Facebook's stock is bouncing back -- for now

It's too soon to call it a comeback, but Facebook's stock is on a bit of a roll these days. Whether it lasts is anyone's guess; many recent tech IPOs remained volatile for months.

Don't look now, but Facebook shares have been on the rise for the last three trading days. Last Wednesday, the social network's stock stood at $27.24. It closed today at $31.41, a 15 percent rise in less than a week.

So far, Facebook has recovered more than $10 billion of the $35 billion in market capitalization it blew off following its disastrous IPO . Facebook's painful low of $25.52 -- just 12 days ago! -- is now starting to fade a bit.

There are many possible reasons for Facebook's recent rise. The company has been on a bit of a spending spree, including its acquisition of Face.com today. It launched a platform for real-time ad bidding last week, one of several recent moves intended to convince investors that it's serious about bolstering its ad revenues.

But there's rarely a single explanation for any given stock's rise or fall. This is especially true of IPO stocks, which frequently remain volatile months after their debut.

Zynga, for instance, debuted at $10 per share before dropping to $8.00 per share and rising back up to $9.22. That's an 18 percent swing in 30 days:

Zynga's Stock in its first month as a public company
Zynga's first month of trading

Yelp's first month as a public company was even more volatile. Its stock opened at $15, bounced up immediately to $24.60, then dropped to $19.80 before recovering to $28.09. It nearly doubled its valuation in its first month -- twice!

Yelp's stock in its first month as a publicly traded company.

And let's not forget about LinkedIn, which debuted at $45, rose to $94.25, then plummeted to $63.31 in its first month, a 32 percent drop from its high:

LinkedIn's stock in its first month as a publicly traded company.

History shows that this kind of trading volatility is going to be the norm for Facebook, at least for a while. The company's next earnings report, its first as a public company, will give us a better idea to the overall strength of its business -- and the likely direction of its stock.

 

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