After nearly a couple of weeks of trading, the shares of the outstanding social network website, Facebook dropped more to as low as $26.44 this week. According to past records, this was the worst two week performance following an IPO since 1995. The drop down of stocks has come under pressure after the influential research firm Bernstein started coverage of their stock with an Underperform rating.
Bernstein noted a target price of only $25. According to Forbes, analyst Carlos Kirjner predicted 2013 Facebook revenue of only $6.4 bilion, about $100 million shy of the consensus, because advertising growth will rise only 38 percent this year and 32 percent in 2013.
As a result Facebook shares closed down 82 cents, or 3 percent, at $26.90 on Monday. That's the lowest close for the social network site since the IPO on May 17.
By the end of last week, Facebook shares fell 7.5 percent.
Facebook's continued fall came despite reports it may be near a settlement with Yahoo, the No. 3 search engine globally, over patent litigation, as well as that it might start to offer service to members under 13. That would allow it to keep expanding its members from the 901 million reported as of March 31.
Other social-networking stocks also witnessed a decline on Monday, including Zynga, the game site that relies upon Facebook. It was down 25 cents, or 5 percent to $5.71, and others including Groupon fell off 80 cents, or 8.3%, to $8.89. The local deals company came public in November 20111 at $20.
Facebook, of Menlo Park, Calif., was priced at $38 by its underwriters led by Morgan Stanley. Since the IPO, shares have lost more than 29 percent of their value, trimming the company's market capitalization from $104 billion to only $58.3 billion.
The value of CEO Mark Zuckerberg's personal stake has plunged from $19 billion to only $13.5 billion.
Facebook, though, raised $16 billion in its IPO.
Taking a look at other factors which can be the main cause of Facebook's dismal trading performance so far, they may include: analyst warnings prior to launch, slowing earnings, uncertainty surrounding a mobile strategy, Nasdaq trading errors and simply an overvaluation of the company. Mark Zuckerberg even said in a Securities and Exchange Commission filing that "Facebook was not originally created to be a company. It was built to accomplish a social mission, to make the world more open and connected."
