Facebook investors are getting flayed as the stock continues to drop precipitously. FB closed on Tuesday at $28.84, down 9.62%.
FB’s options began trading today. Now investors can effectively bet against FB. This event increased the volatility of the stock and was partially responsible for the lower price.
In just over a week since Facebook's IPO, consider the following: FB closed on Tuesday at $28.84, down 9.62%.
-- FB market capitalization has fallen from $104 billion to $79 billion, or 24%.
FB users love the company and, presumably, it is continuing to add millions of new users each month. These people are scratching their heads wondering why FB stock is trading so poorly. The simple truth is that its underwriter overpriced FB shares. Additionally, more and more analysts are questioning the impact of mobile on future revenues, as well as the viability of the company’s advertising business model.
Today, there was some chatter about a potential FB push into the smart phone business and a suggestion that it might try to acquire RIM; these rumors were not given much credence by the experts.
And finally, FB has been labeled as the worst IPO in the last decade by financial talking heads.
FB completed its offering at a very generous price at the expense of its investors. It should not wait too much longer to explain its strategy to the investment community. FB owes it to investors who lost so much supporting its stock.