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Special Coverage of Facebook IPO; Facebook Trades Begin Low; Edwards's Fate in the Hands of the Jury; Arrest Made in Mississippi Highway Shootings

Aired May 18, 2012 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FREDRICKA WHITFIELD, CNN ANCHOR: Hello, everyone. I'm Fredricka Whitfield in for Kyra Phillips. Welcome to our viewers around the world now.

The most hyped IPO of the year is finally here, so just how friendly will investors be to Facebook. At any moment now, we will begin to see the Facebook effect on the stock market for the very first time.

CEO Mark Zuckerberg rang NASDAQ's opening bell from the company headquarters in California to mark this day as Facebook's stock goes public and we've got Facebook's IPO covered from coast-to-coast here in the U.S.

Chief business correspondent, Ali Velshi, and your "Bottom Line" host, Christine Romans, are in New York. And in Silicon Valley, correspondent Dan Simon is live outside Facebook headquarters in Menlo Park.

And take note -- Facebook's price will be showing at the bottom right of your screen.

Let's begin with Christine Romans in New York. Give us the latest, the starting price of "FB," its ticker name, is $38. This is quite historic. This really is like the third largest public offering behind G.M. and Visa, right?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That is absolutely right and it could end up being the second largest by the time all of the trades are said and done.

We are still waiting for the actual indications over at NASDAQ where it could be. It looks like it will definitely be higher, obviously, no surprise there, than $38.

But we haven't seen the trades cross just yet, so we're watching the indications as they're matching buyers and sellers and trying to figure out what this stock will open at.

It's going to be big. There is a lot of hype about it and it often can take a while to get the real sense of the price discovery of what it will look like.

But $38 clearly, that's what the current price says on the boards right now. That is what the IPO price is, Fredricka, waiting to see what investors are going to say. We know there's going to be a huge amount of demand.

WHITFIELD: OK, so who can actually buy Facebook? This is being offered to whom and how?

ROMANS: It's being offered to the institutional investors, the big investors. If you have a brokerage account with Morgan Stanley or any of the other big brokerage accounts, many of them have a lot of shares available for people at the $38 price and people have already placed those orders and they are waiting to see how much the investment will net them.

If you are like you and me or you're an average investor, you may have put out an order on e-Trade or TD Ameritrade for a few shares or for a lot of shares. You could put a limit order and some people have limit orders pending right now to see what price they'll get.

They won't get $38 a share, though. They will get a different price, the price what the market decides the stock will be today.

WHITFIELD: And at $38, has that been considered overpriced by certain standards?

ROMANS: It's interesting because this is a very unique company. But overpriced? Something is worth what the market will pay for it. So you have all of these people around the world -- in fact, there was more demand than the company could even satisfy. Some 420 million shares -- even more that than -- will be sold.

So, you know, we'll know what the price is today and every day it will change. Every moment it will change. Some people will sell and some people will buy and that is what the stock market is, deciding what the price is.

There are those who have said, however, that this is a company that is raising an awful lot of money and people have the highest expectations. So it's got an awful lot to prove now about how it will continue to make money from ads in a very rapidly changing and evolving technology market.

WHITFIELD: All right, so, in the end, it would seem as though everyone will have a piece of Facebook stock. It will be one of those investments that will be standard part of 401(k)s, just like Apple.

ROMANS: I would think so because this is a big, popular stock. It's a company everybody knows. You will likely see it added into all of those big indexes and index funds.

So you are right. If you have mutual funds, you will probably be exposed to Facebook through those mutual funds, just as you are to Apple, IBM, Microsoft and others that are in so many people's portfolio, whether you bought it or not.

WHITFIELD: All right, thanks so much, Christine Romans. Appreciate that. Keep us posted. Now to Facebook headquarters now in Menlo Park, California. Silicon Valley correspondent Dan Simon is there. We saw earlier hundreds of employees showing up to watch Mark Zuckerberg ring that NASDAQ bell and it looks like there is a whole lot of celebration going on there and elsewhere today, right?

DAN SIMON, CNN CORRESPONDENT: Well, this is a once-in-a- generation event here in Silicon Valley. The valley has been buzzing over this for the past few weeks.

And it was a momentous event that we saw here a couple of hours ago, as we saw Mark Zuckerberg ring the NASDAQ bell. It is 8:00 a.m. local time and normally you would have people coming to work, but, instead, they were leaving. They were here all night, drinking Red Bull, having what is called a "hackathon."

This is something that the company does periodically. Interesting that they did it the night before trading began to send a message to the world that they want to keep their eye on the ball, that they want to try to create new products that users will enjoy. And so now you have people leaving headquarters right now and, you know, it's been quite an occasion.

WHITFIELD: Indeed. All right, Dan Simon, thanks so much.

Let's check in with Ali Velshi with some new information coming out of New York now. We are seeing that the price at $38. Is that something we should believe? Unchanged, right now? Won't change at all?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Momentarily, it will change. We have three indications and, basically, they get different sources of information.

What is happening now is the stock is about to be active. They are pairing all of the buyers with all the sellers. There are two types of sellers. There's Facebook, the company, and there are other holders of the stock who are looking to sell.

It is a massive process. Back in the old days when it would be on the New York Stock Exchange and they still have them, you would see groups of people trying to find a price. They want to find a consistent price at which a big chunk of shares will change hands.

And what we are looking at, I have conflicting information, but I have two pieces of information. One is that there is a chunk they have found buyers for 25 million shares or 35 million shares and the range is somewhere between $42 and $45. So within moments, we will see that $38 change.

When I say moments, it could be minutes, but we are likely to see that $38 change to somewhere between $42 and $45. The first tick on this stock will be above the IPO price. Buyers who got in at $38 will instantly have made money if they choose to sell that stock if they are eligible to. So it does look like the first indication on the stock will be between $42 and $45 and that is set to happen momentarily. It is just a backlog of orders, basically, a reconciliation, Fred, where they're just trying to find as much movement as they can.

They don't want to start pairing 50 shares here and 50 shares there. They are trying to find the price at which the first trade can really be an indication of the value.

That will surprise people. It is a little low for the first trade, but that is what we're looking at, somewhere between $42 and $45 and I can't tell you to keep staring at the board, but it's going to happen fairly soon, I understand.

WHITFIELD: So does $45 become the cap? It couldn't go any higher than that.

VELSHI: No. No, that's not true. It can go anywhere. At that point, there has been a backlog. I have been talking to people all morning who have been trying to use their Schwab or e-Trade or Ameritrade accounts to execute trades and they are not getting executed because we haven't started trading.

Then everybody will get into it. People will make up their mind. They'll say, wow, $45. That sounds like a deal. I heard somebody say that it's going to go to $70 or $80 or $90. That is not necessarily true, but you'll start to see the activity.

Will people who bought it at $38 or early investors, say $45 is where I get out and I make my money and I go invest in something else or will people say this has longer to go?

So the fact that it shows up in the $40s in the next few minutes is not an indication that that is where it will be for the rest of the day.

WHITFIELD: Ali, it has been an amazing trajectory for this company in just eight years. Something that started out in a dorm room at Harvard University and now this.

Wasn't it as early as yesterday, $104 billion, the value of Facebook? But after a day of trading like this, what does this do to the value of the company? How much might it impact the increase of the value of that company?

VELSHI: Christine has been reminding us with that where you had Google pricing with a lot of room to grow, what you have Facebook doing is pricing for perfection.

In other words, Facebook has to perform now for the next several years with the expectation that it is a very valuable company. Fred, when you compare companies in the same space -- let's say Home Depot or Lowe's or Ford and G.M., what you are comparing is the price of the stock compared to how much the company earns.

In that world, Facebook is very expensive. The price of the stock is many, many more times what the company earns than let's say a Google or an Apple and so Facebook has a lot to live up to.

What you are betting on, if you decide to buy this stock in the $40s, because that is probably the first place you will get an option to buy it, you are betting not just on Facebook and what it is, you are betting that Mark Zuckerberg and that team and this reiteration of the Internet that they represent is going to be the next big thing.

If you believe that, then it's a bet.

WHITFIELD: OK, well, you said that as a result of this, this company must perform. It wouldn't offer itself in this public manner if it didn't have a plan 5-years, 10-years or perhaps even 20-years down the line, right?

VELSHI: Well, you would think, but I don't know how these coders think. I don't know how young guys like Zuckerberg think. Their minds are wired differently. It is a new way of doing business, so I don't know whether they are thinking about how to improve things right now.

At the road show where they go to investors to talk about what they will do, a lot of people expressed concern about the move to mobile, right? The idea that I don't see ads on mobile? I see it on my computer on Facebook.

How do they monetize that? How do they take advantage of the fact that everybody uses it on a mobile phone?

And their answer wasn't entirely satisfactory, which is why a lot of wealthy investors are not getting into Facebook because they say that is where things are going. That is not 20 years, Fred. That's the next few years.

They don't think Facebook has a great plan, so the bet right now if you are an investor -- look, they have a lot of other things right. They will probably figure this one out, too.

Or you will say, this is the big one. If Facebook can't figure that out, I'm staying out.

WHITFIELD: So you wonder who or whom is impacted the most? Is it the what, the company, the invention of Facebook that will impacted the most, changed the most by this public offering?

Or is it the who, the founder of it, Mark Zuckerberg, the businessman, the visionary, the inventor of Facebook that will be impacted the most and perhaps even changed?

VELSHI: I have to believe that Mark Zuckerberg means it when he says he wants to change the world more than he wants to be rich. He is already richer than anybody I know.

I really do think that this is a movement. So I'm not one of these guys who thinks being a public company is actually going to change them for the worse and I'll tell you why. Remember when Google became public? Most of us knew Google exclusively as a search engine, right? That's mostly what you knew Google. Now, Google is making glasses and they have driverless cars and they're into this Google+ and it's social networking and it is everything you need.

The money that you bring in by going public means that, if you really are a visionary, you can dream really big. And Google did prove that.

So if Facebook, if these guys are really visionaries, this will allow them to dream really big. And I bet you their dreams are bigger than anything I could ever conceive of, so the tradeoff that they're a public company and they'll be scrutinized by investors I don't think will matter all that much.

One key thing, Fred, that a lot of people don't know, this company is still fully, fully controlled by Mark Zuckerberg. A lot of people say that is not really fair. If they are a public company, shouldn't shareholders have some say?

This is like being at a craps table behind somebody who is doing really well. You are betting on them. You're not betting on the game because you don't really understand the game. You're just betting on the fact that this guy knows how to play it better than anyone you've ever seen.

WHITFIELD: So we talk about all the good things that happen as a result of this, what is the worst that can happen from this public offering?

VELSHI: The worst that happens, I would say look at Microsoft. One of the most innovative companies in the history of the world. After it became as big as it did, it stopped innovating. That is when Apple took over, right? You never trusted the iteration of the Windows wasn't going to be that good.

In fact, you started distrusting it. They came out with the Zune when Apple had the iPod. Nobody bought the Zune. It disappeared.

Does becoming a big company and having to fit in with larger investor concerns and keep up with expected growth rates make you soft in the middle? That's the concern.

Facebook is edgy. It's young. It's sharp. At some point, do you soften up? That is the biggest concern. That's not necessarily about going public. That's just about becoming so big.

WHITFIELD: So what do you think the iterations were about the discussions involving Zuckerberg and other executives considering whether a public offering was the right thing to do?

It already had blue-chip status as a result of being a trailblazer in social media.

VELSHI: That is a good question because a lot of companies list because of the prestige, right? You're a listed stock. What does Facebook care? They are bigger than most companies would ever be.

Here is the thing. Early-stage investors. Facebook is a start- up. Start-ups are funded venture capitalists who bet on your company in exchange for stock. Those people are not lifelong investors. They want in for a few years and they want a big cash-out.

Sometimes, going public is to be able to say you guys can have all your money back and leave us alone. Go invest in something else. Go find the next big thing.

And, by the way, if I were smart, that's where I would be sniffing around, where the early-start investors are going and now I have a different crowd of investors who are happy to be invested in my company for $38 or $45 or $50, whatever that stock does today.

That's the difference. Sometimes you have to let your early- stage investors go because they are chomping at the bit to cash out. This isn't their business, being long-term investors.

That is probably a lot of the driving force behind Facebook, pressure from early-stage investors saying we need to cash out. We know you're great, but you will never have the growth that you're going to have in the first early years.

This kind of growth that this company will have is entirely satisfactory for regular investors like us. It is not satisfactory for venture capitalists who want a big boom in a few years.

WHITFIELD: We look at the word, unchanged, as it's posted, $38, but you mention that we could be seeing anywhere between $42 and $45 at some point as well.

Unchanged, you think of Mark Zuckerberg, how unchanged he may or may not be. The facade is that he's very unchanged, wearing the hoodie while meeting with Wall Street investors, but as a result of what takes place today, might we see a different persona of Mark Zuckerberg? Is there really no perhaps incentive to change?

VELSHI: Maybe he'll wear cashmere hoodies. If he was going to change to impress Wall Street, the time to do it was two weeks ago before he went on all those road trips.

At this point, the guy is worth $18 billion. What do we have to change for?

Let me give you the update on what I'm getting right now. A number of people have said the trading was supposed to start at 11:05 a.m.

Here is what is happening in the background. In the background, there are bids for all sorts of amounts of money, right? Some have what's called a market ordering, meaning I want shares of Facebook. I want $100 shares, no matter what they cost.

There are people who hold Facebook stock because they were early- stage investors and they are trying to say I want as much as I can get for my stock. So somebody is probably willing to pay $200 for this stock. Somebody else is willing to pay $35. Somebody else is willing to pay $25.

WHITFIELD: So it is the deeper pockets who are able to do that.

VELSHI: Yes, that's right, but what the exchanges are trying to do is reconcile this so that you don't see gyrations on the stock as soon as it opens.

They are going to say that first price you see when that moves from unchanged, it will be a green arrow and it will be up. And that should be a stock that represents what many, many people are buying it at.

And we are looking at the range of 25 million shares to 35 million shares that they have already reconciled at a particular price.

What the exchanges are trying to do before the stock opens is reconcile as many shares as possible so that that first trade represents 50 million shares maybe and is a solid price, so you don't have crazy volatility.

So the point is, there are already deals. There are bids and there are asks. And as soon as they reconcile this, it is just taking time probably because of the volume of shares and the volume of trade. You will see that move and my indications from traders I'm talking to is that it will be somewhere above $42, probably somewhere around $45, in that range, $42 to $45.

And then it will be open for the market. You can get on your e- Trade or Ameritrade or Schwab or Scottrade, whatever you want, and you can start putting in bids and asks and it can go anywhere from there.

It can go up or down, but it looks like the first trade will be up and it will probably be up by several dollars. It is hard to just look at a screen that says unchanged. Better than looking at me, but that's what's happening right now.

WHITFIELD: Lucky for us.

VELSHI: This is the watched pot, right? This is exactly the watched pot. The watched stock exchange doesn't trade.

WHITFIELD: Wow. Fascinating stuff. All right, Ali Velshi, keep us posted as perhaps that number does change, maybe to that $42 to $45. More on the IPO of Facebook.

(COMMERCIAL BREAK)

WHITFIELD: It's a historic day. Four-hundred-twenty-one million Facebook shares are ready for sale.

Alison Kosik is joining us now with an update. Right now, we're looking at this unchanged number of $38, but what is happening in the backroom? ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Everybody is chomping at the bit, waiting for Facebook to open business, open its doors to the public.

You see that unchanged. That unchanged, once those Facebook shares go on the market to the public, that will change to a percentage. That will change to a number. That $38, most likely is going to change.

It will most likely go higher as the buyers and sellers entering the market, fast and furiously, because you have to remember, these trades, most of them, are done electronically and those trades are done in seconds if not nanoseconds.

WHITFIELD: What is this figure predicated on?

KOSIK: The $38?

WHITFIELD: Yes.

KOSIK: So that is really dependent on what the demand has been. Facebook has been going on this road show for the past few weeks and it found out there is a lot of demand for Facebook shares, that investors want to buy in.

So when there is a lot of demand, that gives the incentive to raise the price more. It is simple supply-and-demand and so yesterday before the close of the session, we found out that -- we had known the range was between $34 and $38.

After the bell, we found out that $38 was going to stick. That is at the high range because the demand has been so tremendous.

Fredricka?

WHITFIELD: So if that number rises to between $42 and $45, how instantaneous is that?

KOSIK: It could happen instantaneously. Once again, we are in the age of electronic trading. I would not be surprised to see it go upwards of $45, $50 today.

WHITFIELD: All right, Poppy Harlow is also with us, keeping a close watch on things. Poppy, what are you learning?

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: It is interesting when you're look at this, I have never experienced such a hyped IPO.

And I think Ali hit on it so well when he talked about what the company is betting on. And I would just say that there is so much attention. I have had a lot of people call me and say, should I invest in Facebook? People that don't invest in other stocks.

I want to talk about the challenge ahead for Facebook and that is -- and Ali touched on it -- mobile monetization. They have got 900 million users. Almost 500 million of them have moved over to mobile, people like me and you.

And we also use it on our desktop, but what they said -- they changed their public filing documents last week in the middle of that road show to say that more people are moving onto mobile more quickly than the ads can catch up.

And that scared off some potential investors, some investors in Facebook because that is something they need to figure out. They talked openly about that. Some people called it a massive opportunity for them. Other people say this is a big roadblock to their growth.

It is just something you have to consider. How do you keep this going as a public business that has to now give its numbers to Wall Street every single quarter, every three months. That is a luxury. As a private company, they had the luxury of not having to report their financials. So it's just something to think about amid all this talk.

Remember what is ahead. This company needs to keep growing and they need to keep making a lot of money. Now, the people in place to do that are probably the best out there, possibly, Mark Zuckerberg and Sheryl Sandberg, the COO.

WHITFIELD: All right, Poppy Harlow, thanks so much. Keep us posted.

So the ticker name "FB," soon to go public. Right now, the number is at $38, unchanged per share. We will find out momentarily, hopefully, if that number will change and, if so, at what cost.

(COMMERCIAL BREAK)

WHITFIELD: We are keeping a close watch on the public offering of Facebook. Trading is delayed just a bit. Right now, the number is at $38 a share, unchanged, but it is expected that when trading begins, that number will spike up just a bit. We'll keep you posted on that.

WHITFIELD: Also this hour, the fate of John Edwards is now in the hands of the jury. This is Edwards arriving at the courthouse in Greensboro, North Carolina, just a short time ago.

The jury must decide if the former presidential candidate is guilty of misusing campaign contributions to cover up an affair. Edwards and his former mistress, Rielle Hunter, never took the stand in this trial.

Prosecutors say Edwards accepted around $1 million in illegal campaign contributions. Edwards' attorneys counter that the money was a gift and that Edwards was guilty of nothing more than a bad husband. He faces up to 30 years in prison on six counts, including conspiracy, if convicted.

And we are monitoring the action in the courtroom. If a verdict is reached, we will, of course, bring that to you live right here on CNN. A major development in the Mississippi highway murders. Police have now arrested this Monday in Mississippi, 28-year-old James Willie. Investigators believe Willie is the alleged gunman behind the murders of these two drivers you are about to see, who were both found dead along state highways just 55 miles apart.

Authorities say they found a semiautomatic handgun that links Willie to the two shootings.

Warren Strain is with the Mississippi Department of Public Safety. He joins us now over the phone with more details on the investigation. So, Warren, how did Willie get caught, the suspect?

WARREN STRAIN, MISSISSIPPI DEPARTMENT OF PUBLIC SAFETY: Good morning, Fredricka. He was being held in Tunica County, Mississippi, which is just outside of Memphis on a separate, unrelated charge of rape. He's also been charged with aggravated assault and kidnapping.

He had the weapon on him. And so, of course, we knew the caliber and had a good idea of what the make of the weapon was, so we expedited that through the state crime laboratory and, sure enough, it came back as the murder weapon.

WHITFIELD: And what more do you know about the suspect, James Willie?

STRAIN: He is no stranger to law enforcement, but he will make his initial appearance in the next day or so on capital murder charges. He will be formally charged later today in the case.

WHITFIELD: Initially, investigators said that the suspect may have been posing as a police officer. Is that, indeed, the case?

STRAIN: Fredricka, we were very cautious through the course of the week in saying that is a very plausible scenario. We wanted to make sure that the public was aware that there was an option to call 911 if there was any doubt that a legitimate law enforcement officer was initiating a stop.

So we wanted to make that information available and, if we had not done that and he were to have been using or impersonating an officer and using that as his M.O., so to speak, and we had not done anything, then we would have had another whole set of problems.

But, if we are going to err, we are going to err on the side of public safety.

WHITFIELD: Warren Strain, thank you so much.

Mississippi's authorities will be holding a news conference about Willie's arrest in less than two hours. We will, of course, bring you the details when they happen.

(COMMERCIAL BREAK)

WHITFIELD: Welcome back. Welcome to our international viewers as well. Facebook was to begin its trading about 25 minutes ago. Now finally, the moment has arrived. I have with me Christine Romans and Ali Velshi with me, keeping a close watch on things.

Christine, you first. How did it open? Did the numbers change significantly?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, it opened at $42.05, just as Ali's sources were indicating. They had a lot of orders they were matching in that $42 to $43 range. You can see on the board -- this is the feed from the NASDAQ behind me. You are looking at trades of $41.30, up more than $3. That is an 8 percent advance. About 10 percent higher than when it opened.

Remember, there's more than 400 million shares here that are set out here that matched up at $38, the IPO price. Now comes the volatile part where you match all of those shares with buyers and get that worked out.

Now, the "Wall Street Journal" and "Bloomberg" reported a technical problem at the NASDAQ. They were having trouble. Ali's got more on that angle of the story. That is why you had more of a delay than expected. We knew this was a big IPO with a lot of demand. It often takes a while to get the price discovery mechanism in place. This is what the NASDAQ is telling us now, this FB, Facebook shares, are trading for. You see this move around throughout the day. We know that $42.05 was the opening price -- Fredricka?

WHITFIELD: Christine, thank you so much.

Let's go to Ali Velshi.

Ali, first, explain what was the glitch about?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Volume, most likely volume. Traders have been reporting they've had trouble changing or cancelling orders. We heard from investors having trouble placing orders, particularly having to do with eTrade accounts, that they were having trouble placing orders. It just could be the amount of interest. We know this was oversubscribed 20 to 1, which means there was demand for 20 times the number of shares that were offered. There were a lot of shares offered.

We have seen this, Fred, on single transactions or single stocks, where there is so much demand on the upside or down side that it causes delays in the system. We are not sure what the delays were. It was a delay coming in.

Here is what is interesting. The stock priced at $38. As you and I discussed a half hour ago, the indications were it would open at $42 or $45. It opened at $42.05. But it is down from there. That means something has happened. You are not seeing that immediate upward momentum. It's very early. This now has been trading for a few minutes. There is probably such a backlog of trades right now that I would not read too much into what the stock is doing. I would give this a couple of hours before we have a sense of is it settling lower than what you call the print, the first trade at $42.05 or settling or higher than that. The $38 trade is now history. That is what the wealthy traders got in on. That's a piece of the past. The issue is the print. The first trade at $42. 05. Does it now end the day higher than that or lower than that? That will give you the sense of whether the broader market, everybody involved in this, thinks this has a long way to run, or not.

Remember, the estimates we heard from people about where the stock might go on the first day have been more in the 50 or 60. Some people have said higher, that range. To see it trading at $40 a few minutes in is probably lower than we expected it would be. As I told you a half hour an ago, we expected to see a trade above $42. I wouldn't have guessed a few minutes in we would be lower than the first print price. Definitely, something to keep in mind. We know there is a backlog and we know there is some difficulty in reconciling orders. It may be a technical problem. We don't know if that is based in the NASDAQ where the stock is listed. It lists on different exchanges and traded on different exchanges. We don't know what the problem is. We are looking into it. Because of that, this may not be an accurate reading of where the stock will be in a few hours.

WHITFIELD: What are the conditions that could hike the prices further from this point?

VELSHI: From this point, it is just demand. We don't know all the institutions who wanted to buy into the stock in the road show. We don't know how many people are sitting there and watching at the offices and trying to get an order in through an online trading organization like Scott or eTrade or Schwab. That can influence the price. At $40, that is a deal. I heard it was $80 or $90. Let me get in on the deal. This is where it becomes a mugs game. You never want to trade the stock because of how the stock is trading. That's momentum. You don't want to do that. That is very '80s. You want to trade on based on if the stock is worth $40 or $50 or $60. Do you think it will be in a year or two when you go to sell it? Do you think it'll be worth more than that? Those are the decisions we have to make. We are still humans. People who thought it was going to be $60 out of the gate are thinking at $40, should I buy?

(LAUGHTER)

WHITFIELD: Ali Velshi, thanks so much.

VELSHI: OK.

(COMMERCIAL BREAK)

VELSHI: To our viewers in the United States and around the world, this is coverage of the opening of Facebook. You are looking at it right now. $40 on the nose. A gain of 5 percent from the IPO price of $38.

And I have to tell you, some analysis we have been making here from most people following the stock, this isn't great news for Facebook. This is a lower than expected increase from the initial price. The worry at this point is it is $2 higher than the price it came out at. And as it approaches the price the underwriters, the major banks who sold the stocks -- as it starts to approach that, you may see them start to do something. It may be a backlog of orders. There is a delay in the opening of trade on Facebook, much longer delay than we expected. It seems to be related to some sort of delay at NASDAQ. It may be technical. It may be the backlog of orders. As you can see, the stock is not moving actively at the moment. That indicates maybe a jam up in the pipeline.

Let me bring in Christine Romans in.

Christine, you and I have been studying the price and comparisons to other stocks, like GroupOn and Zynga, that opened high and came down.

ROMANS: Fizzled.

VELSHI: We've talked to experts on where they thought this stock would go on the first day. Nobody that you or I talked to suggested $40.

ROMANS: No. And here is another thing. You have 400 million shares that are brand new and being digested. I want to caution, just like you, in reading too much the first moments of the printed trade. We have a long day and long way to go. We don't know if it will keep going up. We don't know how many people, Ali, are selling it.

A quick point of trading at 40 right now. Look, it is $44 is what it was trading privately before it became a public company. That would suggest maybe they priced this thing at perfection, right? A lot of other companies have gone public before, Ali. Gone public not at the top, but with lots of room to grow. Google raised $2 billion in august of 2004. That price was actually $85 to $95. Microsoft's IPO was $21 a share. The Apple IPO, all the way back in 1980, $22 a share. About $100 million raised there. A lot of comparisons so Google. A lot of people comparing it to Google.

VELSHI: We are getting word that Zynga stock has halted after plunging 13 percent. The fact we are early in the day and this is having an affect on other tech IPOs. The stock has been halted. We are calling the company to figure out why Zynga has been halted. We're finding out what the reason is. We're calling the company to find out. Zynga and GroupOn are the two companies -- I agree, you should be looking at Apple and Google to compare Facebook to. But Zynga and GroupOn had an initial pop and dropped below the actually offering price. I don't know the story with Zynga. As Facebook debuts, we would describe as a disappointing debut for Facebook stock. Zynga has halted. It dropped 13 percent.

Christine, the issue is two-fold. One is, you said $38, the IPO, at the high end of the second range. You said that was priced for perfection. Maybe the market agrees with you.

ROMANS: It is interesting. The company has a lot to prove. This is a company that has to prove it will be able to get into the Chinese market and continue to grow and continue to make money from our communications with each other and the friendship of the networks we're making. You called it the second transformation of the Internet. How do you modernize this? Other people compared it with Eastman Kodak. Eastman Kodak had a long history. What will it do next in the fast-growing economy? So, I think this is just the beginning of the Facebook story, Ali. It has been an amazing story to hear, but this is the beginning of the Facebook story.

VELSHI: Christine, stay where you are. We are going to the NASDAQ and go to Alison Kosik, and we're going to find out what's going on with Facebook, what this technical problem might have been and what's going on with Zynga stocks. It will be an interesting ride for the next couple of hours. Stay with us. You are watching special coverage on CNN.

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VELSHI: We have full coverage on this. You are watching to our viewers in the United States and around the world, special coverage of the Facebook IPO. Look at the right side of the screen. That is not working out the way the underwriters expected it to. The price of the stock was $38. It opened at $42.05 and has done nothing but go down from there. There was a remarkable delay at the NASDAQ. We don't know what it was about.

Christine Romans and I have been hearing stuff about volumes of trading.

Christine, this may just be a case where it took a long time to get the stock out.

ROMANS: There was something like more than 80 million shares traded in the first 30 seconds when this was out. 80 million shares. You think there is more than 400 million shares that have to be matched with people to buy them. The company is selling 400 million shares. There has to be buyers for all of those. It is remarkable, really. You will se this getting closer to flat here and turning lower. There were a lot of investors in the company who thought they were going to be, and some probably are today, cashing out and making a boat load of money even at $38.10. But there are other investors --

(CROSSTALK)

VELSHI: There you go, Christine.

ROMANS: Yes.

VELSHI: Getting very close to $38 as we speak. This is having a follow on effect on the NASDAQ. Another recent IPO, Zynga, one that everybody has pointed to. We are investigating. The report is Zynga stock has been halted after dropping 13 percent. We don't know if that is unrelated news or just tech investors getting out of that.

Christine, I know you're working the story. Keep staying on it.

I want to go to the NASDAQ where Alison Kosik has been trying to find out more about what we think went on why there was a delay.

Two stories going on right now, two stories, Alison. One is what's going on with the price of Facebook, which is now just about to cross below the offering point. That is just not good news for a tech opening. But what was the delay?

ALISON KOSIK, CNN CORRESPONDENT: And that is really the question. We have been on the phone with NASDAQ officials. We have knocked on their doors literally. They are not commenting on what happened.

We can report what other reports are from the "Wall Street Journal," for instance, saying that these traders had problems canceling trades. I'm talking about Facebook. But it's an interesting development to see that Zynga trading has stopped. I'm hearing a circuit breaker kicked in. Basically, what happened was too many sell orders were going in, so it basically was falling too far too fast, and that's when this circuit breaker kicks in, stops trading with Zynga. And, remember, Zynga accounts for a big chunk of Facebook's revenue. It's an interesting --

(CROSSTALK)

VELSHI: Poppy, I'm coming to you with that.

KOSIK: -- of events to see that Zynga shares with been halted -- Ali?

VELSHI: Right behind you, you have to see what's going on. We've moved to unchanged. Every time it hits 38 it comes back in. I don't know whether -- we got it unchanged again. Don't know whether that's the underwriters getting in and not wanting it to go below the offering price because that's just generally an embarrassing situation.

Zynga -- Poppy Harlow is in New York as well.

Poppy, Zynga, let's just talk about this for a second. What is Zynga and why does it matter?

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Zynga is an online gaming company. It matters because it's very closely tied to Facebook. It had a billion dollar initial publish offering last year. 90 percent of its base is tied to Facebook. When you play a game like Farmville online or something, you can play for free, or what a lot of people do is buy additional things. 30 percent of the money from that goes to Facebook, Ali. That's why we're talking about Zynga. It is so closely tied to the base of this company, and that's why it's fascinating to see the sell-off.

I'm reading through Twitter. One person tweeted "Maybe people are getting out of Zynga because they can get into Facebook." We're not seeing that play out in the stock right now.

I also want to get to a comment from an investor we know, Mohammed Alarian (ph). He's well known on Wall Street. He runs Pimco, one of the biggest bond funds out there. He just e-mailed me and said, "Way too much hype, talking about the Facebook IPO." He said, "The small investor could get hurt." The reason I say that is because it's important to look at this more than hour by hour, more than day by day, really look at it year- over-year if you're getting into this as a long-term bet. Our viewers are not necessarily day traders, Ali. They're looking at this from a long-term perspective. Get to know the business, read about it before you get in or out of something like this. Just important to know.

VELSHI: So arguably, if he's right, this might be a better deal than those people who thought they were getting into Facebook at 60 bucks a share.

HARLOW: There you go.

(CROSSTALK)

VELSHI: We're going to continue to watch that.

One thing I want to tell you about when we come back from the break, Alison Kosik mentioned that Zynga may have been halted because of something called a circuit breaker. I will explain what that is. It's a market mechanism for stopping a stock or an entire index from going down too far. It doesn't mean a lot of other companies are doing it. But, Zynga, which is very closely tied to Facebook, has plunged on this not particularly auspicious opening for Facebook. But, again, early in the day. Could be a backlog of trades. We are going to stay on top of this and watch it very, very closely. And as Poppy said, day trading isn't really the sport here. The idea is what is actually happening to Facebook.

To our international viewers, we'll return you to our normal programming. For our U.S. viewers, we'll take a quick break and be back with Fred Whitfield on the other side.

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WHITFIELD: Welcome back to the NEWSROOM. We're keeping a close eye on Facebook. Trading not a vigorous, at as a high a rate as anticipated. We'll keep you posted on the developments with Facebook.

We're also watching other news, including this, two major events we'll be watching in the U.S. this weekend with important international significance, the NATO summit in Chicago and the G-8 summit at Camp David. In Chicago, protesters are already on the streets days ahead of Sunday's NATO summit. Extra police officers have been brought in from places like Philadelphia and Milwaukee to beef up security.

President Obama is playing host for the G-8 leaders. Financial problems in Europe will be the major topic of discussion. And right, now the president is meeting with the new president, Francois Hollande. Besides the global economy, they are expected to spend a lot of time talking about the future of French troops in Afghanistan.

And kids and parents in north Georgia are scared. Police are looking for a man who was seen trying to take a shot at a school bus. He fled when a resident ran after him and left this rifle and a list of school bus numbers behind. Now some parents are afraid to let their kids ride the bus to school. Police are now escorting buses in the area to school until a suspect is caught.

Much more of the CNN NEWSROOM continues. I'm Fredricka Whitfield. Suzanne Malveaux is up next.

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