Despite the lackluster price increase, this was technically a successful IPO. In fact it might have been one of the best run IPO's in a long time. This sounds like a strange statement and to be honest I had thought "what a wash out!" but after reading an article on cnet this morning it reminded me that the purpose of an IPO is not to immediately raise the wealth of the people that are buying into the company. It is to raise capital for the company.
The company wants to raise as much money as possible by offering its share. Thus it need to offer them at a price that investors think is reasonable. If the price is too low then people will buy the IPO shares and then sell them very shortly afterwards at a profit.
If the price is too high investors will be reluctant to buy at all, which means the company won't raise the capital it needs; and the share price on the day will collapse below its ipo price - quite embarrassing!
Facebook launched at $38 and closed at $38.23, which means that the company foretasted the amount it could raise to about 99% accuracy. Thus this was a success for them.
The next few days and weeks will tell the true story as to whether the IPO price was good for investors, and this could have repercussions for the reputation of Facebook as a vehicle for investment. If the price begins to sag then people will feel duped and may try to sell off their shares to avoid further losses, further depressing the price for the stock.
The cnet article also mentions that underwriters intervened to keep the stock at $38, however their pockets aren't limitless and as soon as they stop supporting Facebook we could see a rapid decline in price.
My guess (and this is not based on any maths or deep investment analysis) is that the underwriters will stop supporting late next week. The price will tip forward and back between 37 and 39 over the week and then begin a gradual decline to some lower equilibrium price (probably somewhere in the mid 25's) until the first set of quarterly trading statements. At that point we'll start to get a picture of what is really going on.
For me I don't really see the value. 1bn users who don't pay a thing for the base product.
I heard before (source unknown) that they reckoned that each user was worth $6 annually, but that means each user has to generate $6 of revenue each year.
I can't imagine that clicking on one ad generates $6 in one go so they would probably have to click on at least 10 ads. I've never clicked on one ad.
Another source of revenue might be sharing user data to analytics companies but this is fraught with privacy issues. Upsetting your users might drive them away, or certainly reduce the amount of data that they share.
Bottom line: Facebook are going to have to do a lot to justify that $38 a share.