FACEBOOK SHARES slid below $30 to a new low yesterday as nervous investors fled the shares, concerned about the firm’s long-term growth prospects and an initial offering price that in retrospect may have been too rich.
Shares of Facebook fell nearly 9 per cent to $29.05 in mid-afternoon trade, an all-time low.
The eight-year-old firm, which began life in Mark Zuckerberg’s dorm room, has now shed more than $20 billion in value since its controversial and glitch-ridden market debut at $38 on May 18th.
A software error on Nasdaq OMX Group’s US exchange delayed the start of trade by 30 minutes on Facebook’s first day of trading, which was to have been the culmination of breakneck growth for the cultural and internet phenomenon.
Instead, claims of selective disclosure in the days leading up to the IPO about Facebook’s slowing revenue growth engulfed the company in controversy, as did perceptions that the stock had been overpriced coming out the gate.
Wall Street has long harboured concerns that Facebook would have difficulty translating its growing presence on smartphones and other mobile devices into revenue. Rivals Google and Apple now control the mobile arena.
Facebook options began trading yesterday, presenting a tempting target as more investors bet the stock would head south.
They piled into put options – granting investors the right to sell stock at a certain price – marking one of the busiest debuts ever in the options market.– (Reuters)
