(MoneyWatch) Facebook (FB) shares closed at $20.88 a share today, a full 45 percent decline from its initial public offering price of $38 a share. The stock was valued at about $72 billion on May 18, 2012, when the social networker went public, but about $32.5 billion of that value has evaporated.
Only the big institutional investors got in on this hot IPO. One investor told me his Wall Street firm told him he was too small to get in on the offering. What's too small? His family had only $25 million invested with the firm.
Index investors also benefited, since they couldn't buy Facebook shares until the index provider added the company to its index. According to its rules, the Wilshire 5000 Total Stock index fund added Facebook after closing on June 15, when company's stock price finished the day at $30.01. Vanguard filings showed the Vanguard Total Stock Fund (VTI) owned 5.6 million Facebook shares, representing 0.09 percent of the fund's assets. (Vanguard declined to disclose the average share price they paid.)
Facebook is not alone, of course. Reams of research shows that IPOs generally lag the stock market as a whole over periods beyond the first day of trading. An updated study originally published in the Journal of Fiance shows that IPOs lag the stock market by 7.2 percent annually for the first three years.
If you, like the "small" investor above, have less than $25 million and were cut out of the FaceBook offering, count your blessings. Also be thankful that your index fund didn't immediately purchase this stock.