SAN FRANCISCO (MarketWatch) — The hotly anticipated initial public offering of Facebook Inc. on Friday largely fizzled, as the social network’s debut was racked by technical problems as well as a market-wide selloff that clipped nearly all of the stock’s gains by the closing bell. 
 
 Reuters Facebook debuted on the Nasdaq Friday morning, but lost most of its gains by the end of the session. 
 
 Facebook FB, -0.21% shares closed Friday at $38.23 — just 23 cents above its IPO price following a volatile session that had the shares up as much as 18% at one point, only to lose most of those gains by the end. 
 
 Many factors contributed to the weak debut. A broad-based selloff hit the market late in the day, pinching more than 70 points from the Dow Jones Industrial Average DJIA, +0.92% and causing the Nasdaq Composite Index COMP, +0.52% to drop 1.2% by the closing bell. What’s more, some believe the massive size of the Facebook offering itself caused some complications. 
 
 “I think that the market was not there for this many shares,” said Michael Pachter of Wedbush Securities. “They priced it right if the goal was for the stock to trade flat, but it appears that the addition of 50 million shares on Wednesday night caused a supply/demand imbalance, and the market appetite wasn’t sufficient to support the stock above issue price.” 
 
 There were also technical glitches on the Nasdaq itself, which delayed the opening of the shares by 30 minutes, and caused confusion for brokers and traders trying to place their orders. Read WSJ story on Nasdaq's problems with Facebook IPO. 
 
 Some analysts believe the offering was priced too high, maximizing the return for the company itself, but not leaving sufficient room for an upside in trading — or that first-day pop that many Internet debuts have experienced. LinkedIn Corp. LNKD saw its shares jump more than 100% on their first day of trades last May, while Yelp Inc. YELP, -0.05% surged nearly 64% in its own debut in early March. Google Inc. GOOG, +0.47% which went public in August 2004, saw a first-day gain of 18%, according to data from S&P’s CapitalIQ. 
 
 Arvind Bhatia of Sterne Agee said it was “surprising that they didn’t get the pop that many were expecting.” He has a 12-month price target of $46 on the shares. 
 
 “It seems the underwriters did not leave much upside, or perhaps investors were signaling that they would buy a lot more shares than they ended up actually buying,” he added. 
 
 The underwriters reportedly had to step in and help provide “liquidity support” for the offering during the day. Morningstar IPO analyst James Krapfel said the underwriters appeared to keep the stock from falling below its IPO price. 
 
 “Facebook debuted at an inopportune time, as the recent stock market swoon clearly pressured the shares,” he said. “Had the company gone public a couple of weeks earlier, first day performance would likely have been much better.” 
 
 Susquehanna analyst Herman Leung pointed to lingering questions about Facebook’s valuation and potential, saying that the market “would like to see the company prove itself before coming more convinced about the story.” Some concerns have risen about the company’s business, such as the news earlier in the week that General Motors Co. GM, -0.73% pulled its advertising from Facebook, questioning the effectiveness of the social network as an advertising channel. 
 
 “It comes down to what investors want to pay for Facebook’s potential,” he added. “What’s exciting about Facebook, not right now, but two years or five years from now?” 
 
 Leung also said Facebook sold a relatively bigger chunk of its total shares, which he estimated at about 18%, in its IPO. In comparison, LinkedIn offered only about 8% when it went public while Groupon offered roughly 5% when it launched. “There are a lot more shares in the marketplace to satisfy the demand from retail investors. A lot of people expected the pop — I would point to that as the first reason.” 
 
 
 
 The company priced its offering of 421.2 million shares on Thursday afternoon, making for the largest technology IPO ever. Underwriters have been granted overallotment options worth about 63.2 million shares, which could bring the total value of the debut to about $18.4 billion. 
 
 Facebook’s open also seemed to suck the wind out of other firms in social networking. Zynga Inc. ZNGA, +0.25% shares fell more than 13% by the close; the social-game maker draws the vast majority of its revenue from Facebook. Shares of Yelp were down more than 12% while LinkedIn slipped by 5.6%. Read more about social-media shares swooning in the wake of Facebook’s IPO. 
 
 Mark Zuckerberg, Facebook’s co-founder and chief executive, rang the opening bell of the Nasdaq Stock Market’s Friday session remotely from his company’s headquarters in Menlo Park, Calif. 
 
 According to data from Dealogic, Facebook’s deal ranks as the second-largest IPO by a U.S. company in history, including the shares in the overallotment. Visa Inc. V, +0.21% went public in 2008 in a $19.7 billion debut. Google, which went public in August 2004, sold about $1.9 billion worth of shares in that offering. 
 
 Facebook priced its IPO at the high end of its expected range of $34 to $38 per share. That range was raised earlier in the week from $28 to $35 per share, and the company added more shares to the deal as well — although all of those came from selling shareholders that included several early backers. Read about Facebook's IPO pricing. 
 
 With its shares at the $38 level, Facebook commands a market cap of about $104 billion. That puts it ahead of many more established and larger tech and Internet companies such as Amazon.com Inc. AMZN, +0.15% eBay Inc. EBAY, +0.23% and Cisco Systems Inc. CSCO, +0.85% 
 
 Facebook is now has about half the market cap of Google, despite only one-tenth the revenue. It had revenues of $3.7 billion last year, with net income of $1 billion. The company says it has about 901 million monthly active users, a number that experts believe will cross into the 1 billion territory later this year. 
 
 The offering by Facebook was widely expected to be the high point in a wave of social-networking deals. LinkedIn shares more than doubled in its IPO in May last year. Groupon rose 31% when it went public in November, while Yelp jumped more than 60% in its debut last March. 
 
 One recent disappointment was Zynga, which saw its stock slip 5% in its December 2011 IPO. ||||| Facebook's public debut had plenty of buzz but not much pop. The shares opened 11% higher, but soon struggled to stay above their offering price. David Benoit and Shayndi Raice have details on The News Hub. Photo: Reuters. 
 
 Facebook Inc. took eight years to stage one of the most anticipated initial public offerings ever. The anticlimax came Friday, as Wall Street bankers struggled to prevent the newly minted stock from ending its first day with a loss. 
 
 The stock had been widely predicted to soar on its first day. Instead, up until the closing moments of the trading session, Facebook's underwriters battled to keep the stock from slipping below its offering price of $38 a share. Such a stumble would have been a significant embarrassment, particularly for a prominent new issue like Facebook, the most heavily traded IPO of all time. 
 
 In the end, the bankers succeeded. When trading on Nasdaq ended at 4 p.m., the social network's stock was up just a hair, 0.6%, at $38.23. 
 
 The roller-coaster day—Facebook's shares started out jumping roughly 11%, before cooling off—was also beset by trading glitches and a 30-minute delay in the opening of trading. Nasdaq OMX Group Inc. didn't respond to requests for comment. 
 
 Facebook was also hurt by investors' high expectations of a healthy first-day pop in the price, according to people familiar with the matter. When that pop didn't happen, it prompted a selloff, these people said. 
 
 That's when Facebook's underwriters had to step in to support the company's share price, people familiar with the matter said. In particular, lead underwriter Morgan Stanley was assigned to be the deal's "stabilization agent"—meaning it was the firm's job to keep the shares above the offering price, these people said. In that role, Morgan Stanley was forced to buy Facebook shares as the price slid toward $38 in order to prevent the price from crossing into negative territory, according to these people. 
 
 Live Chat Recap How did WSJ's David Benoit, Steven Russolillo, Stephen Grocer and Paul Vigna field reader questions in the early hours of trading? 
 
 
 
 Morgan Stanley, which led the platoon of 11 Wall Street banks that arranged the listing, had to dip into an emergency reserve of around 63 million Facebook shares—worth more than $2.3 billion at the offer price—to boost the price and create a floor around $38 a share, according to people close to the situation. In successful IPOs, the reserve, known as the "overallotment" or "green shoe," is used by underwriters to meet soaring demand but in this case, it was used to prop up Facebook's ailing share price. 
 
 The process is common in IPOs and works like this: The underwriters have the extra shares available to either sell or buy for a period after the IPO. If demand is strong, they sell them like all the other shares. But if the stock price falls, they can buy them back, effectively creating a floor for the price. 
 
 Facebook's price began falling almost immediately after shares began trading. It is unclear exactly when Morgan Stanley stepped in, but traders said that the price movements throughout the day, with the shares occasionally touching the IPO price but never crossing below it, suggested the firm was active throughout much of the session. 
 
 Facebook's opening-day travails suggested how tough it can be to live up to high expectations in the market. "There's been way, way too much hype, so it may be impossible not to have it be anticlimactic," said Peter Falvey, managing director of the Boston-based investment bank Falvey Partners LLC. 
 
 Photos: Facebook's First Day of Trading View Slideshow 
 
 The stock's 0.6% rise was far below the first-day performance of other companies that raised $5 billion or more in their IPOs, such as United Parcel Service Inc., which experienced a 36% first-day pop in 1999, according to Dealogic. Some Web-company IPOs over the past year, such as the social network LinkedIn Corp., more than doubled on their first days, though game maker Zynga Inc. closed down 5% on its December debut. 
 
 Still, at a market capitalization of nearly $105 billion by day's end, Facebook took its place among the nation's corporate giants. Its stock market capitalization makes Facebook bigger than computer firm Hewlett-Packard Co., and puts it in the same league as PepsiCo Inc. 
 
 At Facebook's headquarters in Menlo Park, Calif., the mood was celebratory, according to people on the company's campus. Chief Executive Mark Zuckerberg, who founded the company from his Harvard dorm room in 2004 and who is now worth $19.25 billion, rang the Nasdaq opening bell from there early Friday morning amid a gathering of around 2,000 employees. 
 
 Related Video 
 
 Facebook CEO Mark Zuckerberg addresses employees before ringing the Nasdaq bell ahead of Facebook's IPO on Friday. Video: Facebook. 
 
 Mean Street host Evan Newmark calls on WSJ's Thorold Barker and Rolfe Winkler to discuss the delay and then relatively slow start by Facebook shares following the start of trading. Photo: Getty Images. 
 
 In his On the Mark segment, Mean Street host Evan Newmark points out that Facebook's slow start out of the IPO gate gives him lots of hope. Photo: AP. 
 
 WSJ's 'Intelligent Investor' Jason Zweig visits Mean Street and looks at the unique way in which Facebook is intertwined with the lives of its customers and asks 'How much is too much to pay for a piece of yourself?' Photo: Getty Images. 
 
 Flanked by Chief Operating Officer Sheryl Sandberg, Mr. Zuckerberg told the crowd to remember the IPO was just one day. "Going public is an important milestone," said the 28 year old, sporting his trademark hoodie. "But here's the thing. Our mission isn't to be a public company. Our mission is to make the world more open and connected." He closed with, "Stay focused and keep shipping." 
 
 The social network last month reported that its first-quarter sales declined from the prior quarter, and that profit also slumped, though revenue was up from a year earlier. Advertisers such as General Motors Co. have publicly questioned the utility of Facebook's ads. And Facebook must grapple with privacy issues as well as concerns over its strategy in mobile devices and the complex China market, among other things. 
 
 "Facebook's got a great run ahead of it, but things keep moving," said Deepak Kamra, a general partner at venture-capital firm Canaan Partners. "Platforms come and go." 
 
 For the day, however, the offering drew in investors large and small. Theophilus Hodges, a 36-year-old property manager, stopped into an E*Trade branch in downtown Chicago Friday morning specifically to open an account to buy Facebook shares. Mr. Hodges said he plans to invest $10,000 in Facebook shares, using $4,500 of his own money and $5,500 from his mother. "If it wasn't for Facebook, I wouldn't be here," he said. 
 
 Some investors who had bought Facebook shares in private transactions in the so-called secondary market before the IPO said they were disappointed the social network didn't have a strong first-day pop. "If the stock were trading in the $50s right now, I might be fighting off some momentary giddiness, but I can't take giddiness to the bank," said Kevin Landis of the $85 million technology fund Firsthand Capital in San Jose, Calif., which bought Facebook at about $31 a share on the secondary market. 
 
 Yet even if some institutional investors felt let down, Facebook's early venture-capital investors were jazzed. David Sze, a venture capitalist at Greylock Partners, which invested about $12 million in Facebook in 2006 at a $525 million valuation, faced criticism at the time for what was viewed as an expensive deal. Greylock now owns a stake in Facebook valued at as much as $1.15 billion. "No one ever believes at the beginning," Mr. Sze said, adding that his partners are "feeling very happy." 
 
 The hours leading up the IPO on Friday morning were busy at Facebook. Late into Thursday night, hundreds of employees huddled around their computer screens and goofed off, playing hockey or giving impromptu concerts. 
 
 At around 6:30 a.m. Pacific Time on Friday, hundreds more employees returned to the campus to watch Mr. Zuckerberg ring in Nasdaq's opening bell. Facebook engineers had rigged the button to automatically post the message, "Mark Zuckerberg has listed a company on NASDAQ - FB," on his own Facebook profile as he rang the bell. 
 
 But on the other side of the country, on Wall Street, traders were exasperated by a 30-minute delay in the opening of the stock, which didn't begin trading till around 11:30 a.m. Eastern. Nasdaq officials told members in a notice at noon that its staff was "investigating an issue in delivering trade execution messages" from trades made in Facebook's IPO. Around 1 p.m., Nasdaq indicated it would provide a "manual report" to brokers with information on Facebook trades. 
 
 Once the stock opened, trading was robust. More than 200 million shares changed hands in the first hour, as investors rushed in to buy, and some who had received stock from the IPO cashed out. By day's end, 571 million shares traded hands. 
 
 The glitches that beset Nasdaq on Friday helped contribute to the lackluster price for Facebook shares, according to people familiar with the snafus. One of the biggest problems, these people said, was that buyers and sellers of Facebook shares weren't provided confirmation of their trades until 2 p.m. That's akin to people not knowing how much money is in their bank account, and therefore not knowing whether to go out and spend more money or save. 
 
 Lead underwriter Morgan Stanley received about 38% of the IPO shares to distribute, while J.P. Morgan got 20% and Goldman Sachs Group Inc.'s allotment was roughly 15%. Morgan Stanley is expected to command the largest percentage of more than $175 million in fees from the IPO. 
 
 —John Letzing, Owen Fletcher, Geoffrey A. Fowler and Jenny Strasburg contributed to this article. 
 
 Write to Shayndi Raice at shayndi.raice@wsj.com, Ryan Dezember at ryan.dezember@dowjones.com and Jacob Bunge at jacob.bunge@dowjones.com ||||| SAN FRANCISCO (MarketWatch) — Facebook Inc.’s stock offering may have killed the next wave of IPO stars and burned individual investors, but one veteran technology-sector investor is willing to give the social-media icon a second chance — at $20 a share. 
 
 “Facebook FB, +2.18% at $20 is worth a look,” said Walter Price, co-manager with Huachen Chen of the $1 billion Allianz RCM Technology Fund RAGTX, +1.81% which has bested its technology-category average return on a three-, five- and 10-year basis, according to investment researcher Morningstar Inc. 
 
 “Facebook is something we want long term, but when you bring out the stock at $100 billion [market valuation] and that’s our price target in three or four years if they execute well, what is your upside?” Price added. “If they execute well, they can go back to $100 billion in three or four years.” 
 
 Facebook’s market value as of Monday’s close was about $75 billion (including restricted stock and unexercised options); at $20 a share, the company’s market cap would be in the neighborhood of $55 billion. 
 
 The Allianz fund received an allotment of the Facebook IPO, which went public at $38 on May 18, and sold its shares at a profit, according to Price. “The underwriters did a great job for the selling shareholders,” he said. “I’m sure they’re all ecstatic.” Read more on Facebook catching further flak with new sell call. 
 
 ‘Mini-bubble’ popped 
 
 Buyers obviously are less enthused, with Facebook stock down almost 30% from its original offering price. 
 
 “It’s a mini-bubble that popped,” Price remarked of the social-media craze. Facebook broke the trend’s back, but a lack of traction for Groupon Inc. GRPN, +3.86% and Zynga Inc. ZNGA, -0.68% shares also reveals cracks in the IPO machinery. 
 
 “The valuations the sellers expect are too high,” he said. “You can buy a lot of great companies at 10 times earnings or less, so why would you buy Facebook?” 
 
 Price recalled the Facebook road show, where the company introduces itself to institutional investors and Wall Street analysts. The fund manager said he stood in line for an hour and then argued with a security guard about being able to bring his computer into the presentation. Then he waited another hour to get registered. “Pretty surreal” is how Price described the event. 
 
 Then Facebook cut its earnings estimates during the road show. According to Price, “that’s the first time in a long time I’ve seen that happen. That’s usually a cautionary sign.” 
 
 The choppy wake of the Facebook offering leaves “a lingering sense of disappointment with some of the new companies and the IPO process. It’s got to get fixed before you can bring many of these companies public.” 
 
 Where the buys are 
 
 While Facebook and other one-time social-media darlings stumble, Price looks to established technology companies with earnings growth that he finds attractive. 
 
 Apple 
 
 Apple Inc. AAPL, +3.31% for example, “is a stock that has never gotten expensive. As long as they continue to grow their earnings, the stock is going to go up with earnings. Google GOOG, +1.59% is getting to that point too. It’s got cheap enough so there’s not a lot of valuation risk in the stock.” 
 
 Price said Apple shares could trade in the $750 to $800 range over the next 12 months, while Google Inc. shares could see $650 to $700. “Google has done a wonderful job with Android and moving applications to the mobile space,” he added. “Advertisers are recognizing this is a great way to capture customers.” 
 
 Along with Apple and Google, which are hefty positions in the Allianz technology fund, Price also likes the valuation and dividend yield of top holdings Microsoft Corp. MSFT, +0.91% and Intel Corp. INTC, -5.47% 
 
 On edge about Europe 
 
 Price said he expects Wall Street will lower earnings estimates for tech companies as the June quarter comes to a close, reflecting the slowdown in Europe. 
 
 Europe’s troubles are Price’s troubles, since the tech sector is heavily dependent on European orders. ”Most tech companies are global companies, with anywhere from 10% to 50% of their business in Europe,” he pointed out. 
 
 “Its been hard to find European companies. Even with U.S. multinationals, we’ve been careful with what we own.” 
 
 Want news about Europe delivered to your inbox? Subscribe to MarketWatch's free Europe Daily newsletter. Sign up here.
– Facebook has seen a mixed start to its IPO: Initially priced at $38 each, shares in the company quickly jumped about 11%, opening at $42. But things cooled off, and at one point in the first half-hour, shares were back down to about $38, notes the Wall Street Journal. They were hovering just under $40 around mid-day. “I think it’s surprising that they didn’t get the pop that many were expecting,” one analyst tells MarketWatch. “It seems the underwriters did not leave much upside, or perhaps investors were signaling that they would buy a lot more shares than they ended up actually buying.” TheStreet.com has a liveblog here.