Facebook down nearly 11 percent in day two of trade

Facebook down nearly 11 percent in day two of trade

On its second day of trading, Facebook’s stock has closed to finish at $34.03, nearly 11 percent down from where it closed and wiped some $19 billion of its market value. Today was its biggest test after its lead underwriter, Morgan Stanley, decided to stop artificially inflating the price – something it is alleged it has done on Friday to make sure it did not fall below $38.

Things managed to pick up in the mid afternoon session of trade, before near close it slightly fell again.

And now there’s increased speculation on why people are fleeing from the company after the hype.

Some are saying that the fall is due to its $100 billion valuation at launch, with many investors saw a disconnect between its valuation and its revenue and earnings – which showed some slowing down. Basically, Wall Street doesn’t want to pay $38 for what they have keep constantly calling – especially on the financial networks – Facebook ‘a great company’ with 900 million users.

“Look at the valuation on it. It might have said ‘buy’ to a few people, but boy it was awfully rich,” one broker told CNBC.

Others are pointing out the NASDAQ glitches, saying that those ‘spooked’ investors when they tried to modify their orders, resulting them to sell. There were also reports of increased insider selling, and the fact that GM pulled its advertising on Facebook – which Ford mocked. One has even said that it’s Zuckerberg that is pushing the stock price down, and has said that it could be trading $18 to $20 by the end of the year.

“There is an enormous overhang of shareholders wanting to get out, who have low cost basis or purchased in the past 18 months hoping for a more positive IPO,” IPO Desktop’s President Francis Gaskins told CNBC. ““Zuckerberg’s continued lack of credibility with Wall Street means investors won’t necessarily buy into company’s estimates.”

“Going on a honeymoon right after a disastrous IPO kind of confirms that he’s not fully committed to further enhancing shareholder value, seems to me.”

Yes, Gaskins, because Zuckerberg has to please Wall Street guys rather than his newly wedded wife. Because that makes total sense. (That was sarcasm, by the way. It’s hard to translate that into text)

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