Facebook shares close at new low

Facebook's stock has fallen since the company's May 18 initial public offering price of $38 a share.

(CBS/AP) NEW YORK - The unofficial start of summer this week failed to ignite Facebook (FB) shares.

The social networker's stock sank as low as $28.65 Tuesday before closing at $28.84, down $3.07, or 9.6 percent. That's down roughly 24 percent since the social  networking service's initial public offering earlier this month, the largest ever IPO by an Internet company.

Facebook began trading publicly on May 18 following one of the most anticipated stock offerings in history. The stock priced at $38 a day before the company's public debut. The company's market capitalization has since decreased $25 billion in its first seven of trading.

Why Facebook wants to build mobile phones
Embittered Facebook investors ponder next move
Watch: Aunt Jill on the 404 -- told you not to buy Facebook
CBS MoneyWatch's complete coverage of Facebook

But the launch was from far from smooth. The stock's public debut was marred by technical glitches at the Nasdaq Stock Market that delayed trading. And the company, along with the investment banks that led the IPO, is the subject of shareholder lawsuits.

The investors allege that analysts at the the investment banks, including lead underwriter Morgan Stanley (MS), cut their financial forecasts for Facebook just before the IPO and told only a handful of clients. Morgan Stanley has declined to comment. Facebook calls the lawsuits "without merit."

Wedbush analyst Michael Pachter said that Facebook's stock has been hurt by what he called "near-term issues" that include the Nasdaq glitches, an oversupply of stock that was being offered, and the allegations of selective information disclosure. But he rates the stock "Outperform" and has a 12-month target price of $44.

"Facebook has built a huge moat between it and its competitors, and we endorse Mr. Zuckerberg's mission," he wrote in a note to investors Tuesday, referring to Facebook CEO and founder Mark Zuckerberg.

With the latest drop, Facebook's value is about $79 billion.

The downdraft in Facebook shares also appears to be casting a cloud over other publicly traded social-media companies. The stock price of online gaming company Zynga (ZNGA), which derives most of its revenue from Facebook, fell 7.9 percent Tuesday and is down nearly 15 percent since the social networking giant's IPO.

[cbs_anna]

by jfb100 May 29, 2012 5:33 PM EDT
cbs_anna "As an early developer of social networks ... At least half of the 900 million or so "subscribers" are harvested by Facebots from naive users' email address books ..."

Disclaimer: I don't have any social network account, and couldn't be more disinterested in virtual socializing.

Your comments just don't seem to be backed up by facts. It appears that the current estimates are that less than 10% (not 50% as you claim) are duplicate or fake accounts...."

Well, you can research the facts for yourself. It doesn't take much. As of late today MSM reports over 40% FB accounts are spammers. For the accounting of the number created by Facebots, to back up my claim of AT LEAT 50% (which can be easily proven also by downloading "that" massive FB file and doing some analytics - something the IPO due diligence idiots failed to do, or reveal) - you can also rely on internal accounts of how pages are created, and this has already been floating around, for YEARS. People see and read and believe what they want. Corruption, especially on Wall Street is rampant, and the FB IPO is no different. Fraud. Fraud is the LEAST of what goes down on Wall Street.

[cbs_anna]

by jfb100 May 29, 2012 5:33 PM EDT
cbs_anna "As an early developer of social networks ... At least half of the 900 million or so "subscribers" are harvested by Facebots from naive users' email address books ..."

Disclaimer: I don't have any social network account, and couldn't be more disinterested in virtual socializing.

Your comments just don't seem to be backed up by facts. It appears that the current estimates are that less than 10% (not 50% as you claim) are duplicate or fake accounts...."

Well, you can research the facts for yourself. It doesn't take much. As of late today MSM reports over 40% FB accounts are spammers. For the accounting of the number created by Facebots, to back up my claim of AT LEAT 50% (which can be easily proven also by downloading "that" massive FB file and doing some analytics - something the IPO due diligence idiots failed to do, or reveal) - you can also rely on internal accounts of how pages are created, and this has already been floating around, for YEARS. People see and read and believe what they want. Corruption, especially on Wall Street is rampant, and the FB IPO is no different. Fraud. Fraud is the LEAST of what goes down on Wall Street.

[squaredance]

I think the consensus among many analysts now is that it will settle around $12-$15. Some have said it might even go as low as $8, or even lower.

After hearing that Buffett was taking a pass on it, and one of its officers was fleeing the country, that right there raised a rather large red flag. Personally I wouldn't pay $1 for it, since its just another internet 'portal' albeit with a snazzy name, and the portal idea is so tired already.

[Transatlantique]

Facebook sucks.

[nojoy01]

Facebook shares at 20 times earnings would be about $11.70 per share. At 10 times earnings it would only be about $5.85 per share. Even at 25 times earnings it would be about $14.62 per share. Now, what's the clinker in the whole deal? These figures are based on Facebooks' accounting numbers, and those numbers, from past news stories, don't have anytning in common with GAAP. (Generally Accepted Accounting Principles)

[matt6052]

Facebook opened at $38, which is 65 times greater than annual earnings. By comparison, Apple trades at 10 times annual earnings.

The only way Facebook can recover is to offer search and generate revenue with text ads-- directly compete with Google's primary revenue source. Oops, that seems to make the lights flicker whenever I key onto the screen.

[nohater]

would think a person has to have sawdust for brains to invest in facebook. facebook produces no products, no services, manufactures nothing. those that advertise on facebook is probably the major revenue stream for facebook. facebook is nothing but a huge electronic bulletin board.

[hypnotoad72]

It produces ads.

And its users are the products, since that's how the money is generated - ads targeted to users and the refining methods therein.

[rpiny82]

You're exactly right. Something as intangible as facebook has no value.

[credibility2]

There was far too much hype over this IPO to begin with. Its value is deflating...too bad Zuckerberg's ego isn't also deflating.

[slownewsday_6000]

Why should it? He still has more money than he'll ever be able to spend.

[lesserof2evil]

The republi-CONS love Wall Street the way it is right now. It shouldn't be too surprising for con men to protect each other interests.

[hypnotoad72]

There are plenty of Democrats, typically the "blue dog" faction, that are by and large no different.

[fredisalive]

this is just like buying a lottery ticket! I long for the days when people use to make honest money. Making money by betting on money is not business!

[bobnjersey]

[Making money by betting on money is not business!]
------------------------------------------
you're right ... it's not business ... it's investing in business.

[hypnotoad72]

More like a casino gamble. Anyone at the top can cash in and leave everyone else in the cold.

Maybe bobnjersey should look up when Enron execs told their employees to do, then turned around and cashed in... If that's business, let's call it what it is: "Predatory leeching and thievery". Period.