Facebook's stock rebounded 3.2 percent Wednesday, a reprieve for shareholders after the stock's rocky inaugural trading day Friday was followed by a two-day decline.
The shares gained $1 to end unofficially at $32 each.
That's still nearly 16 percent below the initial public offering price of $38. Meanwhile, a group of shareholders have filed a lawsuit against Facebook, its executives and Morgan Stanley, the IPO's lead underwriter.
The suit, filed in U.S. District Court in New York, claims the company's IPO documents contained untrue statements and omitted important facts, such as a "severe reduction in revenue growth" that Facebook was experiencing at the time of the offering.
The suit's three plaintiffs, who bought Facebook stock on its first day of trading May 18, claim they were damaged in the process.
In a statement, Facebook said the lawsuit is without merit. Morgan Stanley declined to comment.
Facebook shares opened trading on Friday at $42.05 and climbed to $45 before closing at $38.23 that day, barely above the IPO price. Shares then dropped 10 percent from the IPO price on Monday, and the stock closed at $31 on Tuesday, down 18 percent from the IPO.
Investors had been hoping for a big first-day pop in the share price after Facebook's IPO raised $16 billion, valuing the company at $104 billion — more than Amazon.com Inc., at $98 billion.
On Tuesday, regulators said they were examining whether Morgan Stanley, the investment bank that shepherded Facebook Inc. through its IPO, selectively informed clients of an analyst's negative report about the company before the stock started trading.
The bank said that its procedures complied with regulations and it "followed the same procedures for the Facebook offering that it follows for all IPOs."
And the first class action lawsuits for Facebook shareholders have begun to roll in.
The stock trades on the Nasdaq exchange under the ticker symbol "FB."
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