Facebook's IPO was an unmitigated disaster, with trading delays and accusations that the social network tipped off insiders to critical information it kept from the average shareholder. NASDAQ ended up paying a $10 million fine to the SEC over problems with the public offering.

"Excuse my French, it was a clusterfuck," Elevation Partners Roger McNamee said last year. "It’s like you had a chance to win the Super Bowl and you didn’t show up for the game."

The stock dipped well below its strike price of $38 a share, quickly falling down into the low teens in the following months. Investors worried that Facebook, like Zynga, was struggling to make the transition from desktop to mobile. Its first few earning reports were disappointing and many wondered if the stock would ever recover.

Facebook's flubbed IPO led to lawsuits and fines

But the company has shown over the last six months that it can follow its users in the migration to smartphones and tablets. Its daily usage is now bigger on mobile than desktop and its latest earnings report showed big gains in mobile ad revenue, which now make up 41 percent of its overall revenue. Investors have responded, driving the stock up 70 percent in the last week. Today it hit $38 a share for the first time since its IPO in May of 2012.

For Facebook a higher share price, and more importantly a perception that the company has regained its momentum, will be critical to its ability to compete with other tech giants like Apple and Google. Facebook was recently outbid by Google for the Israeli search company Waze. If it stock continues this rebound, Facebook will have more ammunition at the bargaining table.

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