Published on May 22nd, 2012 | by Paterson Prosper0
Facebook stock dives more than 10 percent in 2nd day of trading
Facebook was supposed to soar. Instead, it plunged. After the social network’s stock fizzled on Friday in its long-awaited debut, its stock fell 11 percent on Monday, even as the rest of the stock market rallied.
The downward spiral has left some people sitting on big losses, and others scratching their heads. After all, nothing fundamental has changed at Facebook in the days since the much-hyped company came to the stock market ‘ Facebook still has more than 900 million users, its 28-year-old founder Mark Zuckerberg controls the company, and it is still one of the few profitable Internet companies to go public.
Facebook’s IPO ‘like Netscape’s in 1995 and Google’s in 2004′ was billed as a milestone moment. Netscape’s offering ushered in the era of the Internet browser. The company’s stock more than doubled in its first day of trading. Google’s IPO heralded the age of search. It posted an 18 percent gain in its stock market debut. Facebook was supposed to offer proof that social media is a viable business and more than a passing fad.
But investors don’t seem convinced. Facebook’s stock closed Monday at $34.03, down 11 percent from Friday’s closing price of $38.23. The investment banks that arranged Facebook’s offering set a price of $38 on Thursday. Although many investors had hoped for a big first-day pop, Facebook’s stock opened Friday at $42.05 and fluctuated between $45 and $38 throughout the day.
For a host reasons, Facebook’s falling share price shouldn’t have been a surprise.
‘Its IPO occurred the same week that the markets posted their worse performance so far in 2012. The Standard & Poor’s 500 index fell 4 percent.