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Google shares trade higher

The faces of Google and Nasdaq executives appear in a video image Thursday morning in Times Square. (Associated Press / The Spokesman-Review)
Associated Press
The faces of Google and Nasdaq executives appear in a video image Thursday morning in Times Square. (Associated Press / The Spokesman-Review)

SAN JOSE, Calif. — Shares of Google Inc. surged 18 percent in their market debut Thursday, the culmination of a unique and bumpy initial stock offering for the 6-year-old dot-com dreamed up in a college dorm room.

The stock started at $100.01 on the Nasdaq Stock Market, $15.01 higher than its $85 initial offering price. They finished the day at $100.34 with just over 22 million shares having changed hands, making it one of the 10 most actively traded stocks on the Nasdaq.

The IPO price, set late Wednesday through an unorthodox auction that alienated many on Wall Street, cleared the way for the stock to start trading under the symbol “GOOG.” Founders Sergey Brin and Larry Page opened trading on the Nasdaq, though Google didn’t begin trading until midday.

Nasdaq officials said a delay in trading was standard for IPOs, and added that there were some technical issues as the Nasdaq matched bid and ask prices in the minutes leading up to trading.

The surge may indicate many institutional investors sat on the sidelines for the initial offering, said Barry Randall, portfolio manager for the First American Technology Fund.

“There were a lot of institutional investors who were spooked by not only the initial auction scenario but also the missteps along the way,” he said. “I suspect many of them did regard it as a healthy business model, and now they have the ability to purchase the stock from the open market instead of the managers. I think they feel more comfortable.”

The $85 initial share price was short of Google’s original expectation of $108 to $135 a share. It also comes at the lowest end of Google’s downward-revised range it made on Wednesday, when it also reduced the number of shares to be sold to 19.6 million from 25.7 million — a move that was expected to buoy prices.

“The good news for Google is that it didn’t price below the low end,” said Tom Taulli, co-founder of CurrentOfferings, an IPO research company. “If it had priced below the low end, maybe there could have been some selling pressure.”