Facebook stock plummets on day two of trading

email article email article print article print article tip @techmeme

Facebook stock has fallen more than 10% on its second day of trading, after already having had problems on its opening day of stock trading.

In fact, there were so many issues on Friday that the Nasdaq is reportedly changing its IPO procedures, and underwriter Morgan Stanley had to step in to defend the US$38 opening price.

For a while though, things looked good, with the price climbing to US$42 in late Friday trading. Today’s pricing represents a 25% decrease from that high.

The performance of the stock led many to question whether or not Facebook and its underwriters had been overly ambitious in the price they set for the IPO.

“It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that’s the bottom line here,” Joe Saluzzi, co-manager of trading at Themis Trading is quoted as saying by news agency Reuters.

It’s worth remembering that a couple of tech companies have seen their stock prices fall after going public. Perhaps the most obvious example in recent times is that of Groupon. The group buying site went public in late 2011, with its stocks rising from their initial asking price of US$20 to US$31. A couple of weeks later, however, they fell 15%.

According to Reuters, investors are becoming wary of the risks associated with buying Facebook stock.

“Investors are increasingly aware of the risk embedded in the stock price. There are real concerns about growth and advertisers’ frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk,” it quotes Brian Wieser at Pivotal Research Group as saying.

“At $38, the stock is priced for perfection in a manner that implied that risks were negligible.”

email article email article print article print article

Related Articles on the Web

Related articles

Topics for this article


Share
  • BURN MEDIA TV

    WATCH THE LATEST EPISODE NOW
    Latest Episode
    Data woes? Here are 6 data saving tips for your smartphone

MORE HEADLINES

news

VIEW MORE

interviews

VIEW MORE

future trends

VIEW MORE

entrepreneurship

VIEW MORE

social media

VIEW MORE

facebook

VIEW MORE

twitter

VIEW MORE

google

VIEW MORE

advertising & marketing

VIEW MORE

online media

VIEW MORE

design

VIEW MORE

mobile

VIEW MORE

More in News

Facebook goes crazy for Zuckerberg wedding

Read More »