Facebook debut sets pace for tech IPOs to come

Reuters Facebook�s arrival as a public company will be seen as a gauge of the tech IPO market�s health for the remainder of the year. (Above, co-founder and CEO Mark Zuckerberg)

SAN FRANCISCO (MarketWatch) � After Facebook, the IPO deluge.

Or so the investing world is wondering.

With Facebook Inc. FB �finally going public, the market�s attention next turns to whether the social-networking sensation will lead the way for another wave of tech firms to cash in on the IPO market. Read more: Full coverage of the Facebook IPO.

But Facebook saw a mixed debut out of the gate, with an initial gain, then a drop to its IPO price of $38 before picking back up and then closing at $38.23 � which may prove to be a disappointment for investors who were looking for a strong first-day �pop� for the shares. Read more: Facebook IPO loses steam.

�What happened was the stock was sprinkled liberally through the retail investors, and they don�t have the same experiences other accounts do, said John Fitzgibbon, analyst with IPOScoop.com. �It�s had its shakeout.�

Still, the heavy pre-IPO demand for Facebook�shares suggests that the hunger for social-media stocks hasn�t abated over the last 18 months, which has also seen debuts by the likes of LinkedIn Corp. LNKD , Pandora Media Inc. P , Groupon Inc. GRPN �and Zynga Inc. ZNGA , among others.

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Indeed, while Facebook�s trading debut Friday was unexpectedly weak, the offering was the most-anticipated tech-industry IPO since Google Inc. GOOG �went public in 2004. Facebook sold $16 billion worth of shares in an IPO that valued the company at more than $100 billion, making it one of the largest offerings in U.S. market history. Read more: 10 stocks that beat Facebook on its first trading day.

Make or break

Now that Facebook is publicly traded, its IPO is seen as both a symbolic coda to the series of social-networking firms that have come to market already, and a measure of the IPO market�s health for the remainder of the year.

�Facebook is the component that will make or break the IPO market,� said Scott Sweet, of IPO Boutique. �It is so powerful and there is so much demand that if the IPO didn�t work, the IPO pipeline would immediately freeze.�

All of this is happening at a time when the number of IPOs has shrunk. Of the 12 offerings scheduled for last week, Sweet noted, five were ether withdrawn or postponed.

Click to Play Facebook debut hit by delay

Facebook's highly anticipated IPO began trading after a 25-minute delay Friday, with shares priced at $38. Rolfe Winkler joins Markets Hub to discuss early market reaction. Photo: Reuters.

And yet, IPO activity overall has increased since this time a year ago.

According to research firm Renaissance Capital, 68 U.S. companies have held IPOs this year as of May 15, a 10% increase from a year ago, with 58 of those pricing between January and April. Nick Einhorn, senior analyst with Renaissance, said that period was �the busiest first four months of the year in any year since the dot-com bubble.�