Facebook has lost more than a fifth of its value since its faltering Wall Street debut on May 18, writes The Telegraph.
After initially placing at $38, the company’s shares briefly peaked at $45 before sinking back to $38.25 on their first day of trading.
On Tuesday the stock fell $3.07, or 9.6 percent, to close at $28.84, down 24 percent since its public stock debut. It went as low as $28.65 earlier in the day.
Facebook’s IPO of stock priced at $38 and raised $16 billion for Facebook and some of its early investors, according to The Huff Post. The company was valued at $104 billion – more than Amazon.com Inc., at $98 billion, at the time.
Facebook stock debuted at over 100 times historical earnings versus Apple’s 14 times. However, the stock’s public debut was marred by technical glitches at the Nasdaq Stock Market that delayed trading.
That was followed by Wall Street has harbored concerns that Facebook, which has about a billion users worldwide and dominating Internet social-networking, would have difficulty translating its growing presence on smartphones and other mobile devices into revenue, informs Reuters.
The company’s rivals Google Inc. and Apple Inc. currently dominate the mobile arena. However, Facebook is now looking for the ways to solve this problem.
For example, there are rumours that the social network giant may purchase Norway’s Opera, which has been on the auction block for a while.
Mark Zuckerberg was considering building a Facebook phone, and that an easy way to acquire the hardware expertise needed was to buy troubled Research in Motion.
“They are clearly looking at smartphones and are trying to become more vertically integrated with their users,” said Ryan Jacob of the Jacob Internet Fund. “They just don’t want to be another app on Google’s or Apple’s platform.”
“Speculation that Facebook is dabbling outside their main expertise and possibly planning another large acquisition may be unsettling to some investors,” he said. “But I think options trading is behind today’s drop in the shares.”
The company, together with the investment banks that led the IPO, is currently the subject of at least two shareholder lawsuits.
The suits allege that analysts at the large underwriting investment banks cut their financial forecasts for Facebook just before the IPO and told only a handful of clients.
Facebook’s lead underwriter Morgan Stanley has declined to comment. Facebook calls the lawsuits “without merit.”
Some investors also worry about how Zuckerberg commands more than half of the company’s voting shares through agreements with other investors, granting him near-absolute control over Facebook.
All this happens in time when the 28-year old CEO who had married his longtime girlfriend Priscilla Chan on May 19, is enjoyng his honeymoon in Rome. The honeymoon was supposed to be secret, but Zuckerberg did a thing that cannot be left unnoticed by media.
Mr. Zuckerberg took his new wife to lunch in Rome, spent just 32 euros ($40) – and did not leave a tip (see Facebook’s Mark Zuckerberg Left No Tip for $40 Honeymoon Lunch in Rome)
Their bill at the kosher restaurant in Rome’s Jewish Ghetto came to just 32 euros after a lunch consisting of deep-fried artichokes – a Roman Jewish speciality – fried pumpkin flowers and ravioli stuffed with sea bass and artichokes.
And the owners of the restaurant were surprised when Zuckerberg, who said he had enjoued the dinner, left without leaving a tip.
“I asked him ‘how was it?’ and he said ‘very good'”, the owner, identified only as Umberto, told Corriere della Sera newspaper. “I had gone up to him and said ‘Are you …?’ and he said ‘Yes’.”
It was not the first time that the multi-billionaire chose not to tip – Facebook CEO reportedly did the same thing the night before at Pierluigi, a historic trattoria near Campo de’ Fiori, a pizza in the heart of Rome.