize it. if this goes below issue price that's extremely negative here. >> wonder what the atmosphere is in the park at the moment as zuckerberg and his crew sit there. >> they don't care because they made their money. >> maybe, maybe not. he's still sitting on a lot of stock. >> he doesn't care. >> if he's not going to sell it's not relevant. >> he sold the shares he wanted to sell at the price. you know -- is carly still with us? >> you know, you get the sense that if this thing printed 60 or 38 it wasn't going change the mood out there in menlo park. >> it does change the mood from the market.

>> yes. >> it does change the mood. for example, kayak which is attempting to ipo on the back of this. >> here's a hedge fund, our original plan the office flip the shares. but now that we have so many shares it may be a game changer, not sure what we're going to do right now at 38.30. there's still people trying to determine we got more shares than we thought we would get now what are we going to do. that's a process that's going on right now. >> they thought they would flip it. did they think it was -- >> it's old-fashioned greed and fear. you see it open at 42.05 and you think maybe we'll trade up here.

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welcome back. we're still keeping an eye on what's happening down at nasdaq. facebook trading right around the price that those shares were priceed. $38 again is where facebook priced. it went out a bit north of 42. there it sits at $37.70 as we watch the early moments of facebook trading. keep in perspective what's happening in the overall markets today. take a look at technology. it continues to be problem. nasdaq was down 4% on the week. it is giving back more today. it has just bounced off the loss. it's interesting to keep into perspective here that this ipo happens on a week